BP To Build World's Biggest Biofuel from Grass Plant

BP has this week announced plans to build what it claims will be the world's biggest facility for turning grass into biofuel, shelling out $112.5m investment for a 50 per cent stake in biofuels firm Verenium in the process.

The new facility will build on the company's existing partnership with Verenium, which has seen the two companies build a pilot plant in Louisiana. But the new Florida refinery will be 25 times bigger than the pilot plant, underlining the rapidly expanding interest in cellulosic ethanol, made from inedible plants, such as grass, rather than corn.

Carlos Riva, chief executive of Verenium, hailed the deal as "a critical next step" in the two companies' plans to commercialise cellulosic biofuels, that unlike corn-based biofuels should not have a knock on effect on food supplies and prices.

BP said that the Florida facility cost between $250m and $300m to build, but should produce 36 million gallons per year of fuel once it is operational. Ground will be broken on the site next year, with biofuel production scheduled to begin in 2012.

The joint venture company also intends to develop a second site in the Gulf Coast region.