Shell, Iogen kill plans to build Canada biofuel plant

By Shawn McCarthy
The Globe and Mail

TORONTO -- Royal Dutch Shell and Iogen Corp. have killed a plan to build a next-generation biofuel plant in Canada, and the Ottawa-based technology company is laying off 150 people.

In a release Monday, the two partners said they will continue with a smaller-scale research project to development cellulosic ethanol from agricultural waste.

"Shell continues to explore multiple pathways to find a commercial solution for the production of advanced biofuels on an industrial scale," Iogen said in a release.

"But the company will not pursue the project it has had under development to build a larger scale cellulosic ethanol facility in southern Manitoba."

Iogen was once considered a world-leader in the development of ethanol from agricultural waste but has been unable to solve engineering problems that stand in the way of a commercially viable, large-scale plant.

The company was singled out for mention in Finance Minister Jim Flaherty's 2007 budget, when the government devoted $500-million to Sustainable Development Technology Canada to assist in commercialization of next-generation biofuels that use agricultural, forestry and municipal waste, rather than corn and wheat to make ethanol and biodiesel.

Iogen never tapped the fund, though other biofuel companies, notably Montreal-based Enerkem, have benefited.

In June 2010, Shell and Iogen announced they would increase investment in their joint venture company, Iogen Energy, to accelerate development of the cellulosic ethanol at its demonstration plant in Ottawa.

But at the time, the partners signaled the agreement would last only two years.

Iogen said its successful enzymes business will not be affected by decision to scale back the ethanol activity, and that it will expand its offering of enzymes used in the biofuels business.

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