The evidence of that was ample at the Cleantech Forum in San Francisco this week. Through keynote speeches and panel discussions, the conference emphasized opportunities in the traditional energy industry and a growing symbiotic relationship between cleantech developers and big energy companies.

Behind the trend

Several forces have emerged in recent years that have been contributing to this trend. First off, venture capitalists have been shying away from investing in cleantech startups in areas like new types of solar panels, or biofuels. Many of the investors have yet to make their money back, due to the long timelines and large capital requirements needed for the companies to mature. It could also be that “righteous investing” gave them blinders to good investments.

With the lack of investments from VCs, startups are increasingly looking to corporations to help them with funding. And the companies that tend to be interested in investing in next-generation energy technologies, are — not surprisingly — the traditional energy companies. For example, natural gas provider Encana recently backed thermoelectric tech startup Alphabet Energy, Shell has been hunting for startups through its GameChanger program, and Total has made a variety of investments into cleantech companies over the years, including SunPower.

Meanwhile, the emergence of abundant and cheap natural gas has changed the energy game in the U.S. It’s providing traditional industry jobs to many states, and has been embraced by the Obama administration as a clean energy opportunity. There will be massive opportunities when it comes to selling next-generation technologies to natural gas firms and helping natural gas providers avoid environmental problems.

The growth of the renewable electricity sector will be tied to natural gas. Solar and wind generation can’t produce power around the clock, and utilities will have to match clean power with 24/7 energy like natural gas. Natural gas proponents have stepped up efforts to form alliances with renewable energy players, some of whom see the pairing as a practical approach to promote clean power generation.

Cleaning up fossil fuels

Energy executives “are all excited about the unconventional oil and gas in North America, and they know it will only take one or two environmental disasters for the game to be over,” said Wal van Lierop, co-founder and CEO of cleantech venture capital firm Chrysalix Energy Venture Capital, when I caught up with him at the Cleantech Forum.

To gain public confidence, comply with regulations and, in some cases, reduce risks and production costs, oil and gas producers are hunting for technologies that clean up wastes, recycle water and boost production. And if any of these technologies can earn a low-carbon designation and help with public relations, then all the better. The Texas Tribune ran an interesting story this week that looked at oil companies attempts to recycle dirty water from oil production.

Chrysalix is fond of backing companies that can serve oil and gas, as well as mining, companies. It’s invested in GlassPoint Solar, which designs steam generation equipment to help oil companies boost production; Axine Water Technologies, which offers a way to get pollutants out of wastewater from industrial operations and cities; and Seair, a public wastewater treatment company whose CEO, Ric Charron, spoke about his experience working with oil and gas companies at the cleantech conference.

While helping oil and gas producers boost production and win public support isn’t the same as saving the planet, van Lierop argued the results are no less worthwhile: “It’s a very important goal to ensure that you clean up traditional energy sources.”

Fossil fuels not going anywhere

The oil and gas industry is here to stay for a very long long time. Strong federal support for oil and gas exploration — part of President Obama’s “all of the above energy strategy” — continues to protect entrenched energy players and allows oil and gas companies to continue their grip on transportation and electricity generation. These companies operate at such a massive scale that it’s hard to a tiny startup to compete with them.

Fossil fuel companies are partly investing in renewable energy sources as a defensive move. It’s a hedge against any quick change in government policy and public sentiment. Chevron made some small investments in renewable energy technologies, and probably was glad it didn’t invest more when it realized later that its investments weren’t as lucrative as it had expected. The growth of the biofuel business, in particular, will require the support of major oil industry players.

Some venture capital investors maintain that cleantech investing is still a financially viable option — that a cleantech 2.0 investing wave will come some day in the future. But for now, in a year when “cleantech” has become a dirty word, it makes sense for cleantech companies to go make friends with the dirty fossil fuel industry.

