Biofuel startup LS9 has formed a partnership with Procter and Gamble (NYSE: PG) to develop chemicals for use in the consumer goods giant's products.

Financial terms of the partnership announced Tuesday were not disclosed. But the two said they will work on a "multi-year collaboration" to use the South San Francisco, Calif.-based startup's technology for products including "sustainable chemicals" and renewable transportation fuels.

LS9 is developing genetically engineered microbes that eat sugar and excrete fatty acid alkyl esters, hydrocarbons that match petroleum-based diesel fuel. But it has also been developing microbes to create various chemicals, spokesman Jon Ballesteros said Tuesday.

"Our vision has always been to be a market leader in both the production of sustainable chemicals and renewable fuels," he said, though he wouldn't name any specific chemicals LS9 is seeking to produce.

In addition to LS9, a number of startups are looking to take biofuel technologies and turn them toward industrial chemicals.

San Diego-based Genomatica is working on genetically engineered microbes to turn sugar into the industrial chemicals MEK and BDO (see Genomatica: Microbe-Made-Chemicals Could Save Empty Ethanol Plants).

Boulder, Colo.-based OPX Biotechnologies says it has microbes that can turn sugar or syngas into bioacrylic (see OPX Lands $17.5M for Bioacrylic, Biodiesel).

And San Francisco-based SynGest Inc. is planning to build an $80 million plant in Iowa to turn corncobs into bio-ammonia, a primary ingredient in fertilizer (see Cars Into Electricity, Corncobs Into Ammonia).

Cincinnati-based P&G said LS9 will help it reach its recently amended sustainability goals for 2012, including a pledge to sell $50 billion or more in so-called "sustainable innovation products," or products with 10 percent lower "environmental footprint" than those they're replacing.

P&G also wants to cut its energy and water use, waste and carbon dioxide emissions at its plants by 20 percent.

LS9 has been rather quiet about its progress since its 2005 founding. Tuesday's announcement is the first since October, when it named oil industry veteran Bill Haywood as CEO and announced plans to seek up to $100 million to build a demonstration plant by the end of next year (see LS9 Seeks Up to $100M Under New CEO).

LS9 has raised $20 million in equity financing from Khosla Ventures, Flagship Ventures and Lightspeed Venture Partners. While it's seeking funding to bring its technology to commercial scale, as of October it had produced only about 5,000 gallons of biofuel at a pilot fermenter at its headquarters.

Ballesteros said Tuesday that LS9 remains on track to bring its biofuels to commercial production, though he didn't specify a timeline for when that would happen.

Tags: biochemicals, biofuel, genomatica, ls9, opx biotechnologies, procter and gamble, syngest