BP backs out of E10 off-take agreement with Primary Energy

Western Australias fledgling biofuels industry has been dealt a severe blow after BP walked away from a deal to buy the entire output from a planned ethanol plant, throwing into doubt the US$300 million facility and calls for a compulsory biofuels quota. BP said it was not commercially viable to meet an agreement with Primary Energy to buy the plants annual output of 160 million liters of ethanol, which it had planned to use in a fuel blend known as E10. Primary Energy has revealed that it is now uncertain whether it will go ahead with the construction of the plant, due to start in Kwinana later this year. Chief Executive of Primary Energy Matthew Kelley said the move was a major blow for the environment, with the facility expected to have been able to reduce WAs carbon emissions by 400,000 tons annually. (May 29, 2008)