Engineering begins on Iogen-based cellulosic plant in Brazil

By Susanne Retka Schill | October 17, 2012

Ottawa-based Iogen Energy Corp. announced an initial investment by Raízen Group to develop a commercial cellulosic ethanol project in Brazil. Raízen, a joint venture between Royal Dutch Shell and Cosan SA is the world's largest producer of sugarcane ethanol. Iogen Energy, a joint venture with Shell and Iogen Corp., operates a demonstration facility in Ottawa where it has produced over 2 million liters (560,000 gallons) of cellulosic ethanol as it refined its process since 2004.

The Raízen investment will cover the development and engineering costs associated with the front end design of a biomass-to-ethanol facility to be co-located with Raízen's Costa Pinto facility in Piracicaba, São Paulo. Using sugarcane bagasse as the feedstock, the engineering will determine the best size for the cellulosic add-on and other possible synergies with the existing facility.  

The deal comes after Raízen conducted a thorough review of cellulosic technologies. "We believe Iogen has one of the most robust, well proven, and competitive technologies in the cellulosic ethanol business", said Vasco Dias, CEO of Raízen. "This is a first step in our strategy to make cellulosic ethanol in association with sugarcane production operations. We see tremendous potential for this technology in meeting the world's growing demand for cleaner and more sustainable fuels".

"We're excited to be working with a major ethanol industry player like Raízen," Iogen Chairman Brian Foody said. "Large scale commercialization in Brazil will open the door for broader commercialization of our technology."

Raízen Energia SA is the production company of Raízen Group, a $12 billion joint venture between Shell and Brazilian ethanol company Cosan SA. Raízen produces 2.2 billion liters of ethanol annually, 4 million tons of sugar, and has installed capacity of 900 MW of electric energy derived from sugarcane bagasse. The company has more than 4,500 service stations for retail fuel distribution in Brazil, 700 convenience stores, 53 fuel distribution depots, and aviation fuel businesses in 54 airports in Brazil.

Iogen Energy announced a major layoff this spring, downsizing its payroll by 150 to 110 employees, at its Canadian R&D facility, and announced it would not pursue a commercial-size cellulosic ethanol project in Canada at this time. Shell and Iogen Corp., joint owners of Iogen Energy Corp., said Iogen Energy had agreed to a new plan that would refocus its strategy and activities, leading to a smaller development program.

Shell has been restructuring its cellulosic ethanol development efforts. This fall, Codexis Inc. announced Shell was terminating the research agreement between the two companies, although the enzyme developer received marketing rights on its CodeXyme product, excluding Brazil. Codexis, Shell and Iogen had collaborated on cellulosic enzyme development in the past. And to complete the web of relationships, when Shell and Cosan created the joint venture, Raízen, the transaction included transferring Codexis shares to Raízen, making the Brazilian ethanol producer the California-based enzyme maker’s largest shareholder.