I learned something interesting today. If you had asked me who is the world’s largest distributor of bio-fuels, I would have probably guessed ADM. It looks like I might have been wrong. Here is a press release that came across my desk today:
Shell and Codexis to Explore Next-Generation Bio-Fuels
HOUSTON and REDWOOD CITY, Calif., Nov. 16 /PRNewswire/ — Shell Oil Products US, a subsidiary of Shell Oil Company, and Codexis Inc., a privately held biotechnology company, announced today they would launch a collaboration to explore enhanced methods of converting biomass to bio-fuels. Terms of the agreement were not disclosed.
“Shell is committed to leading the development of second-generation bio- fuels that offer lower well-to-wheel CO2 production and enhanced performance,” David Sexton, President, Shell Oil Products US, said. “We are exploring the application of Codexis’ proprietary technologies to produce alternative fuels from renewable, sustainable sources.”
“Our proven biocatalytic approach should provide the critical pathway to developing economically feasible alternative transportation fuels from renewable resources,” Alan Shaw, Ph.D., Codexis President and Chief Executive Officer, said. “We are pleased to be partnering with Shell, a world leader in energy, to undertake this important effort.”
Shell has been involved in developing bio-fuels for more than 30 years, and believes it is the world’s largest distributor of transport bio-fuels today. The company sold nearly 800 million gallons (3 billion liters) of bio- fuel in 2005, mostly in the United States and Brazil. Shell also markets fuels containing bio-components in Australia, France, Germany, Italy, the Philippines, Sweden and Thailand.
So, Shell sold 800 million gallons of biofuel in 2005. I will have to check to see where ADM ranked. But it is funny that as much grief as oil companies get, and as often as they are accused of lobbying against biofuels, that Shell is one of the world leaders. That’s why I tell people not to write off oil companies if alternatives start to make economic sense. Oil companies are primarily energy companies, and they will make biodiesel just as quickly as they will make conventional diesel, if that’s what the market favors.
8 thoughts on “Who Supplies the Most Biofuel?”
I agree with your comments that oil companies are not necessarily against energy diversification, but you may want to have another look at the word ‘distributed’ – ADM probably *produced* the most biofuels, but you can’t fill your tank at the local ADM gas station.
I don’t know, Robert. We’ve known for 30 years that we have a long-term energy problem. Before World War II, there were reports that we had enough natural gas in the US to last several centuries. Those numbers were meaningless by 1975.
Briefly, in the 1970s, the oil companies jumped on the alternative energy bandwagon. At the first chance, they jumped off. Despite knowing we need to diversify, the oil companies have held the energy portfolio since the early 80s and have resisted or postponed alternative energy and better controls on pollution.
I know, the politicians have been no better than the oil companies; they were content with cheap oil even if they knew it was simply a result of pumping it out faster. It postponed hard decisions by everybody.
But then here’s Shell bragging about being involved in biofuels for 30 years and the market share is very tiny after 30 years. Where’s the evidence we can afford another 30 years of that kind of behavior? Evidence, mind you. I’ve read recent speeches by oil executives and they’re the same speeches that were given 30 years ago. Maybe the new generation of executives are sincere, but the record of their companies has not been good.
We’re still going to need oil and the oil companies will still make their profits and that’s fine by me, but do we really want to leave the oil companies in charge of the broader energy portfolio? If the oil companies decide it’s more lucrative to buy coal companies rather than biofuel companies, are we going to be any better off?
Your own articles (which have been brilliant by the way) suggest that if ethanol numbers don’t improve, about all we’re doing is burning fuel twice, first the fuel to make ethanol and then the ethanol itself. First, that’s almost double the pollution. Second, there’s a potential conflict of interest for the oil companies. If it’s financially more lucrative to make ethanol with an EROEI of 1.3 instead of 2.3, how are we going to get that energy security? We already see farmers clamoring for ethanol legislation despite how poor the results are so far on the EROEI.
I’m a pragmatist. When a model isn’t working very well, I start looking for something better, even if it’s just a combined government/business partnership that takes seriously dealing very soon and very aggressively with securing our energy future without sabotaging ourselves with pollution and Global Warming. If you look at the history of our country, transitions have often been handled best by a large number of companies rather than a small handful. It might be time to make companies smaller, more plentiful, and more competitive again. At least outside the oil sector.
ADM probably *produced* the most biofuels, but you can’t fill your tank at the local ADM gas station.
Yeah, but they still distributed it to the distributors. I would dispute Shell’s claim, because it looks to me like ADM produces about a billion gallons of biofuel a year. However, Shell is still pretty heavily involved, despite Vinod Khosla’s claims that oil companies are working to keep biofuels off the market.
Robert said, “If you had asked me who is the world’s largest distributor of bio-fuels, I would have probably guessed ADM.”
Had you had asked me, I would have said Mother Nature. 😉
As far as I know, the billions of barrels of petroleum we pump out of the ground and billions of tons of coal we dig up are all biomass derived — made from algae, plankton, giant ferns, trees, et al. that grew 75-100 million years or so ago and that nature turned into hydrocarbons with heat, pressure, and of course, lots and lots of time.
The difference between ancient biofuels and modern biofuels is who supplied the energy to make the transformation.
That’s why modern biofuels are generally so inefficient — someone has to pay for the energy that nature provided gratis to make ancient biofuels.
Despite knowing we need to diversify, the oil companies have held the energy portfolio since the early 80s and have resisted or postponed alternative energy and better controls on pollution.
The problem is one of scale and economics. If the economics favor biofuels, oil companies will drift that way. They will supply what the customers want. They will not simply jump into biofuels with both feet, because if the price is too high and customers won’t pay, then their share price will be pummeled and the leadership will be voted out.
The problem of scale is this: ADM is the largest producer of ethanol in the country. They produce a billion gallons a year. That is equivalent to the output of a very small oil refinery. So it would be very, very difficult for an oil major to devote a large fraction of their business to biofuels. There aren’t enough raw materials for making that much biofuel.
If it’s financially more lucrative to make ethanol with an EROEI of 1.3 instead of 2.3, how are we going to get that energy security?
That is a very big problem, and is the reason you don’t see more ethanol plants like E3 Biofuels being built. They are at a disadvantage to those who are trying to do it as cheaply as possibly. Getting the EROEI up takes capital. I would like to rectify this by increasing the tax on fossil fuels. Low EROEI processes would be penalized, and you would see a shift toward higher EROEI processes.
Isn’t it amazing how many of these perverse incentives would disappear with a shift of taxes from productive activity to e.g. fossil fuels?
“Yeah, but they still distributed it to the distributors. I would dispute Shell’s claim, because it looks to me like ADM produces about a billion gallons of biofuel a year. However, Shell is still pretty heavily involved, despite Vinod Khosla’s claims that oil companies are working to keep biofuels off the market.”
Well, these kinds of verbal sleights of hand are the bread and butter of PR. I think their interpretation of ‘distribution’ is retail sale, which is the only thing that would allow them to make that statement – and in that regard they’re right, though I agree with you that it’s disingenuous because of the way they’re using the language.
You must be kidding, there are over 160 NEW bio-refineries being built as I write! None are owned by Shell. The future is biofuel, all states are changing laws, giving credits, etc…. USA will be changed like Brazil was. There are also state of the art technologies like: U.S. Sustainable Energy Corp. which is producing 5 gallons of biofuel from 1 bushel of soybeans in their reactor. They also are in contract with Turnkey Electric to install bio-power plants throught out the USA! Is shell doing that? I didn’t think so!
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