BP announced that it has reached an agreement for BP Biofuels North America to acquire Verenium Corporation's cellulosic biofuels business. The agreement includes the acquisition of Verenium's facilities in Jennings and San Diego (California) for $98.3 million. The acquisition is evidence of BP's goal to a leading company in the cellulosic biofuels industry in the US. BP is one of the few global companies with an integrated end to end capability, from research and development through to distribution.

Verenium Corporation is to keep its commercial enzyme business, including the biofuels enzymes products and maintain the rights to develop a lignocellulosic enzyme program. Verenium Corporation is an independent bio fuels manufacturer. It is engaged in the development of high performance specialty enzymes and cellulosic ethanol technology. The company operates in two segments namely, bio fuels and specialty enzymes. The bio fuels segment is operated through its 100% owned subsidiary, Verenium Bio fuels Corporation. The segment is mainly involved in the production and commercialization of bio fuels, specifically ethanol produced from cellulosic biomass. The enzymes segment develops customized enzymes used in alternative fuels, specialty industrial processes, and health and nutrition markets.

The global market for biofuels is projected to grow by a CAGR of 12.9% during the period 2006-2015 to reach US$ 61.5 billion by 2015. Biofuels have seen a spurt in the US and the EU, with the latter planning to increase its annual production to about 10% of its liquid fuels by 2020. The United States has set up an ambitious target to produce about 8 billion gallons annually by 2012 and about 40 billion gallons by 2022. Though the energy companies are widening their portfolios to include biofuels, the move is fraught by significant challenges such as types of fuels to be used, regulations and regulatory approvals, increased usage of land for cultivating biofuel crops and diversion of food crops for fuel production which is resulting in the increase of food prices.

Author: Paul Chapman, Analyst