BP, China to invest $73M in cleantech center

London's BP (NYSE: BP) and the Chinese Academy of Sciences (CAS) are moving forward with plans for a cleantech commercialization center in Shanghai, promising to jointly invest 500 million RMB ($73 million USD) in the next five years.

The center in the Pudong Science and Technology Innovation Park is expected to open in 2009 to commercialize clean technologies by researchers, universities and CAS institutes.

BP and CAS will then be able to use the technology, or earn revenue from licensing it to other companies, said Robert Wine, a spokesman for BP in London.

The Clean Energy Commercialisation Centre expects to initially have about 50 employees to help work on technologies in the fields of carbon capture and storage, coal gasification and conversion, coal bed methane, and underground gasification.

Wine said such technologies have the potential to address the cheapest, but most polluting, energy source in China.

"They're dependent on coal, and they recognize that simply sourcing coal and burning it in the traditional methods isn't the way long term," Wine said. "The center wants to find a cleaner way, which is where our technology and expertise can be used."

BP and CAS plan to each contribute staff to the center to help perfect the technologies. The 20-year project is expected to generate enough money to pay for itself after five years, Wine said. The investment and revenue are to be split 49:51 between BP and CAS.

The center still needs approval from government agencies.

"This is not a venture capital type investment," Wine said. "It's very much about the technology."

BP has invested $4.6 billion in China since the early 1970s in the fields of natural gas, aviation fuel and retail fuel stations. But in 2001, BP agreed to invest $30 million over 30 years in clean energy through a program with CAS.

In addition to that investment, BP and CAS first announced tentative plans for the commercialization center in August 2007.

"The scope in China is absolutely huge," Wine said. "That's why we're looking at China—because of the huge resources and their determination to do something with those technologies."

The center represents one of BP's largest singular investments in clean technology in China, Wine said. But it's far from the largest cleantech investment BP has made.

Last year, BP announced plans to invest $500 million over 10 years in a biofuel research program with the University of California Berkeley, the University of Illinois, Urbana-Champaign and the Lawrence Berkeley National Laboratory (see BP funds biofuel research with $500M). That project intends to look at next-generation biofuel sources.

BP is also teaming with DuPont (NYSE:DD) to invest $58 million to build an ethanol plant in England with an adjoining pilot plant for biobutanol (see DuPont and BP building biobutanol facility in U.K.). Wine said the entire plant could be converted to biobutanol if the pilot is successful.

And BP said last year it plans to invest $25 million over five years in a project with the Massachusetts Institute of Technology's Energy Initiative to research the conversion of low-value carbon feedstocks such as petcoke and coal to high-value products such as electricity, liquid fuels and chemicals while cutting carbon dioxide emissions (see MIT, BP to research clean coal technologies).

BP said it spends approximately $50 million per year in its global university research program that includes long-term partnerships with universities and research institutions in the U.K., U.S., China and Russia.

BP has tightened its cleantech focus in recent weeks, however, pulling out of wind projects in China and India to focus on the U.S. wind market (see BP, NRG start up Texas wind farm).

Wine said BP expects to have roughly 1 gigawatt of installed onshore wind capacity in the U.S. by the end of this year through projects or joint ventures.