Shell and Iogen Extend Alliance on Cellulosic Ethanol
15 July 2008
Royal Dutch Shell plc and Iogen Corp. extended their commercial alliance to accelerate the development and deployment of cellulosic ethanol. Shell will increase its stake in Iogen Energy Corp., a jointly-owned development company advancing cellulosic ethanol, from 26.3% to 50%, and make a “significant” investment in technology development.
Iogen uses specialized enzymes to convert plant fiber into sugars that are then fermented and distilled to make cellulosic ethanol. The collaboration with Iogen is a key part of Shell’s strategic investment and development program in biofuels, particularly in next-generation biofuels using non-food feedstocks.
Shell’s global biofuels program also includes collaborations with Choren (on production on BTL), Codexis (on enzyme conversion) and Virent (on development of biogasoline), as well as a joint venture called Cellana (development of marine algae for vegetable oil).
Iogen’s first demonstration commercial plant opened in Ottawa in 2004. Shell is considering investing in a full-scale commercial cellulosic ethanol plant and is contributing to Iogen’s detailed feasibility and design assessment work. (Earlier post.)
I don't like these kinds of partnerships between small start-up type companies and corporate behemoths - I think it has a stifling and stagnating effect on creativity and innovation.
Posted by: ejj | 15 July 2008 at 09:36 AM
Well, that is one way to see your money to into something good. EXXON?
Posted by: Paul | 15 July 2008 at 09:54 AM
I am having a bad typing day.
Well, that is one way to see your money go into something good. EXXON?
Posted by: Paul | 15 July 2008 at 09:55 AM
It can work - it depends on what is missing - a big company will be able to supply money and may be able to supply the missing technology / management expertise, or they may just screw it up with extra process.
However, you would hope Shell really need this and will make a go of it - cellulosic ethanol would be a good thing if we could feed people as well.
Posted by: mahonj | 15 July 2008 at 12:26 PM
While past performance of oil behemoths has been monopolistic - this is one way for oil companies to make amends for past transgression - and preserve a role in future energy markets. There is no doubt that oil will be an unwanted commodity in twenty years. Replacing fossil fuel with biofuels and electric transportation is the first step in energy independence.
Next would be for Shell and other big oils to look hard at expanding their roles in solar. Solar thermal appears ready for major investments that can pay off handsomely. Large scale energy storage like CAES would be another area to examine, as well as wind, geothermal, and the as yet untapped tidal/wave energy in the oceans. And some major distributor needs to take the lead on installing E85 pumps - should that be Shell - they can expect an entirely new (dedicated) customer base of Flex-Fuel, PHEV users.
There is a lot of good that an old-school energy company can do - it simply takes a handful of people within the organization who have vision for a better future - and who want to be a part of it.
Awkward though it may be for greens, Shell should be commended for this gesture.
Posted by: gr | 15 July 2008 at 01:26 PM
Interesting. Looks like RDS is into a spectrum of technologies in the emerging biofuel markets. In times where GHG regulation is increasingly becoming certain, I think this is a smart move by Shell to carve a niche in the biofuels space & establish some IP presence. With carbon trading, there is also a possibility of offsetting some of the CO2 emissions from its Canadian oil sands business with the CO2 credits from producing cellulosic ethanol.
Posted by: Pradeep | 15 July 2008 at 11:30 PM
Pradeep:
Unfortunately carbon trading is a boondoggle so easily corruptible that any green financing it produces will be tarnished. Cap and trade profits are similar to profits from drug cartels, oil cartels, weapons cartels - filthy money predicated on a sham.
Posted by: Sulleny | 16 July 2008 at 07:21 AM
I know ethanol is a capital intensive business. If Iogen was to go large, they would have needed the capital. Then again, if their pilot projects were working well, they could have raised the capital.
Iogen was an early leader, and yet we heard very little about how their pilot projects did. I'm wondering if RDS is buying them (and 50% is virtually bought) just as a way to bury them. Iogen might not really have had the goods. I don't see RDS wanting the petro party to end.
I wonder if RDS has purchased shares from the earlier round investors who are cashing out, or if these are new shares. The critical difference is, RDS could easily buy 0.1% from any other investor for an obscene markup just to have total control, and then it is game-over for Iogen's independence.
Posted by: Healthy Breaze | 16 July 2008 at 01:09 PM
RDS has seen the end of oil writing on the wall for many years. They over stated their reserves and a former executive is on the record stating that they can get the oil, but it will be more difficult and more expensive. I think all oil companies see the future as becoming more difficult for them to supply the increasing world demand.
Posted by: sjc | 16 July 2008 at 02:05 PM
Shell, if they have good accountants, knows their market share is going to shrink. But they can stay in the game by playing the E85/cellulosic card and eventually H2 for the inevitable FCEVs. Meanwhile to fill in for lost gasoline revenues they can invest smartly in solar energy for regional distribution.
A matrix of solar thermal plants in sunbelts the world over selling and distributing electric locally and at distance via ESS. The source energy is free - storage and distribution are the only costs. Big oil could turn such a venture black in short order.
Posted by: gr | 16 July 2008 at 11:36 PM
Small sidelight: Years ago, it was observed that the fall of the mighty railroads, with air travel growth and advent of the interstate highway system, was, in part, because railroads continued to think of themselves as railroads, and didn't re-invent themselves as transportation companies. It appears that that lesson has not been lost on oil companies.
Posted by: Bob Nuner | 08 September 2008 at 11:19 AM