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As a Friday present for its more enterprising fans, the Finnish firm announced the release of what it calls a ’3D-printing Development Kit’, or 3DK, for the back shell of its Lumia 820 handset. Here’s how Nokia community and developer marketing manager John Kneeland described it:

“Our Lumia 820 has a removable shell that users can replace with Nokia-made shells in different colors, special ruggedized shells with extra shock and dust protection, and shells that add wireless charging capabilities found in the high-end Lumia 920 to the mid-range 820.

“Those are fantastic cases, and a great option for the vast majority of Nokia’s Lumia 820 customers. But in addition to that, we are going to release 3D templates, case specs, recommended materials and best practices — everything someone versed in 3D printing needs to print their own custom Lumia 820 case.”

This makes Nokia unique among major handset manufacturers, at least so far. Yes, there are many 3D-printing schematics out there for iPhone cases, for example, that use Apple’s official specifications. However, they are not part of the iPhone.

Embracing inevitability

What Nokia has done here is to invite a certain type of user to build a component of its product. In doing so, the company is hewing to its historical course of openness – you know, the one it was so keen on before the Microsoft partnership, when it tried to accelerate development of the Symbian platform by open-sourcing it. That was all about software, and Nokia messed up by not being timely in its code releases.

This is about hardware, and Nokia can rightly claim to be in the vanguard here. Bear in mind that Lumia smartphones run the closed Windows Phone platform — by partnering with Microsoft rather than Google, Nokia sacrificed openness on the software side. By releasing the 3DK (a neat term, by the way), the company is reintroducing that customizability in its hardware and potentially stimulating a whole new ecosystem that may actually feed back to its own internal development efforts.

Nokia is effectively outsourcing rapid prototyping to its customers. As Kneeland puts it: “You want a waterproof, glow-in-the-dark phone with a bottle-opener and a solar charger? Someone can build it for you — or you can print it yourself.”

But there’s another aspect to this that Kneeland doesn’t mention. If you view the mass adoption of 3D printing as an inevitability – whether it be through people all owning their own 3D printers or, more likely, paying by usage at a local 3D-printing store – then it follows that many more people will start ripping out and replacing static components of various devices, such as smartphones.

If that happens, then many less skilled practitioners of the art will start messing up said devices with parts that just don’t fit as well as they should. Nokia’s 3DK release should reduce that risk for customizers of Lumia 820 phone shells, making it more likely that they will remain satisfied with the overall product experience. It’s like releasing a solid SDK, only for hardware, and it’s a smart move on many levels.

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The 7 MW pilot project is built by Fremont, Calif-based GlassPoint Solar, and will be crucial for the four-year-old GlassPoint to validate its concentrating solar thermal technology, says Rod MacGregor, CEO of GlassPoint Solar.

The company is building the project for Petroleum Development Oman, which is a joint venture between the government of Oman, Royal Dutch Shell, Total and Partex. On Tuesday GlassPoint plans to announce a $26 million round of investment from Shell, RockPort Capital, Nth Power and Chrysalix Energy Venture Capital.

The project is only the second for GlassPoint, which built a 300 KW system for Berry Petroleum in central California in early 2011. But the Middle East is where GlassPoint wants to be. It’s the mother lode of oil production and where natural gas, which has historically been used to produce steam for oil extraction, remains expensive. Natural gas in the U.S., on the other hand, is too cheap right now to make solar steam production an attractive option, MacGregor said.

GlassPoint set out to design equipment for producing steam that is then injected by high pressure into the ground to loosen and thin the sticky oil in rock fissures. The use of steam to recover more oil from the field isn’t a new concept, but using solar energy to produce steam is a more novel approach. Many companies that are developing similar solar thermal equipment for electricity generation also are targeting the oil recovery operation. BrightSource Energy, for example, built a 29 MW project at a Chevron oil field in California last year.

