BP steps up biofuels investment

Oil giant BP unveiled its second biofuel venture of the week today as it pledged to invest in the production of more sustainable biodiesel.

Through a joint venture with D1 Oils, BP is to ramp up the planting of Jatropha curcas trees – a drought resistant, inedible oilseed plant – used to make biodiesel.

Energy companies like BP have been keen to secure supplies of biofuels ahead of new regulations, such as those in the UK which demand that 5% of transport fuels must be made up of biofuels by 2010.

But biofuels have come under increasing criticism in recent months as they have been blamed for hiking up global food prices as farmers move from producing food crops to subsidised fuel crops.

However, Jatropha has many advantages over other biofuel crops as it requires less water than most plants and is a hardy crop that can grow in a variety of land and soil types and, therefore, does not need to be grown on good quality agricultural land used to grow food.

Under the venture, the two firms will invest around $160m (€118m) over the next five years in cultivating the plant at D1’s existing plantations in India, Southern Africa and South East Asia. It will also increase production to parts of central and South America.

The oil produced will then be used to meet local biodiesel needs as well as being exported to markets such as Europe, where domestic biofuels produced from rapeseed and waste oil are unlikely to be able to meet increases in regulatory-led demand.

BP estimates that around one million hectares will be planted over the next four years, with an extra 300,000 hectares per year thereafter. Once all the plantations are established, BP hopes to be producing around two million tonnes of jatropha oil a year.

The joint venture comes days after BP announced a $400m (€296m) investment in a new bioethanol plant in conjunction with Associated British Foods and DuPont.

Iain Conn, chief executive of BP’s refining and marketing business said: “This joint venture is a further milestone in our strategy to develop real avenues to contribute to global energy supplies in ways that are sustainable and progressive.”

Founded in 2002, Middlesbrough-based D1 Oils is a global producer of biodiesel, which has operations covering agronomy, refining and trading. It is also involved in the research and development of the science, planting and production of inedible vegetable oils.