Big Oil Meets Biofuel

Surrounded by dwindling recourses, public pressure, and pending legislation, almost all petroleum conglomerates are investing billions of dollars in biofuels.

Big oil companies such as BP, Shell, and Chevron are investing in advanced biofuels, not first generation biofuels. The exception to this is Valero. Valero recently purchased seven ethanol plants from VeraSun. Valero has also invested in ZeaChem which plans to build a cellulosic ethanol plant, and Solix Biofuels which plans to harvest oil from algae.

The major legislation fueling the partnership of big oil and biofuel is the 2005 Renewable Fuel Standard (RFS). The RFS legislation mandates that blending of biofuels will increase from 9 billion in 2008 to 22 billion in 2022. In 2007 the United States (the world’s largest petroleum consumer) used 142 billion gallons of gasoline.

Many in the biofuel industry are nervous about the large oil companies coming in and taking over. They fear that they are only interested in renewable fuels to appease the public and government, and may not truly be interested in advancing the biofuels industry. On the other hand, biofuel companies are keen to take advantage of the sudden interest to benefit from big oil’s access, money, and resources.

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