GlassPoint’s solar steam equipment uses steel mirrors to concentrate the sunlight onto water-containing steel pipes to produce steam. The set up is similar to the equipment used by much bigger rivals such as Abengoa Solar and Areva. What sets GlassPoint’s design apart is the glass structure that seals each row of mirrors and pipes and protects the equipment from strong wind, sand, dust and humidity. Those same conditions present challenges to any kind of solar steam or electricity generation equipment and require more frequent cleaning.

MacGregor compares his company’s equipment design to that of a greenhouse. Growers “try to get as much light into a greenhouse while protecting the plants from the environment. That’s similar to what we do,” he said.

In addition to the glass shield, GlassPoint’s technology is designed to use low-quality water that likely contains crud from the oil field.  In comparison, solar steam equipment from rivals typically requires very pure water to run, or else their pipes will be clogged by the crud, MacGregor said. Eliminating the need to treat water saves costs.

MacGregor declined to disclose the cost of building the Oman project, which can produce, on average, 50 tons of steam per day. The company contracts with factories to produce the various components for its solar steam equipment. MacGregor plans to use the new round of funding to hire more engineers and people to work on finances and government relations.

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Voser said the world’s energy demand will triple by 2050 instead of double – as some have projected – if people don’t conserve energy and use it more efficiently. He cited China, along with the U.S., as examples of how the government is promoting policies to manage energy demand.

While he also mentioned China’s ambitious plan to increase its use of renewable energy such as wind and solar, he isn’t so bullish about the prospect of alternative sources playing a big role in meeting people’s energy needs. Voser said he hasn’t seen innovations that can speed up the adoption of wind and solar to make a significant dent in the global energy mix. Wind energy, for example, has been around for 30 years, yet its share of the energy market is tiny, he pointed out.

“From the innovation side, the key we need to work on is to shorten the delivery time to get to a sizable percent of the total energy market. We haven’t cracked it on the innovation side,” Voser said. He spoke mostly in generality and didn’t much hone in on what types of innovations should happen to boost clean energy use (and replace fossil fuels).

Shell has set up a venture capital fund that has invested in a variety of energy companies, which are mostly in oil and gas and a few in areas such as ocean power and building materials. The oil giant also is investing in carbon capture and sequestration demonstration projects in places such as Canada and Australia. Such technology remains expensive and risky, and there is no clear policy to make the investment worthwhile, Voser said.

He was pressed to name some “crazy big bets” that Silicon Valley should work on during a question-and-answer session. Though he declined to speak specifically about a particular source of renewable energy, he did say a breakthrough in storing electricity is key.

He was also non-committal in his view of electric cars. Asked whether he would ever buy one, he said that’s a possibility because he figured the world will offer up cars of many stripes, whether they are powered by gasoline, hybrid technology or electricity. “Why shouldn’t I drive an electric car? But, if the electricity in the U.S. predominantly comes from coal, then I’ll not buy one.”

But since he was speaking to a crowd with many people from Silicon Valley, Voser was keen to point out that Shell is big on investing in innovations.  When he became CEO in 2009, he said, he decided that the company would work more closely with startups with promising technologies and help commercialize them.

To illustrate that Shell is big on innovations in general, Voser cited the company’s joint technology development work on information technology with companies such as IBM. Shell also is working on R&D projects with Chinese oil and gas companies, he said.

“We are trying to use information technology in order to drive some of our innovations,” Voser said. Shell and IBM banded together in 2010 to develop a Linux supercomputer that Shell would use to do seismic and other analyses for oil and gas exploration.

But he also professed to have found it challenging to figure out how to work with startups in places such as Silicon Valley and not get bogged down on “figuring out who makes the biggest profit off of the IP.”

Photo courtesy of Shell

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We’ve had eight Presidents since Richard Nixon promoting energy independence, and 19 congresses have supported each president’s intentions to achieve energy independence, said Hofmeister (The Daily Show made the same argument in this hilarious clip). But we are more dependent on foreign sourced energy now then when we started this conversation in 1973 on the heels of the first oil embargo, he said. While we have 2-year and 4-year mental models for how public policy should be organized and presented, the reality is that “energy extends over decades. It’s a critical problem,” said Hofmeister.

