Credit crisis may delay biofuels development

A global pull-back from bank lending may dent the commercialization of biofuel technologies to replace conventional gasoline, said the chief executive of U.S. cellulosic ethanol firm BlueFire Ethanol.

A credit crisis which claimed more bank victims on Monday has raised project finance costs and made ambitious targets to replace fossil fuels with renewable energy sources look less achievable.

"Longer term, yes... the issue of capital may slow us down," Arnold Klann told Reuters on Monday.

BlueFire Ethanol was hoping alternative investors including hedge funds may bridge any shortfall in bank lending, he added.

A global transition to renewable sources of energy, including waste, to replace gasoline and wind and solar power to replace gas and coal-fired power generation, is meant to cut carbon emissions and improve security of energy supply.

The credit crisis could slow that transition both through more costly finance and by diverting subsidies from renewables, which are often more expensive than conventional fossil fuels.

U.S. Democratic presidential candidate Barack Obama on Friday said that he may have to scale back his U.S. energy investment plans, if elected, in order to help pay for a planned $700 billion financial market bailout.

Click here to read more

Source: Reuters