Tyson, Conoco Cook Up Recipe To Battle Climate Change
How? The recipe appears rather simple, really. To produce one 42-gallon barrel of renewable diesel requires about one barrel of animal fat. That's something Tyson's got a lot of. It produces 300 million gallons -- nearly a million gallons a day -- of beef, pork and chicken fat every year. And each barrel requires, on average, two steers, or 16 hogs or 1,300 chickens. Talk about putting a fryer in your tank.
It won't all go to produce fuel, though. Once the deal, which was announced yesterday, is ramped up, about 58% of its fat production will go to diesel, the companies said in a Webcast and news release. Production should begin later this year and gain full traction by spring 2009.
The companies are careful to distinguish this renewable diesel from biodiesel, saying the latter doesn't fit with existing pipelines but the former, because of its molecular makeup, does.
One might have expected something like this initiative from Conoco, which has a reputation as one of the more environmentally concerned oil companies. Word has it company executives actually believe in global warming. But Tyson doesn't conjure thoughts of environmental benevolence.
Dick Bond, Tyson's president and chief executive, has been leading the charge against diverting corn from animal feed to produce ethanol so it may be that the deal is less altruistic than it appears on the surface. Essentially, Bond doesn't want his products priced out of consumers' reach. This deal would seem to cover that base.
Over the last year, the companies have been collaborating on ways to combine Tyson's expertise with protein and Conoco's processing background to introduce renewable diesel to the U.S. Whatever their motivation, most of the major energy players aren't champing at the bit to do more than dig up more stores of oil from the earth.
Still, one might prefer a certain altruism, even a kind of suffering to help battle climate change, a sense of deprivation or sacrifice of some kind. One won't find it here.
Conoco, which posted $172.4 billion in revenue in 2006, moved up a slot to No. 5 on the 2007 Fortune 500 list. It CEO, James Mulva, also ranks No. 5 - on the list of the country's highest-paid executives. No, Conoco isn't moving into renewable energy for its health.
Both Conoco and Tyson lobbied the White House and other administration officials to expand a tax break that had been intended as a piece of pork for a Missouri constituent. That expansion, issued April 2 by the IRS, provides a credit for diesel fuel produced with existing technologies involving vegetable oil and animal fats.
The ruling is probably worth hundreds of millions to Conoco and increases demand for products from Tyson.
In the announcement, the companies referred to Tyson "byproducts" but talked only about fat. At the Webcast, Bond was asked about that. "There are a lot of other potentials that we are working on but we don't have anything more to talk about today." Cow tails? Chicken feathers?
Capitalistic coup or no, it's refreshing to hear an oil company exec speak about climate change this way: "The oil and gas industry does far more than what the public is aware of," said Mulva. "The industry has to do far more in proactive outreach to address climate change. Mitigation is better than adaptation."
Editor's note: This is the second in a series of articles that focus on the environment and green marketing this week, which leads to Earth Day on Sunday.