For example, just look at the recent decision of solar manufacturer Evergreen Solar to move its manufacturing to China, pointed out Hofmeister. Evergreen had been building a tax payer-subsidized manufacturing plant in Massachusetts, with an allocated $58 million aid package, until it decided to move its plant plans to China because of cheaper labor costs. The state reportedly invested $31 million directly in Evergreen and hopes to ‘clawback’ about $13 million of that, reports the Boston Herald. Hofmeister said that the U.S.’s short term policy led to Evergreen leaving for China because China’s policies are “more predictable, more understood and more supported.”

The U.S. needs a long term plan that looks at the short, medium and long term, said Hofmeister, and if it’s not it’s just “wishing into the wind.” And actually Hofmeister does have a suggestion for a solution for a long term plan that he thinks will help with the U.S. 2 and 4-year political cycles. Hofmeister wants the creation of an Energy Resources Board, that would be an independent regulatory commission and would set the parameters of the energy supply system over the next 50 years.

In terms of the stimulus package, Hofmeister said the $80 billion for green energy was “brilliant, and execution was good,” but that for the world’s largest economy with the oldest energy infrastructure, that’s a “frittering number,” which is “directional,” but “not material.”

However we solve the problem, Hofemister pointed out that we need to remember the sheer economics and volumes of the dependence on fossil fuels in the U.S.:

• The U.S. consumes 20 million barrels of crude oil to get through the day.
• That’s the consumption of 10,000 gallons of oil a second to get through the day.
• The U.S. uses 60 million cubic feet of natural gas per day.
• If we stack the cubic feet of natural gas on top of each other we’d go to the moon and back 25 times every day.
• We use 1200 train car loads of coal every hour.
• That’s one train car load of coal every three seconds, producing 49 percent of our electrons every day.

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Report author Andrew Soare interviewed more than 300 executives for the report, and finds that startups in the field have started to distinguish themselves as winners or losers in terms of larger rounds of investment and corporate partnerships. At the same time, startups are changing their game plans to better fit the difficult market, shifting focus to specialty chemicals and postponing plans for mass-producing biofuels that will have to compete against oil on price.

So who’s on top? As with its report last year on the biofuel sector, Lux pulls together data on revenue per employee, patents, performance metrics, production capacity and the like to place contenders in terms of maturity and potential. Winners in both categories included net-generation biofuel stock market bellwether Amyris, cellulosic waste-to-isobutanol startup Gevo, algae-to-fuel startup Solazyme, long-time cellulosic ethanol developers Mascoma and Poet, and two startups making succinic acid and butanol — U.S.-Canadian firm BioAmber (formerly DNP Green Technology) and China’s Cathay Biotechnologies.

As for low-ranking companies, Lux didn’t pull punches, putting some dozen little-known names in its immature, unpromising quadrant, indicating the judgment that they’re “highly risky as investment, licensing, partnership, or merger and acquisition target(s).” Those included two “caution” warnings for U.K.-based ethanol producer TMO Renewables and French biocatalyst developer Proteus.

Many of the top-ranking startups have deep partnerships with established players in the field. Cellulosic ethanol maker Mascoma just got $50 million from oil refining giant Valero to build a plant in Michigan, along with an agreement to buy the fuel from it. Amyris has backing from French oil giant Total and P&G, Gevo has letters of intent from Total subsidiary Total Petrochemicals and United Air Lines, and Solazyme has investment from Chevron and a partnership with European food and consumer products giant Unilever.

They’re not alone, of course. Craig Venter’s Synthetic Genomics got $300 million from ExxonMobil for algae biofuel research, LS9 has backing from Chevron and products giant Procter & Gamble, and Codexis has pharmaceutical partnerships and a piece of Shell’s massive Brazilian biofuel partnership.

