BP drops plans for cellulosic ethanol
October 31, 2012, 03:46 pm
BP recently announced that it is dropping plans to build a commercial-scale cellulosic-ethanol plant in Florida. BP, one of the largest oil companies in the world, said it is placing the plans on the back burner so it can focus on research and development in an announcement that significantly impacts the ethanol industry as a whole.
The original plan was for BP to build a facility in Highlands County, Florida, that would produce 36 million gallons of cellulosic ethanol each year. Cellulosic ethanol is a renewable fuel made from non-food crops like switchgrass and wood cuttings.
The EPA recently announced, through the RFS ethanol mandates, that growth in ethanol production after 2015 has to come from cellulosic sources. The problem remains and seems to have become worse with the BP announcement, because only a small amount of the requirements are being met today. In addition, some oil companies are even paying fines for not utilizing the fuel, which has not been developed. With the current course the fuel development is on, some experts say that these requirements are impossible and the EPA needs to no longer ignore the ethanol problem.
Overall gas consumption has been down, primarily due to poor economic conditions, and fines for oil companies are set to only get worse, as increased mandates are in order. This problem doesn't just affect oil companies, because consumers will essentially be paying for those fines, similar to the corporate tax issue that has been a hot-button issue throughout the presidential election.
Sander Cohan, principal at energy consulting firm ESAI, told the Wall Street Journal that cellulosic-ethanol production has been difficult primarily because of the availability of raw materials and the overall cost. Cohan added that BP is most likely sidelining the fuel production until the market catches up and profits are possible
BP said it plans to use the money from the cellulosic-fuel plans to invest in renewable fuel projects in England and Brazil, as well as renewable fuel research and development in San Diego.
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