Enter Shell

Shell steps into biofuel production through Brazil joint venture
By Kris Bevill | July 22, 2011

Oil giant Royal Dutch Shell plc is entering into the ethanol production arena through a joint venture formed with Brazilian sugar and ethanol producer Cosan Ltd. The $12 billion venture is named Raízen, a combination of the Portuguese words for root (raíz) and energy (energia), and is now the third largest fuels company in Brazil. The company will produce 2.2 billion gallons of ethanol annually, as well as 4 million tons of sugar and up to 900 MW of electricity from sugarcane bagasse. It will distribute its ethanol internationally to Shell’s nearly 4,500 retail service stations initially and plans to expand its distribution market in coming years to include exports to other key markets.

Shell has previously been a significant distributor of ethanol, including cellulosic ethanol produced at Ottawa-based Iogen Energy’s demonstration facility. Shell has invested heavily in Iogen Energy as part of its strategic biofuels development program and transferred its commercialization rights related to Iogen to Raizen as part of the joint venture. Shell CEO Peter Voser says the joint venture with Cosan further advances his company’s plan to play a major role in biofuels production and distribution. “We are building a leadership position in the most efficient ethanol-producing country in the world,” he stated. “Low-carbon, sustainable biofuels will be increasingly important in the global transport fuel mix.”

As part of the joint venture, Shell transferred approximately 5.6 million shares of its stock in Codexis Inc., a California-based technology firm dedicated to developing biocatalysts for advanced biofuels, among other applications. As a result, Raízen is now Codexis’ largest shareholder. “We look forward to the opportunity to work with Raízen in the development of biofuels,” says Codexis President and CEO Alan Shaw. “With access to feedstocks and experience in ethanol production, Raízen has the potential to accelerate future commercialization of renewable fuels.”

—Kris Bevill