The Lux report breaks down startups according to technologies: fermentation, gasification, synthetic biology, chemical processes, crop enhancement, and algae processes. Some headline-level conclusions include:

• Fermentation’s digestion is improving. Companies like TetraVitae and Genomatica are engineering organisms that can eat more and more feedstocks and pump out more and more valuable chemicals, like succinic acid and butanol. Companies emerging from the biotechnology sector like Amyris and Verdezyne are also producing interesting new chemicals.
• Gasification is good for waste. It looks like heat beats bugs for converting trash into useful hydrocarbons. Even though that uses a lot more energy, it could be worth its while if startups can squeeze efficiencies out of the process. And remember that trash doesn’t cost anything — in fact, processors can usually get paid by the ton for taking it off the hands of government and private trash management authorities.
• Algae hasn’t proven anything yet. Lux says that only a handful of algae-based biofuel startups will survive — the report singles out Solazyme and Algenol — amidst a host of competitors that haven’t solved the key problems of harvesting and processing algae in a cost-effective manner.

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Image courtesy of Argonne National Laboratory via Creative Commons license.

Statoil has agreed to fund the research and development of a process conceived by BAL to turn macroalgae growing off the coast of Norway into ethanol, said BAL, a 3-year-old company based in Berkeley, Calif. Statoil will finance demonstration projects which, if proven successful, will lead to more funding from Statoil to bring the ethanol to market. Statoil plans to sell the ethanol in Europe.

While BAL figures out the right steps to transform seaweed into ethanol, Statoil, the largest oil and gas producer in Norway and one of the largest offshore oil producers in the world, will figure out the logistics of farming seaweed. The companies declined to disclose the investment figures.

Daniel Trunfio, who became CEO of BAL in May after 25 years with Royal Dutch Shell and running Adventine Renewable Energy in Illinois as its chief operating officer, told us the startup’s strategy is to seek industry partners with the money and resources to commercialize its technology from the start.

“If you think about where the second-generation [biofuel] companies have struggled, it’s having the balance sheet to commercialize the technology,” Trunfio said. “I have no doubt that our R&D milestones will be met. Now we have a platform to commercialize the technology.”

BAL’s technology will extract the carbohydrates from seaweed and break down the sugar for fermentation. The company has worked on using E. coli to do the work, but wants to develop the yeast to do the same, he said. Using yeast can be more cost-effective because of the long history of using yeast to produce ethanol, he added.

Seaweed has one advantage that cellulosic materials such as switchgrass and woodchips don’t have: It doesn’t have lignin, so breaking it down to make sugar isn’t as difficult, Trunfio said.

Growing seaweed isn’t a novel idea, and commercial seaweed farming has been around since the 1950s, he said. Those farms are growing seaweed for food while BAL plans to grow non-edible species.

About 1,500 to 2,000 gallons of ethanol can be made from one acre of seaweed, he said. In comparison, 992 gallons of ethanol can be made from one acre of sugarcane in Brazil and 420 gallons from one acre of corn, he said. Trunfio declined to discuss manufacturing costs.

BAL has lined up two other projects. The Chilean government has given the startup $7 million to grow seaweed and turn it into ethanol. The company started its seaweed farming operation in May. It’s also working with DuPont to turn seaweed into isobutanol. DuPont won an $8.8 million grant from the ARPA-E program at the U.S. Department of Energy for the $17.7 million project. A joint venture between DuPont and BP called Butamax Advanced Biofuels will bring the technology to market.

Overall, BAL has received close to $34 million in private equity, project financing and government funding, including money from Statoil. BAL’s investors include Austral Capital, X/Seed Capital and Energy Capital Management

David Baker, a professor of biochemistry at the University of Washington in Seattle, founded BAL. His two co-founders hailed from Japan, though both of them, Yasuo Yoshikuni and Yuki Kashiyama, earned graduate degrees at UC Berkeley and have worked in the U.S. Yoshikuni is the chief science officer while Kashiyama heads the company’s Chilean operation.

