Bad news for jatropha: BP exits

Days after Exxon announced a move into algal biofuels, the latest darling of the biofuels sector, it appears the sun is setting on the last big craze. Jatropha was billed as a miracle solution to the food vs. fuel tension, growing oily seeds on marginal land that doesn't compete with food, but BP is exiting its jatropha JV with D1, which was a milestone for oil major involvement in the biofuels sector when announced in 2007.

BP Plc, Europe's second-largest oil company, will exit its jatropha biofuel project with D1 Oils Plc to focus on production of ethanol in Brazil and the U.S. and advance biobutanol development.

“To ensure the success of these investments, BP is concentrating new business development in these areas and will no longer be directly involved in the jatropha as a biofuel feedstock,” Sheila Williams, a London-based company spokeswoman, said today in an e-mail.

This could be construed as part of BP's broader pullback from renewables under Tony Hayward. That said, with BP's continuing with ethanol and biobutanol, it's hard to construct a story where this is other than a bad sign for jatropha in general. With such a small capital investment at stake, it makes no sense for BP to exit if there is any appreciable upside.

Update, pat on the back: I beat Environmental Capital, one of my top blogs, to this by a few hours. Which is, of course, irrelevant. Plus their post is much better. It adds at least three interesting facts:

1) "D1 Oils will buy out BP’s half of the venture for 500,000 pounds—less than the price of a nice apartment in London—even though the joint venture is apparently worth more than 7 million pounds."

2) "BP and D1 Oils planted more than 200,000 hectares of the stuff—25% of the worldwide jatropha planting."

3) Jatropha is a water hog, using 5x as much water per unit of energy as sugarcane and corn. So much for not competing with food for scarce resources...