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Financial Times: Shell ‘five years from biofuel of plant waste’

By Ed Crooks in London
Published: November 7 2007 03:29 | Last updated: November 7 2007 03:29

Royal Dutch Shell hopes to have a “second generation” biofuel, which can be produced from plant waste rather than food crops, on the market in five years, the company said on Tuesday.

Graeme Sweeney, the head of fuels development, set the objective as he announced an expansion of Shell’s collaboration with Codexis, a California-based biotechnology company, to work on enzymes for extracting fuel from plant matter.

Separately, Range Fuels, a US company based in Colorado, on Tuesday broke ground on the country’s first second-generation ethanol plant, which will produce fuel from wood-chips and waste from Georgia’s pine forests.

It expects to have the plant in operation next year, in the first phase producing about 25m gallons of ethanol a year, or roughly 1,600 barrels per day: the size of a typical small first-generation ethanol plant.

Second-generation fuels are seen by their supporters as a solution to the problems of today’s biofuels, such as ethanol from corn and biodiesel from vegetable oil.

Jean Ziegler, an adviser to the United Nations, last month described the use of food crops for fuel as “a crime against humanity”.

Shell said its work on biofuels with Codexis, which began a year ago, had produced “positive early results”. It would give no further details, saying they were commercially sensitive.

It will take an equity stake in Codexis of an undisclosed value, and take a seat on its board.

Shell denied that the deal suggested that its work on biofuels with Iogen, a Canadian biotech company, had been disappointing.

Shell announced in April 2004 that Iogen “is successfully producing the world’s first cellulose ethanol fuel available for commercial use”, when its demonstration plant opened, but the two companies are still studying the feasibility of a full-scale commercial plant.

Mr Sweeney said: “I believe we are five to 10 years away from substantial volumes of second-generation biofuels but we will work to see what we can do to bring that forward.”

Codexis has been supplying enzymes for the pharmaceutical industry, using its technology to conduct what it calls “directed evolution”.

Alan Shaw, the president of Codexis, said: “I would like to think we can get there in five years, not 10.”

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