WIR PART THREE

Alternative energy started to come of age this week. BP, the oil giant famed for going 'beyond petroleum' struck two landmark deals this week. The first was with Associated British Foods and chemical giant Du Pont, to build a bioethanol plant at BP's existing chemical works in Hull. AB Foods will supply wheat feedstock and take by-products coming the other way for conversion into animal feed. BP will produce bioethanol and Du Pont will produce bio-butanol. In a separate deal, BP signed up to a joint venture with biofuels minnow D1 Oils to produce biodiesel from jatropha oil. Jatropha is an oilseed tree which grows fast, yields a lot and whose oils are inedible - perfect feedstock for biofuels. Although the £31.8m capital commitment BP is making to this venture is peanuts for such a vast company, it effectively safeguards D1's future. Other biofuels companies have been caught in a vicious margin squeeze, with input costs under pressure from soaring vegetable oil prices, while selling prices remain relatively stable. Last week, China Biodiesel had a profit warning and this week Biofuels surrendered to its bankers. D1 looks the best placed, and its shares rank good value.