Royal Dutch Shell plc has incresed its stake from 26.3 per cent to 50 per cent in Canadian cellulosic ethanol maker Iogen Energy Corporation, in which Shell first took an equity stake in 2002. In operation since 1974, Iogen is a privately held company located in Ottawa, Canada. 

Iogen specialises in cellulosic ethanol, a fully renewable transportation fuel made from agricultural residue that can be used in today's cars and has been producing cellulosic ethanol at its Ottawa demonstration plant since 2004. Iogen also develops, manufactures and markets enzymes used to modify and improve the processing of natural fibres within the textile, animal feed and pulp and paper industries. 

The two  companies have also announced an extended commercial alliance to accelerate development and deployment of cellulosic ethanol, with Shell "considering" investing in a full-scale commercial ethanol plant based on Iogen's proprietary technology.

Cellulosic ethanol is a second-generation biofuel made from waste, not food crops like corn -widely used in the US to make ethanol - and is much more sustainable over the long-term, as it does not take away land from food crop production, .a constraint on the potential of conventional biofuels.

Also fuel from wastes sources as wheat straw promise to reduce CO2 production by up to 90 per cent compared to conventional fuels.

For Shell its collaboration with Iogen is a key part of its strategic investment and development programme in biofuels, particularly in the 'next generation' biofuels using non-food feedstocks as Shell  businesses also include renewable energy projects including wind, solar and biofuels. Shell is a leader in the development of next generation biofuels, using non-food bio materials, alternative processes and high performance fuels.

Moreover, it is working with biofuel manufacturers to secure cost-effective supply and press for social and environmental safeguards.

Shell's global biofuels programme also includes collaborations with Choren (on production on BTL), Codexis (on enzyme conversion) and Virent (on development of biogasoline), as well as a joint venture called Cellana (development of marine algae for vegetable oil).

Iogen's first demonstration commercial plant opened in Ottawa in 2004.  Shell is considering investing in a full-scale commercial cellulosic ethanol plant and is contributing to Iogen's detailed feasibility and design assessment. Iogen already plans to start construction of a $500-million ethanol plant later this year in Saskatchewan that would use hay as a feedstock.

"We have come a long way together already on this particular technology pathway for sustainable biofuel and we will be working ever closer to meet the technical and commercial challenges facing larger scale production,'' says Dr. Graeme Sweeney, Shell executive vice president, future fuels and C02, said. ''This is a strong statement that Shell is committed to accelerating the development of cellulosic ethanol in collaboration with Iogen." 

''We are excited to see this expanded partnership'', said Brian Foody, chief executive officer of Iogen Corporation. ''This transaction sets the stage for successful large-scale cellulosic ethanol production.''

Shell is also working on meeting government mandates for biofuel and, with its experience, expertise and assets, has become the world's largest distributor of biofuels.