The UK Government’s Renewable Fuels Agency’s report said in early August, 2008 that of the biodiesel used in the UK from mid-April to mid-May, only a fifth of the total quantity of biofuels sold met recognised environmental standards.

The time has come for differentiation among biofuels. Some biofuels are clearly superior to others in terms of environmental benefits, and the standards that they adhere to. An unambiguous trend is emerging in the biofuels industry that recognises the fact that there is a premium on biofuels which meet sustainability criteria.

A new report finds that the ‘green’ credentials of biofuels will be an overriding factor in the industry. Second generation biofuels have been attracting more investment lately. In fact, oil giant BP has just announced that it will invest up to $90m as part of a deal with US cellulosic ethanol specialist Verenium as part of a plan to speed up the development of a commercially viable form of biofuel which does not affect food supplies. Verenium has known expertise in the area of enzymes used to quickly breakdown waste organic material.

Production of fuel, in this case cellulosic ethanol, will come from sources such as wood chips, corn stalks and discarded sugar cane. The two companies will form a 50:50 joint venture which licences intellectual property from both firms and also begin new research and development activities.

Ever since corn-based biofuels have come to be known as environmental untouchables, several oil giants are now investing in similar technology and aiming for leadership positions in renewable fuels which have impeccably ‘green’ certificates.

The BP-Verenium announcement came close on the heels of an announcement from oil company Shell which revealed it has increased its stake in cellulosic ethanol specialist Iogen from 26.3 per cent to 50 per cent. Other joint activity related to commercial biofuel production has food company, Archer Daniels Midland, teaming with German engineering companies Daimler and Bayer to investigate the feasibility of Jatropha as a biofuel crop. Also, General Motors has acquired stakes in biofuels production plants in Mascoma and Coskata.