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Big oil firms touted algae as climate solution. Now all
have pulled funding
Biofuels
March 18, 2023
Insiders aren’t surprised as ExxonMobil, the last remaining
proponent of green algae biofuel, ends research.
![](images/images_03_22_2023/pic4.jpg)
Some strains of algae produce large amount of lipids
which can be turned into fuel relatively easily. Photograph:
Michael Macor/AP
One
by one, big oil firms have touted their investments in algae
biofuels as the future of low-carbon transportation – and one by
one, they have all dropped out. Now in the wake of the last
remaining algae proponent, ExxonMobil,
announcing its withdrawal, insiders say they are disappointed but
not surprised.
Algae research was central to Exxon’s green marketing campaigns for years,
and frequently
criticized as greenwashing rather than a genuine research effort.
But several of its former research partners told the Guardian that it was
serious about the potential of algae biofuels – explaining why it stayed
in the field long past the point at which other oil companies dropped out
– but not serious enough.
In its 12 years in the space, Exxon invested $350m in algae biofuels,
according to spokesperson Casey Norton. (Norton says that’s more than
double what the company spent on touting this research in ads.)
Even so, every algae researcher who spoke to the Guardian said a real
effort to commercialize biofuels, algal or otherwise, requires several
billion dollars, and a long-term dedication to overcoming seemingly
fundamental biological limitations of wild organisms. And no oil company
was willing to go that far.
“It’s very challenging and very expensive to bring these technologies to
market,” said George Huber, whose biofuels research at the University of
Wisconsin at Madison was funded by Exxon for years. “It’s not gonna happen
overnight. It’s great they make these commitments, but you know they need
to start putting more capital into these projects.”
He added: “They’re driven by Wall Street and they have to keep their stock
prices high and keep their shareholders happy. And usually that’s making a
large amount of money. All the oil companies have been talking about the
need to get into more sustainable things, but it’s hard to make money
with. And most of their money comes from oil.”
The appeal of algae as a feedstock for biofuels was twofold: because they
grow in large concentrations in ponds, they don’t compete with food crops
for arable land. And some strains produce large amounts of lipids – fatty
acids that can produce an oil, which can be turned into fuel relatively
easily. But competing with abundantly available and heavily subsidized
fossil fuels, particularly gas, was not so easy.
One of the biggest challenges was that wild strains of algae couldn’t
deliver the high levels of lipids needed to produce large quantities of
fuel, said Todd Peterson, the former CTO of Viridos, Exxon’s longstanding
and now former algae research partner.
That’s why Viridos was focused on genetically modifying the organisms to
maximize lipid production. And they were making real progress. The magic
formula for commercial viability of algae biofuels is a strain that can
produce 15g of oil per square meter in an outdoor environment, and one
Viridos strain had reached 10. “It’s hard to engineer an organism that is
hundreds of millions of years old to behave differently,” Peterson said.
Peterson, who worked for the company from 2013 to 2018, said he always got
the impression the scientists at Exxon that Viridos worked with were
serious about the research. “I’m disappointed,” he said of Exxon’s
withdrawal from algae, “but trying to keep an open mind. You never know
what the shifting priorities are within a company.”
Viridos laid off 60% of its workforce after Exxon’s December 2022
withdrawal from the sector, which was only revealed by
Bloomberg last month. On Monday, Viridos announced a $25m round of funding
led by Bill Gates’s Breakthrough Energy, with Chevron and United Airlines
contributing as well.
Despite making enormous progress over the past decade, most algae
researchers say algae biofuels at the sort of scale necessary to meet
current fuel demands are still at least a decade, and more likely two
decades, away. It is possible that more investment during the years in
which oil companies touted their investments in the space would have moved
the needle faster. Exxon ultimately invested just over half of the $600m
it once promised back
in 2009, according to Norton.
Multiple former Viridos employees who requested anonymity because they had
signed non-disclosure agreements said the Exxon research funding never
seemed like much, but the company would send big crews out to the algae
ponds to get video for its ads. “I would see them running and think I wish
they had given us more research funding versus spending so much on
advertising,” one former employee said.
It is not unusual for companies to shift their investment priorities over
time as markets and revenues change.
The first big investments in algal biofuels research happened during the
1970s, when oil supply was constrained thanks to the Opec embargo against
the United States, and all the oil majors plowed funds into alternative
fuels and renewable energy tech. At the time, Exxon was investing in
everything from solar and nuclear to lithium batteries and climate change
research. When the bottom dropped out of the oil market in the 1980s, all
of that stopped.
Similarly, oil majors BP, Shell, Chevron and ExxonMobil all swung big for
algae beginning in 2008, announcing hundreds of millions of dollars in
research funding. Then the fracking boom went bust in 2015, and one by one
they dropped out. Some, like Shell, continued major investments in
biofuels more broadly, but only Exxon stayed in algae.
Today, in addition to Exxon’s pullout, there are other reasons to question
algae’s promise.
The algae boom emerged at a time in the early 2000s
when it seemed like the world still needed to run on some sort of
liquid fuel, said Matthew Posewitz, of the Colorado School of Mines
and National Renewable Energy Laboratory. Posewitz’s algae lab was
funded by Exxon for eight years. “Now there’s another transition – a
lot of ground transportation will become electrified and you might not
need liquid fuels there, which means a smaller market, basically just
jets and boats.”
Posewitz credited Exxon with being a very involved
partner. “They’re paying attention to the data and influencing
research directions and informing academics of market needs,” Posewitz
said. “And that’s what you want. Sometimes academics can go in a
direction that doesn’t fulfill any market need.”
All the researchers who spoke to the Guardian agreed:
what was needed to make algal fuels a success was a longer runway and
funding in the billions – closer to what oil companies spend on fossil
fuels.
“It was great while Exxon was interested, but in the
end it’s going to take more time and investment to mature this from a
fuels perspective and they have other priorities,” Posewitz said.
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