Codexis Deal Highlights Shell's Increasing Interest in Biofuels

Royal Dutch Shell upped its investment in the biofuels industry with its increased stake in Codexis, a biofuel technology company that develops super enzymes, which help turn organic materials like switchgrass and wood chips into sugar that can be used to make fuel.

Shell has been dabbling in the biofuel industry for awhile now including a partnership with HP Biopetroleum to develop biofuels from algae. But its decision to take a bigger stake in Codexis is just another example of oil producers’ increasing interest and investment in renewable energy.

Codexis, the Redwood, Calif., biofuels-catalyst developer, was considered an up-and-comer in the cleantech industry, and last April announced its intention to raise $100 million in a bid to take the company public. The company’s IPO aspirations were quashed five months later when it nixed its plans due to poor market conditions.

Shell had already invested $30 million with the company in November 2007 as part of a five-year development deal that gave the oil giant a seat on Codexis’ board. Considering Codexis’ mission, it’s not surprising that Shell as well as other investors including Chevron Technology Ventures and Maxygen took notice. The company’s aim to develop enzymes that can break down cellulosic material faster would make the process of converting agriculture waste into fuel a far more efficient and cheaper endeavor.

This latest deal injects Codexis with some much-needed dollars in a era of contracting investment in the cleantech industry while giving Shell a larger stake in Codexis and another seat on its board. Codexis now has the funds to hire more researchers in California and Budapest. The Budapest connection seems incredibly random until you consider what the Wall Street Journal points out: the city is the center of beer fermentation, an art its scientists have been trained in. It turns out that beer fermentation is pretty darn close to brewing up biofuels.