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Oil companies break with trade group on RFS

Hydrocarbon Engineering,

Shell and BP have broken with the oil and gas industry’s top trade groups, which insist that Congress must completely scrap a federal mandate that forces gasoline makers to blend in ethanol and other renewable fuels.

The companies are instead seeking more modest changes to the eight year Renewable Fuels Standard (RFS).

John Reese, Shell’s downstream policy and advocacy manager, has indicated that Shell generally supports the RFS, but does feel that it has to be revised. He  has additionally indicated that, as Shell has recently partnered with Virent Inc., in the production of advanced alternatives made with plant materials at a pilot facility in Houston, the company has slightly different interests than others in the oil industry; its biofuels investments would be undermined if the mandate were dismantled.

Similarly, BP accounts for half of Butamax Advanced Biofuels, a joint venture with DuPont that aims to convert corn, wheat and other biomass into alcohol that has a higher energy density than traditional ethanol and can be blended into gasoline at refineries. Hence, the company has not made any visible effort towards repeal of the standard.

Matt Hartwig, a spokesman for BP, has outlined that BP generally supports the goals of the RFS program to stimulate the development and deployment of biofuels technologies. However, the company recognises that there are challenges with the standard that must be addressed. BP continues to work with regulatory authorities to address these issues.

The RFS obligates refiners to add steadily increasing amounts of ethanol and other alternatives into the nation’s transportation fuel supply, up to 36 billion gal in 2020. However, oil industry leaders say that they are hitting a ‘blend wall’ where they can no longer mix in enough ethanol to meet RFS volumetric targets without exceeding a 10% threshold acceptable for use in all cars and trucks.

The American Fuel & Petrochemical Manufacturers (AFPM) and American Petroleum Institute (API) insist that nothing short of full repeal will do.

Adapted from press release by Emma McAleavey.

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