BP is focusing its biofuel efforts on Brazilian sugar cane and U.S. energy grasses, holding off on investments in the rest of the world for the moment, a senior executive of the global energy group said on Thursday.
James Primrose, head of strategy at BP Biofuels, said government incentives and clear regulations in alternative energy gave the Americas region an advantage in the sector, compared to Europe or Asia where the landscape is murkier.
“Our growth plans are ambitious,” he told Reuters on the sidelines of an ethanol conference in Geneva, a European hub for commodity trading.
“In order to deliver on our plans, we have to focus on those markets first where there is the regulatory clarity and the cost-advantaged feed stocks.”
In July, BP announced a $98 million purchase of technology developed by U.S. partner Verenium, under which it took ownership of cellulosic biofuels technology.
The biofuels unit plans to increase its engagement with Brazil, given the high quality and relatively low cost of its sugar cane, Primrose said, without offering any details.
In the United States, the BP executive said government support for cellulosic biofuels had given a boost to investors. “In that regard, in terms of the clarity of the regulations, the U.S. is favorable to Europe,” he said.
BP is particularly bullish about the potential of energy grasses, especially in the southeastern United States which boasts a hot, humid climate and vast farmlands conducive to the fast-growing plants that can yield cellulosic ethanol.
The company had already identified the southern United States as a target area for biofuels before the Gulf of Mexico oil spill, Primrose said. “The very unfortunate events in the Gulf have only strengthened the commitment to alternative fuels and in particular biofuels,” he said.
A top U.S. private agricultural economist said in July the BP oil spill would boost demand for renewable fuels by feeding worries about oil, and give incentives to focus again on agriculture as an alternative source of fuels.
Primrose also cited strong potential from biobutanol, a fuel molecule produced from corn, wheat, sugar cane and other stocks which works well in today’s cars and trucks. BP is working with DuPont on biobutanol.
“Biofuels like biobutanol can allow you to continue to increase the use of biofuels without having to look at new vehicles,” he said. “It is possible to use the same ethanol facilities — corn in the U.S., wheat in Europe and sugarcane in Brazil — and retrofit those facilities to biobutanol.”
Asked about the dominance of large energy companies in biofuels, following major investments from Exxon Mobil, Petrobras and others, Primrose said size did confer an advantage.
“It is true to say that existing oil companies have both the access to funding and the reach to employ these technologies,” he said. At the ethanol conference on Tuesday, Primrose had said viable biofuels needed to be produced on a large scale.
“Niche options will not deliver the kind of solutions that are required in the road transport space. Niche options are also not attractive to companies of the shape and the scale of BP,” he said.