BP Plc, Europe’s second-biggest oil producer, is abandoning a cellulosic ethanol project in the U.S., its second move in a year to scale back in renewable energy.
The company canceled plans to build a $300 million cellulosic ethanol plant in Highlands County, Florida, to focus on “more attractive” projects, according to a statement on its website today.
BP doesn’t plan to build any commercial cellulosic ethanol facilities on its own, and will now focus its U.S. biofuel efforts on research and development and licensing its technology, Matt Hartwig, a spokesman, said today in an interview. The company decided in December to wind down its solar business, which had become unprofitable after prices plunged.
“Ethanol is not something a lot of people are interested in investing money in,” Mark Schultz, an analyst at Northstar Commodity Investment Co. in Minneapolis, said in an interview today.
“Corn-based ethanol hasn’t been profitable for about a year,” he said. BP is “seeing that this isn’t the right street to go down anymore.”
Cellulosic ethanol is a renewable fuel produced from inedible feedstocks such as waste and switchgrass. U.S. government mandates require that refiners blend 36 billion gallons (136 billion liters) of biofuels into their products annually by 2022. The Environmental Protection Agency has had to slash the targets for cellulosic ethanol because it isn’t yet commercially available.
BP announced plans in 2008 to build the plant, which would have produced 36 million gallons of fuel a year. It formed a venture with biofuels company Verenium Corp. in 2009 to jointly build the plant in south-central Florida and each invested $22.5 million in the project. BP bought Verenium’s biofuels business for $98.3 million in September 2010.
“We believe it is in the best interest of our shareholders to redeploy the considerable capital required to build this facility,” Geoff Morrell, a BP spokesman, said in the statement.
BP continues to work with other renewable-fuel developers including its Butamax Advanced Biofuels LLC joint venture with DuPont Co., Hartwig said. It will continue to operate a cellulosic ethanol pilot plant in Louisiana and a research facility in San Diego, he said.
BP last year began exiting the global solar-energy industry after 40 years. Competition from Chinese manufacturers created a glut of panels, helping drive down prices 48 percent last year.
Royal Dutch Shell Plc is Europe’s biggest crude producer.