Biofuels growth stifled by EU policy delays: BP

LONDON Tue Oct 18, 2011 12:07pm EDT

LONDON (Reuters) - Biofuels for use in transport are becoming more competitive compared with oil but the pace of growth has slowed due to a lack of regulation and sustainability standards in Europe, the chief executive of BP's biofuels division said.

"In the UK, biofuels get no tax breaks whatsoever. The biggest obstacle (to biofuel growth) is uncertainty around the future of mandates and clear (European Union) sustainability standards," Philip New of BP Biofuels told Reuters in an interview on Tuesday.

New expects the European Union to meet its 2020 target of getting 10 percent of energy for transport from renewables, namely biofuels, if new measures are put in place to support the more sustainable alternative fuels.

EU policymakers are currently debating the green credentials of some biofuels and should present proposals for approval by EU governments and lawmakers before the end of the year. However, legislation might not emerge for several years.

Around 20 percent of EU and U.S. transport should be fueled by biofuels by 2030 and 9 percent globally, compared with the current 3 percent, New said.

"Over time, more and more (biofuels) will be blended into standard fuel. Our market share of supplying them will be 16-19 percent -- the same as for standard fuel," he said.

UNCERTAINTY

Critics say some biofuels production can occupy land that would otherwise be used for agricultural purposes, thus limiting food and water resources for a rapidly rising world population.

Some biofuel production could also increase carbon emissions, especially if rainforests are cut down to facilitate production.

BP produces ethanol from sugar cane in Brazil and owns Vercipia Biofuels in Florida in the United States, which is developing a commercial-scale cellulosic ethanol plant due to start production in 2013.

In the UK, BP joint venture Vivergo Fuels is building a bioethanol plant in Hull, which should come online in the first half of next year, New said.

The plant was originally meant to become operational this year.

Rival bioethanol producer Ensus decided to shut down Britain's largest bioethanol plant in May for an undisclosed time, partly due to the debate over biofuels' green credentials which has created uncertainty for EU producers.

"We are very concerned there are no new biofuel production facilities elsewhere in this country (...) because of the uncertainties of member states to do what is necessary to meet the renewable energy directive," New said.

"It would be naive to pretend making biofuels is easy. We are relatively confident in our ability to learn from (bioethanol production) lessons."

(Editing by Anthony Barker)

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