Image courtesy of Snowball team and BAL.

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U.S. Patent #7,794,969, AKA “Methods and Compositions for the Recombinant Biosynthesis of n-Alkanes,” covers the Cambridge, Mass.-based startup’s process to engineer “photosynthetic microorganisms for the direct synthesis of diesel molecules.” While other biofuel startups are using genetically engineered organisms to convert  sugar into drop-in fuels (see Amyris and Solazyme for examples), Joule says its organisms need only sunlight, water and carbon dioxide — a fact that’s key to its low-cost claims.

Joule’s “helioculture” systems — glass containers of algae and water laid out in a manner similar to solar panels, with pipes to take the resulting biofuel to storage tanks — are meant to be modular and scalable, CEO Bill Sims told us last year. Unlike many other algae biofuel efforts that rely on harvesting and processing the algae to make fuel or other products, Joule’s microorganisms keep pumping out fuel in a continuous process. Craig Venter’s startup Synthetic Genomics is working on engineering algae to do someting similar, and has a $300 million research project underway with oil giant ExxonMobil.

Joule’s pilot project in Leander, Texas is now producing ethanol, rather than diesel, and can produce up to 10,000 gallons per acre per year, though Joule said it’s shooting for 15,000 gallons per acre. As for its diesel product, Joule plans to start pilot production by year’s end and open a commercial plant in 2012.

Joule raised a $30 million series B round in April, adding to the “substantially less than $50 million” CEO Bill Sims said the company had raised as of July 2009, when it came out of stealth. The company was founded in 2007 at the Flagship Venture Labs, an arm of Cambridge-based Flagship Ventures.

Joule’s claims have been greeted with some skepticism by biofuel industry analysts, no doubt making the new patent — along with another on “Hyperphotosynthetic Organisms” approved on August 31, and Joule’s numerous other patent filings — interesting nighttime reading for its biofuel competitors.

Joule’s claim of being able to produce 15,000 gallons of diesel per acre is particularly aggressive. Henrik Scheller, director of cell wall biosynthesis at Lawrence Berkeley National Laboratory’s Joint BioEnergy Institute, has said that algae growing in sunlight can reasonably produce about 4,385 gallons of fuel per acre per year, and that’s by harvesting and processing the algae itself. Joule declined our interview request on Tuesday — we’re curious to hear how the company addresses questions about its high-volume, low-cost claims.

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The move — first reported via anonymous sources by Greentech Media last month —makes sense, given the startup’s strengths. Alameda, Calif.-based Aurora’s main technological advantage lies in the work they’ve done to selectively breed strains of algae. Those strains are higher in omega-3 fatty acids than most, and can also out-grow typical strains by a factor of two to one in pilot ponds in Florida and Mexico, CEO Gregg Bafalis tells me. Otherwise, the company is using technologies that have been around for decades: open raceway ponds, well-known algae harvesting crushing techniques, conversion into omega-3 EPA for pharmaceuticals and high-protein feed for fish farms and other purposes.

But while Aurora had first hoped to take its better-growing algae straight to biofuels, it’s decided that the technology for doing so is “really at least several years out,” Bafalis told me. Monday’s shift has been presaged by big changes in the company, with CFO Joe Geesmand and CEO and former Shell veteran Robert Walsh leaving in February, and the company raising $15 million and appointing new CFO Scott McDonald in March. Bafalis, a veteran of both the traditional energy industry and biofuel startup Green Earth Fuels, joined the company in June.

“I’m familiar with biofuels and living off of government subsidies,” he said. “When I joined this company I was concerned with building a business on fundamentals that could stand on their own.” The company hopes to have its first demo facility in Australia, which will use CO2 from natural gas and fertilizer plants to grow algae in eight 1-acre ponds, operating by year’s end, and plans to get to commercial scale by the first quarter of 2013, Bafalis said. While the company does hope to see biofuel made from its algae in the future, that’s off the table for current commercialization plans, Balfalis said.

