ExxonMobil algae biofuel exit does not deter investors
Bill Gates’ Breakthrough Energy Ventures has announced a new investment in a biofuels company, in spite of the ExxonMobil algae biofuel exit late last year But critics say the technology has long featured in oil industry greenwashing campaigns and is far from a commercial reality.
In mid-March, the Bill Gates-led Breakthrough Energy Ventures, alongside United Airlines and Chevron, announced a $25 million investment into an algae-based biofuels company that ExxonMobil recently abandoned.
The promise of algae-based biofuels, unlike corn ethanol, for example, is that it could provide a liquid fuel to replace gasoline, diesel, and jet fuel, without eating up land or negatively impacting food prices.
The investment will help fund R&D for algae biofuels by Viridos, a California-based biotech company, in an effort to eventually reach “commercially deployable levels,” according to a press release.
“By establishing production sites to grow Viridos-engineered microalgae in saltwater, we are creating the foundation for a biofuel future that moves away from fossil fuels without competing for precious resources such as fresh water and arable land,” said Oliver Fetzer, Viridos Chief Executive Officer.
But algae-based biofuels remain very far from being economically or technically viable.
That was the conclusion of none other than ExxonMobil, which had positioned its investment in Viridos as the centrepiece of the oil giant’s decade-long effort to develop biofuels from an algae feedstock. At the end of last year, ExxonMobil decided to end its support for algae biofuels, cutting off funding for Viridos, which forced the biotech company to lay off 60 percent of its staff, according to Bloomberg. Exxon also eliminated its support for an algae research programme at the Colorado School of Mines.
Exxon’s exit from algae is “unfortunate,” Matthew Posewitz, a chemistry professor at the Colorado School of Mines and a longtime researcher into algae-based biofuels, told Gas Outlook.
“They gave us great resources for the lab. Their scientists were 100 percent involved with what we were doing. Weekly checking in, we had very frequent progress reports and constant research meetings,” Posewitz said, referring to Exxon’s support for his research group.
Posewitz agreed that algae biofuels are not close to commercialization, but noted that scientists have made steady progress.
“I would say people have found really productive strains in recent years that are getting very close to the productivity metrics that people have been targeting,” Posewitz said.
Numerous technical challenges remain, such as harvesting cells and separating them from water, which is expensive. Also, algae cells are “carbon thirsty,” and it can be challenging to feed them enough carbon dioxide.
“It’s easy to do in a lab, you can just bubble them with CO2. But when you start to scale up and get to larger systems — it’s harder to scale that up,” Posewitz said. Another challenge is dealing with a variety of microbes that act as predators to the algae.
“I think a lot of progress has been made. I think the field will continue to make progress,” he said. “But it is a slow long march, and you’re trying to change the world, and that’s not so easy some times.”
ExxonMobil algae biofuel: just greenwashing?
The decision ended Exxon’s campaign for its favoured and highly-touted climate solution. The amount of actual money invested was not trivial — Exxon invested more than $300 million on algae research since 2009. But that is a rounding error compared to its core business. By way of comparison, Exxon plans on spending $24 billion in 2023 alone, nearly all of it in oil, gas, petrochemicals, and refining.
While the ExxonMobil algae biofuels programme never received huge levels of funding, it nevertheless featured heavily in the company’s advertising and marketing efforts. Exxon spent $68 million promoting its algae programme, according to a congressional probe into the industry, an amount that critics say is an indication that Exxon’s biofuels investments were more about PR than about building a commercial business.
The specific goals also called into question the seriousness of the effort. Exxon had aimed to produce 10,000 barrels of algae-based biofuels per day by 2025. That would have amounted to less than one tenth of one percent of the company’s 3.7 million barrels per day of oil-equivalent production in 2022. In the Permian basin alone, Exxon is ramping up oil production to 1 million barrels of oil equivalent per day by 2027.
“Even if they had achieved maximum success, it would be about 10,000 barrels per day. That would be the best-case scenario. It never could have made a contribution to climate solutions at the scale they were talking about,” Richard Wiles, president of the Center for Climate Integrity, a climate accountability watchdog group, told Gas Outlook. “So, it was just clearly a part of their whole disinformation apparatus. Obviously, they used it primarily as a greenwashing tool.”
That was also the conclusion of the congressional inquiry into the history of climate deception by the oil majors. In a memo published last year, the House Oversight Committee unearthed email exchanges and documents indicating that ExxonMobil knew its algae investments were very far from a commercial reality even as it continued to heavily advertise and promote its biofuels programme.
“This focus on advertising unproven technologies that may not scale for decades, if at all, suggests that these advertisements served to distract the public from Exxon’s continued fossil fuel business,” the September 2022 Committee memo stated.
Exxon has since moved on from algae. More recently, it has laid out ambitious plans — still light on specifics, however — for blue hydrogen and carbon capture and storage, technologies that received new incentives as part of the Biden administration’s Inflation Reduction Act passed into law in 2022.
In a statement to Gas Outlook, ExxonMobil said that it has spent billions of dollars over the past 15 years on various research and development projects and technologies to reduce emissions.
“Our business requires that we make decisions around the commercial viability of R&D projects. In terms of R&D, we have always taken a commercial-scale, portfolio approach,” said Todd Spitler, a spokesperson for ExxonMobil. “Algae still has real promise as a renewable source of fuel, but it has not yet reached a level we believe is necessary to achieve the commercial and global scale needed to economically replace existing sources of energy.”
He added that ExxonMobil spent approximately $350 million on algae over a decade, and has “seen remarkable results in the science.”
Posewitz of the Colorado School of Mines saw Exxon’s involvement as serious. “To us, it was always about science all the time,” he said, referring to his work with Exxon scientists. “We didn’t really participate nor follow the advertising campaign that was happening.”
As for the future of algae biofuels, Posewitz said that electrification of the ground transportation sector leaves the liquid fuels opportunity more narrowly concentrated in aviation and other niche industrial sectors. That actually makes the challenge more “tractable,” he said, leaving open the possibility that algae biofuels may one day offer a modest, but important, climate solution. Rather than having to solve the entire liquid fuels problem, the task is more manageable if it focuses more narrowly on aviation, for example.
“Because you’re going for a much smaller total quantity, it makes it way more practical. That it could actually deliver,” he said.
He cautioned that other technologies are also vying for aviation, such as green hydrogen, and it remains unclear if algae can ever bring down costs to the point where it becomes feasible.
“If it’s gonna be price competitive, it’s binary — it’s either cheaper or it’s not,” Posewitz said. “And if it’s cheaper, everybody uses it, and if it’s not, nobody does.”
That echoes the goal of Breakthrough Energy Ventures’ renewed interest in Viridos. In its announcement, Breakthrough and its partners mentioned sustainable aviation fuels multiple times. Breakthrough and Viridos did not respond to questions from Gas Outlook.
But if algae is to ever play a role, it will require a lot more money, likely billions of dollars and maybe a few decades of development.
In the meantime, it will no longer feature in oil industry advertisements.
“Now that Exxon’s out of it, and algae is no longer just a prop in their disinformation campaign, maybe we’ll get real research and figure out of this has any meaningful role at all,” Wiles said. “It’s not that algae is bad per se, although it looks like it’s a long way from meeting anything. It’s just the way [Exxon] used it that was so unethical.”