Biotech startup Codexis eyes emerging carbon market

By Poornima Gupta

SAN FRANCISCO (Reuters) - U.S. biotechnology company Codexis, which is partly owned by Royal Dutch Shell Plc (RDSa.L), is expanding its product offerings to target the emerging market for carbon capture and storage, President and Chief Executive Officer Alan Shaw said on Tuesday.

Coal-fired power plants provide about half of the electricity in United States, but account for about 80 percent of carbon dioxide emissions from domestic power generation, making them top targets for environmentalists.

Coal companies, governments and environmental activists are hoping for breakthrough technologies that will help trap, transport and bury underground carbon dioxide, the main greenhouse gas blamed for global warming.

The Redwood City, California-based company has been mostly focused on the pharmaceutical and biofuels sector, but is now actively looking for a partner to help the company market an enzyme that helps captures carbon dioxide from smokestacks of coal-fired power plants.

"Coal is not going anywhere fast," Shaw said. "There's an urgent need to take carbon dioxide out of coal-fired power stations."

Enzymes are specialized organic substances that act as catalysts in biochemical reactions.

Shaw said the company, which also counts General Electric Co (GE.N) and Pfizer Inc (PFE.N) as shareholders, has successfully completed testing its product in the last couple of months and is looking to commercialize the technology.

"We need a partner and are actively talking" to companies, he said, citing a huge interest in the market for such a technology. "The market is meeting us more than halfway."

Codexis is seeking a partnership with an industrial equipment maker that would help engineer a system to introduce the enzyme to the carbon dioxide on the smokestacks.

A company like GE could be a great partner, Shaw said, but he declined to say if Codexis was in talks with the industrial conglomerate.

Shaw said the company plans to aggressively scale-up its plans for the carbon market in 2010.

No commercial scale projects exist to demonstrate the carbon capture and storage technology, but the European Union has pledged to have 10-12 pilot plants in operation by 2015.

The U.S. Energy Department is also providing up to $408 million in funding for two projects aimed at developing clean coal technologies.

Shaw said legislation is critical to develop the carbon market.

"They have to put a price on carbon for it to truly work," he said. The air sector has the most potential if concrete goals for carbon emissions are put in place at the international talks on climate change in Copenhagen in December, Shaw added.