Shell fuels cellulosic ethanol push with new Codexis deal

Oil giant Shell has stepped up its push into the biofuels sector, shelling out an undisclosed sum to increase its stake in Codexis, a developer of enzymes designed to enhance the efficiency of second generation biofuels.

The company announced last week that it has increased its equity stake in Codexis and will take an extra seat on the company's board. According to reports, the deal is on a similar scale to $30m (£21m) deal that saw Shell take an initial stake in the firm back in 2007.

Under the terms of the latest agreement, Codexis has agreed to work with Iogen, a biofuel developer in which Shell also holds a stake, on a project that will see Codexis' enzymes used at Iogen's cellulosic ethanol plant in Canada.

Iogen's plant uses enzymes to break down the cellulose in waste agricultural matter such as wheat straw to create sugars that are then distilled to make ethanol. It will now trial Codexis' enzymes in an attempt to enhance the efficiency of the process, which aims to create second generation ethanol that does not rely on food stocks such as corn.

Shell and Codexis said they would also expand their co-operation on research projects designed to identify enzymes that could turn biomass directly into biofuels similar to gasoline and diesel, removing the need for energy intensive fermentation processes.

“The expert Codexis team will make a real difference in the race toward full-scale commercial production of biofuel from non-food sources,” said Graeme Sweeney, Shell executive vice president, future fuels and CO2. “Better enzymes will improve efficiency and help lower costs.”

The two companies said they would work together to expand their existing research centre in the US and also open a new centre in Budapest, Hungary.