Shell Partners With Codexis on Biofuel Research

Shell and CodexisRoyal Dutch Shell (RDS.B) has announced that it will be expanding its collaboration with startup Codexis to further work on developing “new super enzymes” to convert biomass into fuel. Under terms of the five-year research collaboration, the oil giant will make an undisclosed equity investment in Codexis and will have a seat on the Redwood City, Calif.-based company’s board.

Shell and Codexis said they’ve have been working on biofuels since November of 2006, and that steady advances over the last year have led to this recent agreement. The two have been trying to develop enzymes that can break down a variety of biomass fuels into liquid fuel.

Currently, processes like cellulosic ethanol production require multiple stages with enzymes. Companies are scrambling to collapse these processes down to a single step, and engineering the right enzyme could do the trick. Venture capitalists are poring money into biofuel startups and Vinod Khosla has over a dozen biofuel investments already. And with new potential subsidies for biomass crops in the U.S. Farm Bill and an uncertain future for corn ethanol, a breakthrough in biocatalytic enzymatic technologies could be a windfall for the first company across the gate.

Codexis, founded in 2002, is privately held and has raised over $72 million in private equity from investors including Chevron, Bio*One Captial, CMEA Ventures, Maxygen, Pequot Ventures, and Pfizer.

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