Exxon Makes Big Investment in Algae Biofuels

(image: embrownny.files.wordpress.com)

An artist's conception of a massive alage biofuel farm. (image: claytonbodiecornell.greenoptions.com)

The world’s largest publicly traded oil company, Exxon Mobile, is investing $600 million in the world’s smallest plants, the AP reported today.  Exxon just announced a partnership with biotech company Synthetic Genomics to develop transportation fuels from algae.

Fossil fuels, such as coal, natural gas, and petroleum, as well as their many derivatives, such as gasoline, number 2 home heating oil, diesel, and propane, are formed from the remains of organisms that lived and died millions of years ago. They are primarily made of hydrocarbons, which are the principal ingredients of all living organisms, especially plant life. There’s no reason why, with the proper processing, fuel can’t be made from currently living organisms, skipping the whole buried-in-the-ground-for-millions-of-years part. And that’s what biofuels are—fuels produced from plants or other living organisms.

Biofuels can—and have been—produced from many different types of plant matter, including corn, switchgrass, and wood chips. Exxon appears to be betting on algae–tiny water-dwelling plants often called “pond scum” (though most algae lives in salt, not fresh, water). Why algae? To begin, algae are ferociously efficient at converting sunlight and carbon dioxide into algae—they can actually double their weight several times a day under the right conditions.  Fast growing means algae can produce a lot of biomass to convert into fuel; some estimates suggest that algae can produce 15 times more oil per acre than other biofuel crops like corn or switchgrass. Also, since they “feed” on carbon dioxide (using the energy from sunlight to convert it into useful organic compounds through the process of photosynthesis), algae capture carbon dioxide, helping with global warming and offsetting carbon emissions from industry. Even better, algae also needs other nutrients, such as those found in sewage. Theoretically, you can run pipes from your sewage treatment plant and from you coal-fired power plant directly to your algae tanks, cleaning up your air and water at the same time you produce fuel.

There are other algae advantages, too. For example, depending on the strain or variety, they can be grown in salt water, freshwater, contaminated (or otherwise unusable) water, even on land unsuitable for other crops. Unlike growing corn for biofuel, which cuts it into the supply of crops for human and animal food, growing algae does not appear to involve any opportunity costs or tradeoffs. Algae can also be grown in various artificial arrangements that allow for denser packing, and hence more energy per acre. For example, Glen Kertz of Valcent Products has a closed, vertical system for growing algae that he claims allows the production of 100,000 gallons of algae oil (the “ingredient” used to make algae biodiesel) per acre, as opposed to 30 to 50 gallons per acre from using corn or soybeans for biodiesel.

Glen Kertz's vertical rack algae growing system. (image: static.huddler.com)

Scientists at Kertz’ company also say that depending on the type of algae and the “diet” of nutrients you feed them, you can optimize the biofuel output for different purposes—jet fuel say, or diesel—depending on your needs.
Algae biofuel has a similar molecular structure to existing petroleum products. This means that Exxon can use its existing refineries to produce algae biofuels, and its existing pipelines and tankers to distribute them. The biofuels should be so similar to current fossil fuels that they can be used in the same way.

Exxon is not the only major oil company investing in biofuel. Royal Dutch Shell PLC is partnering with Canadian Logen Corp. to produce ethanol from wheat straw, while simultaneously partnering with German Choren Industries to make biofuel from wood residue. BP PLC is teaming up with Verenium Corp. to build an ethanol plant using cellulose. The oil giants are even phasing down investments in other alternative energy sources in favor of biofuel—Shell’s investment in biofuel comes at the expense of its wind and solar investments, which are being scaled back.

It makes sense for oil companies to invest in non-petroleum fuels. As The HEAT Zone has explained, while there is considerable disagreement about “when” and “how fast,” nobody seriously disputes that one day, we will start running out of oil.  Smart oil companies, who don’t want to become as extinct as the organisms fossil fuels are made of, will begin looking for other energy resources to develop, exploit, and market. (After all, there’s a reason that “British Petroleum” rebranded itself “Beyond Petroleum.”)

Biofuel makes more sense for these companies than solar or wind—it utilizes much of their existing infrastructure, is used in the same way as their current products, and to a large degree, can be slotted seamlessly into their marketing and distribution. Do you care, for example, whether your gasoline was made millions of years ago or yesterday, as long as you can fill up your tank for a reasonable price? Whereas solar or electric requires these companies to reinvent themselves as power companies or utilities, biofuel (once the technology for making it is fully mature and cost effective) requires little more than new product brand names.

Of course, oil companies are not exactly betting the farm on biofuel yet—Exxon’s $600 million investment is less than 2 percent of what it’s spending on fossil fuel capital and exploration projects in 2009. On the other hand, as they say in law enforcement, “follow the money.” When big, smart, profitable companies start investing hundreds of millions of dollars, even if it’s only a small percentage of their gross, it’s time to pay attention.