WASHINGTON Oct 25 BP Plc on Thursday
canceled plans to build a plant in Florida to turn tough grasses
such as sorghum and cane into cellulosic biofuel, the second oil
major this year to back out of plans to produce "next
generation" ethanol from non-food crops.
Once seen as a promising solution for the debate over the
merits of using corn and other crops to make fuel, cellulosic
biofuel has become a political football as companies struggle to
produce commercial quantities, despite a government mandate.
The U.S. Congress originally mandated that by 2012, 500
million gallons of cellulosic ethanol be blended into fuel by
refineries. But because very little of the fuel is produced, the
Environmental Protection Agency lowered the mandate to 8.65
million gallons for 2012.
The U.S. oil industry's lobby group has sued the government
over the mandate, and Republicans in Congress have said the law
should be changed.
BP said it now plans to focus on research and development as
well as licensing its biofuels technology, instead of building
the 36-million-gallon plant, the value of which was not
"Given the large and growing portfolio of investment
opportunities available to BP globally, we believe it is in the
best interest of our shareholders to redeploy the considerable
capital required to build this facility into other more
attractive projects," Geoff Morrell, the company's
vice-president of communications, said in a statement.
In April, Royal Dutch Shell Plc and privately held
Iogen Corp scrapped plans for a commercial-scale plant in Canada
to make ethanol from straw and plant waste.
Privately held Poet, one of the largest U.S. ethanol makers,
broke ground on a $250 million cellulosic plant earlier this
year and hopes to start producing commercial fuel after
completing the plant in 2013.
The project has received financing from Royal DSM,
a Dutch life-sciences company.
BP said it will continue to run a biofuels research center
in California and a demonstration plant in Louisiana.