Algae fuel firm once bankrolled by Exxon finds some newfunders
For over a decade, Viridos was the centerpiece of Exxon Mobil’s heavily advertised push to develop climate-friendly biofuels from algae. The oil major slashed its support for the company last year. Now Viridos, based in La Jolla, Calif., has secured funding from a newgroup of backers.
Viridos announced on Monday a $25 million round of financing from Bill Gates-led Breakthrough EnergyVentures, with United Airlines and Chevron also participating. The funding will support Viridos’s ongoing quest to boost the productivity of its algae as it aims to develop low-carbon fuels for heavy-duty transportation, including airplanes and trucks.
Viridos genetically modifies the algae to grow them faster and fatter. The company has increased the productivity of these aquatic organisms by a factor of seven, according to Chief Executive Officer Oliver Fetzer, which is more than halfway to the levels needed for commercial production.
When funding from Exxon dried up last year, Viridos cut 60 percent of its staff and shuttered its outdoor ponds in the California desert. Exxon told Bloomberg Green it shifted its focus to other low-carbon technologies that are closer to deployment, such as carbon capture.
With its newfunding, Viridos will work in the lab with its trimmed-down staff to develop and enhance its algae strains. The resulting biofuels could produce 70 percent fewer heattrapping emissions than conventional fuels, according to the company. And since the organisms grow in brackish water and don’t require arable land, they won’t compete with food crops.
The company’s approach impressed Breakthrough Energy Ventures, which led the financing round after struggling for years to identify promising lowcarbon investments into liquid fuels. “There are big segments of transportation that are very difficult to electrify,” said Eric Toone, Breakthrough’s chief technical officer. “The need for hydrocarbons and zero-carbon hydrocarbons is going to be significant for a very long time.”
Chevron sees the algae funding as a “long-term investment” that may one day contribute to its growing biofuel production, said Natalie Merrill, a senior vice president for business development. With 15 years of work already behind it, Viridos has “made some good advances” and the “potential is big” if algae can reach commercial scale, she said.
But cultivating algae in a way that can compete economically with fossil fuels is incredibly challenging. 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. Numerous start-ups, including Algenol and Sapphire Energy, pivoted away from biofuels to focus on turning algae into specialty products like cosmetics or pet-food additives.
“There’s still a lot of risk there,” said John McGowen, director of operations at an algae research center at Arizona State University. “There’s just a lot that hasn’t been demonstrated at any kind of significant scale.”
Perhaps the thirstiest market for these low-carbon fuels will be airlines, which are on track to contribute more than 20 percent of the planet’s CO2 emissions by 2050 and have fewother options to slash their footprints. U.S. airlines set a target for 3 billion gallons of sustainable aviation fuel (or SAF) by 2030.
That would represent an enormous increase. Globally, only about 80 million gallons of SAF was produced last year, according to the International Air Transport Association.
Most SAF today is derived from fats, oils and greases. “Think french-fry grease from McDonald’s,” said Michael Leskinen, president of United Airlines Ventures. But, he adds, “there’s only so much of that.”
United more than quadrupled its use of SAF last year to 2.9 million gallons. But that’s still far below 1% of the airline’s jet fuel supply.
To spur the development of new kinds of SAF, United last month launched a $100 million sustainable flight fund alongside a number of corporate partners, including Boeing, General Electric and JPMorgan Chase. The airline’s backing forViridos was supplied through this fund.
Viridos still has a challenging path ahead. Fetzer hopes the company can boost the productivity of its algae to commercial levels within about two years. After that, the next step would be to build a demonstration plant capable of producing 100 barrels of biofuels per day.
Such an endeavor would require hundreds of acres of ponds and likely cost more than $100 million to develop, according to Fetzer.
“Viridos has got hurdles, for sure,” said United’s Leskinen. “But it is far and away the world’s leading developer of algae that could be used for fuel.”