It’s a hard fact that no algae biofuel company can claim cost-competitive production to date. The key challenges lie in cost-effective ways to harvest the algae from water, and convert it into fats for conversion to fuel, without using more energy at higher cost than you’d yield from the final fuel product.

Other algae startups have targeted markets outside fuel to get started. Solazyme, which has technology for growing algae in the dark by feeding it sugar, has been working to adapt its algae oils for consumer products giant Unilever to replace palm oil, and last week said it had received an undisclosed investment from the consumer products giant. The insight isn’t limited to algae-based biofuels. Khosla Ventures-backed LS9 has a deal to produce industrial chemicals for Procter and Gamble, even as it has continued to claim breakthroughs in turning cellulosic materials into fuels.

These smaller markets could help biofuel companies in their challenge to compete with the fossil fuel industry on its own terms. Not only must biofuels compete with their fossil fuel equivalents, they also have to be able to scale production to the billions of gallons. Without that kind of scalability, most algae biofuel companies are just “playing” with their investors money, according to Craig Venter, whose Synthetic Genomics is in a $600 million algae biofuel research program with ExxonMobil.

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Codexis CEO Alan Shaw spoke to us Wednesday, and while he couldn’t say just how the deal would impact the company’s short-term financial picture, he did say that Codexis would be working on converting 100 percent of the sugarcane plant — the one-third that’s sugar, and the rest of the cellulosic material that’s left over — into biodiesel through a direct fermentation process. Just what share of the overall venture’s production might come from Codexis technology in the coming years he couldn’t specify.

Still, Codexis is “already significantly engaged” in the Brazilian project (an MOU was signed in February), and expects to have its technology working there next year, Shaw said.  While Shell has turned over its 16-pecent stake in the Redwood City, Calif.-based company to the yet-to-be-named venture, it and other investors (Chevron, Pfizer, General Electric) are holding onto their Codexis stock, he added.

“This joint venture is very much about Shell’s future,” Shaw said. Indeed, Shell says it will invest $2 billion in the project, and will retain rights to buy back Cosan’s half in ten years. The new joint venture is expected to add some 2 billion liters (528 million gallons) of annual production capacity to Cosan’s already existing 18 billion liters (4.75 billion gallons) per year in ethanol sales, and Shell and Cosan together have 4,500 gas stations to sell the fuel.

Shell has had a 3-year partnership with Codexis, and accounted for 76 percent of its revenues in 2009. Codexis was one of the first biofuel startups to link its fortunes so publicly to Big Oil, but it has since been followed by others. IPO candidate Amyris has a partnership with French oil giant Total; Chevron has invested in LS9 and Solazyme as well as in Codexis; and Exxon is in a $600 million partnership with Craig Venter’s Synthetic Genomics to genetically engineer algae for biofuel. Other biofuel startups are inking deals with agriculture giants: Gevo, the Khosla Ventures-backed cellulosic ethanol company that filed for an IPO this month, has a partnership with Cargill.

Shaw said he believes Codexis is ahead of its competitors in getting its technology into the massive refining, transport and distribution networks needed to bring biofuels to market at a scale that matters. “This joint venture is real, it’s happening today, one of the world’s largest oil companies has put its weight behind it,” he said.

Shell also turned over its stake in Canadian biofuel company Iogen Energy, which will also be part of the new joint venture. Codexis is working with that company to turn wheat straw into ethanol, in what Shaw dubbed a “North American solution” to match Brazil’s interest in cellulosic sugarcane waste for fuel.

Beyond its partnerships with Pfizer and other pharmaceutical companies, other projects underway for Codexis include carbon capture, and Shaw said the company expected to announce a “big brother partner” in that field some time this year.

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