Exxon backs off project on biofuels from algae
Firm, which highly promoted plan, shifts to carbon capture, hydrogen
After advertising its efforts to produce environmentally friendly fuels from algae for over a decade, Exxon Mobil is now quietly walking away from its most heavily publicized climate solution.
Exxon has slashed its support for Viridos, a biotech company based in La Jolla, Calif., that operated as the oil giant’s key technical partner since it began its algae push in 2009.
With Exxon funding drying up and difficulty finding other backers, the biotech firm laid off 60 percent of its staff on Dec. 27, according to Viridos executives. The biotech company said it is still moving forward with algae research.
Exxon, meanwhile, has also halted funding for a multimilliondollar algae project at the Colorado School of Mines at the end of last year, after supporting the work for eight years. Another Exxon-backed venture with the National Renewable Energy Laboratory is set to end within weeks.
Exxon confirmed that it’s pulling back on funding for algae in favor of other technologies now being worked on by its Low Carbon Solutions division. “At this point we have other programs that are ready for deployment,” said Vijay Swarup, Exxon’s senior director of technology who ran algae research.
“We need to get on the deployment curve for carbon capture, for hydrogen, for biofuels. Algae still needs some more work.”
It’s a remarkable shift for Exxon. The allure of biofuels made from algae is that they would potentially generate less than half the emissions of petroleum.
The production and use of Exxon’s oil and gas ultimately generates about 630 million tons of heat-trapping gases each year, nearly equal to the carbon footprint of Canada. The green goop has for years been prominently featured as a climate-friendly possibility in television ads and investor presentations.
Exxon is retreating from algae despite a smashing financial performance last year, in which it posted a recordbreaking $59 billion in profits. And it comes just as the algae research has shown significant progress: Viridos and Exxon achieved significant improvements in recent years, including a sevenfold increase in the productivity of algae grown in outdoor ponds, according to Viridos Chief Executive Officer Oliver Fetzer. Algae has long played an intriguing role at Exxon.
The company, more than any other, has received criticism for being the most recal
citrant on climate change, becoming the subject of lawsuits, protests and years of political scrutiny over its long-term commitment to fossil fuels even as global warming gathers pace.
As criticism poured in, Exxon frequently held up its algae efforts as one significant piece of evidence that it was serious about climate change and discovering cleaner forms of energy. “They’ve been trying to create the impression that they’re part of the solution, when they’re certainly not,” said Robert Brulle, a visiting professor at Brown University who has studied the promotional activities of the fossil fuels industry.
In an interview, Exxon officials rejected the suggestion that algae was some sort of greenwashing attempt.
Future potential
“The progress we’ve made to this point is remarkable,” Swarup said, adding that algae still has enormous future potential.
“Where we are with the algae today is further along than, quite frankly, anyone has ever been with algae, in terms of productivity, in terms of the ability to replicate the results outdoors.”
All told, the company spent more than $350 million dollars trying to develop biofuels from algae,.
While recent progress with Viridos was significant, Exxon is prioritizing other low-carbon solutions— including spending billions of dollars on carbon capture and storage — because it remains extremely challenging to produce large quantities of algae biofuels at a profit.
Exxon will invest $17 billion over the next five years on initiatives that will lower emissions and help achieve its goal of eliminating emissions from its operations by 2050. “Our objective is to commercialize technologies,” said Swarup.
“We still have a healthy portfolio of R&D programs in the lower-carbon space.”
Exxon’s flight from algae marks yet another blow in a decades-long quest to generate cleaner fuels from the aquatic organisms. The potential has long enchanted everyone from scientists to venture capitalists to oil majors.
Algae is extremely efficient at turning sunlight and carbon dioxide into lipids, which can then be extracted and processed into biofuels. Since it grows in brackish water and doesn’t require arable land, algae doesn’t compete with food crops, unlike corn grown for ethanol.
“If you just look at the rate that algae converts photons and CO2 into stuff that you can burn, they crush anything else on the planet,” said Stephen Mayfield, director of an algae biotechnology lab at University of California San Diego.
But cultivating huge quantities of algae in a way that can compete economically with fossil fuels is incredibly daunting. Dozens of companies have tried and failed. Shell, for instance, launched an algae biofuels joint venture in 2007 and then sold its stake four years later.
Efforts by Chevron and BP didn’t yield big breakthroughs. Meanwhile, numerous start-ups, including Algenol and Sapphire Energy, pivoted away from biofuels to focus on turning algae into specialty products like cosmetics and pet-food additives. Viridos has become one of the only companies remaining.
“It’s still too expensive to grow for fuel,” said John McGowen, director of operations at the Arizona Center for Algae Technology and Innovation at Arizona State University.
When Exxon barreled headlong into the stillcrowded field of algae hopefuls more than a decade ago, it announced it would spend $600 million to produce biofuels from the aquatic feedstock. Up to half of that total would flow into a partnership with Viridos (which was then called Synthetic Genomics), a start-up that had been co-founded a few years earlier by Craig Venter, a scientist famous for helping to decode the human genome.
Despite its deep pockets, Exxon suffered a rocky start like most other algae-biofuel aspirants. Just months into the work, it began building a 4.5acre pilot project at its Baytown refinery on the outskirts of Houston.
Exxon constructed several ponds, ranging from the size of a bathtub to a one-acre cylindrical pond with a paddle wheel to circulate the water. The project cost an estimated $15 million.
While it showed that algae biofuels could be produced outdoors, the Baytown facility could never hit their critical milestone of producing one gallon of algae oil in a day, according to former insiders from Exxon and Viridos.
In and out of the lab
Algae that performed well in the lab struggled outside, where temperature and lighting were less predictable and invasive organisms could devour the algae.
By mid-2012, the project was shut down and Exxon’s algae ponds were later backfilled.
Viridos, with Exxon’s backing, went back to the lab and continued tinkering with various algae strains. In 2017, the companies trumpeted a big breakthrough: They figured out how to double the lipid content— the stuff that is eventually turned into biofuels— in a particular strain of algae.
The companies began testing its strains in outdoor ponds that Viridos built in the California desert near the Salton Sea.
Emboldened by the progress, Exxon declared in 2018 that it would target commercial production with the ability to produce 10,000 barrels a day of algae biofuels by 2025.
An Exxon press release from this period quoted Swarup heralding the push into “lower-emission technologies to help reduce the risk of climate change.” That year, Swarup appeared at the South by Southwest festival in Austin to publicize the algae program.
Exxon’s marketing machine kicked into high gear. In one ad that appeared on national television, a guitar bangs out a gritty version of “Farmer in the Dell,” as the sun peaks up over massive ponds full of green liquid sloshed along by paddle wheels. The words “more energy and fewer emissions” splash across the screen.
In its most intense stretch of advertising, Exxon spent $60 million airing three of its algae commercials on national television over a 2.5-year period from 2017 to 2019.
The company also flooded Facebook, Twitter and online news outlets with algae ads. “Becoming #UnexpectedEnergy for transportation could someday be algae’s claim to fame,” declared one Facebook ad depicting white-coated Exxon scientists toiling with beakers full of green fluid.
Critics have long blasted the algae ads as greenwashing. While 10,000 barrels a day would be a smashing success for algae biofuels, it also amounts to less than 0.3 percent of Exxon’s production of oil and gas.
“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,” wrote congressional investigators in a scathing September report following a year-long probe of fossil-fuel industry disinformation by the House Committee on Oversight and Reform..