LONDON, June 21: Oil major BP is directing investment in advanced biofuels to the United States and South America due to uncertainty about the European Union’s future regulatory environment, a senior executive said.

“At the moment we are not contemplating investing in second-generation cellulosic (ethanol) in Europe simply for the reason that there is not enough certainty on what the market conditions will be like,” Phil New, head of BP Biofuels, said in an interview.

The European Union initially embraced biofuels, setting a target that 10 per cent of all fuels used in transportation should come from renewable sources by 2020. Support has wavered, however, as questions have been raised about the environmental credentials of some biofuels.

Some critics have argued, for example, that the additional crops needed to produce the fuels can lead to the destruction of forests, which would release large quantities of greenhouse gases into the atmosphere and exacerbate climate change.

The debate has created considerable uncertainty about future regulation in the EU and stalled investment not only in biofuels made from food crops, known as first generation, but also in advanced or cellulosic biofuels, which are made from the inedible parts of plants and do not compete with food crops. “There are other places in the world that appear to be more attractive places to invest,” New said, noting BP was developing its technology predominately in the US and was looking at several options on where to invest, including Brazil.

BP is the owner-operator of several sugar cane ethanol mills in Brazil, where it may develop cellulosic projects. “I think what we are becoming increasingly interested in is the integration potential between a sugar cane mill and a cellulosic plant,” New said.

One of the biggest problems for cellulosic biofuel plants has been the cost of transporting feedstock to the facility, but with a sugar cane mill it is already on site.—Reuters