Biofuel project seeks £135m in funding
By James Mackintosh
Two planned biofuel plants will start to try to raise £135m from investors today as part of efforts to profit from the government's race to shift away from petrol.Future Capital hopes to secure money from wealthy private investors to support construction of wheat-to-ethanol refineries in Grimsby and on Teesside to produce more than 260m gallons a day - one third of anticipated British demand.
The project is part of a rush into production of ethanol - which can be mixed with petrol - after poor early returns from biodiesel, another alternative fuel. Britain's biggest biodiesel plant, near the planned Teesside ethanol facility, cancelled its trading on Aim and was forced to restructure after it took on too much debt and suffered technical problems.
According to Future, the new plants together will supply more than a third of the forecast 1m tonnes of ethanol likely to be demanded once government rules come into effect. The rules will require 5 per cent biofuels by volume by 2010, with fuel suppliers forced to pay a penalty if they were to fail to meet the goal. Several big ethanol plants are planned, including a refinery being built by Ensus in Wilton and a British Sugar/BP joint venture to be constructed close to Hull.
Tim Levy, chief executive of Future, said the project should avoid the poor publicity that has attended biofuels recently. Chief among this are accusations that they are pushing up food prices while doing little for the environment.
By using waste products in a nearby power station, Future and Vireol, operator of the plant, believe they can produce ethanol that would generate a saving of 70 per cent of carbon dioxide against petrol use, more if carbon credits are taken into account. Mr Levy also argues wheat prices - at a record yesterday - are propelled by poor harvests and commodities demand, not the needs of biofuel.