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Market News

 June 22, 2006
BP and DuPont partner for biofuels

 New York, USA -- BP and Dupont have created a partnership to develop the 'next generation' of biofuels. The two companies have been working together on the development of formulations to overcome the limitations of existing biofuels, and now plan to bring a jointly developed product to market.

The two companies plan to deliver advanced biofuels for transportation, using DuPont's biotechnology and bio-manufacturing capabilities and BP's fuels technology expertise.

The first product expected will be biobutanol, a fuel additive used in a similar way to ethanol, for the United Kingdom market. The companies hope to launch the fuel in 2007.

Biobutanol will be initially produced from a variety of feedstock, including cane or beet sugar, corn, wheat, cassava, and potentially cellulose crops, and provides improvements over ethanol by reducing vapour pressure and tolerance to water contamination. It may also be blended in with gasoline in larger concentrations than ethanol without the need for engine modifications. The companies also report improved fuel economy.

BP and DuPont believe that these characteristics will allow biobutanol to enter gasoline distribution channels more easily than other biofuels. Existing technology will support the first stages of production using ethanol infrastructure, while a new production process that will enhance competitiveness is being developed.

In another recent announcement, BP is planning to spend US $500 million to set up a biofuels research centre. The laboratory will be attached to a major US or UK university, and will work on improving the efficiency of biofuels.

It will take on "basic" research which will be freely available to the research community, as well as commercial projects to support BP's own biofuels business, the company said. The institute will initially focus on: improving the efficiency of existing biofuels; developing new technology so that more of a crop can be used to make biofuels; and developing new high-energy species of plants.

Biofuels currently account for around two percent of global transportation fuels, but the United Nations and other organizations predict that share could grow rapidly in the coming decades, with biofuels accounting for one-quarter of the world's energy needs by 2025.

Canada itself has been slow to adopt biofuels, but that should change with a Renewable Fuels Standard that will require 5.75% of all gasoline and diesel sold in the country to come from biofuel sources. Canadian company Iogen is a world-leader in cellulosic ethanol, which represents a potentially greater environmental and economic benefit than ethanol produce from corn or grain.