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Exxon’s algae

Financial Times

By Ed Crooks

Published: July 15 2009 03:00 | Last updated: July 15 2009 03:00

Energy Source (Ed Crooks): Exxon, the west’s biggest oil company, has launched a new research programme into producing biofuels from algae, in a break from its general antipathy towards alternative energy.

At first sight, this looks a pretty bizarre thing for the company to be doing. Rex Tillerson, Exxon’s CEO, has been consistently sceptical about biofuels, even the advanced “second generation” variety. (Or, as Steven Chu, US energy secretary, described them to the FT, “fourth generation” biofuels.)

In fact, it is not as odd as it might seem. For a start, Exxon is looking into biofuels, which have some resemblance to its traditional oil business, particularly in terms of the principal markets – road and air transport – and some of the skills required for production, such as an understanding of fuels standards and performance. Venturing into the electricity business with solar and wind power, as BP has done, is more of a stretch.

BP is retaining its biofuels research programme, including a joint venture with Verenium, the US biotech company, even as it cuts back its investment in alternative energy overall.

Secondly, Exxon’s research programme is into algae, which look like one of the most promising sources of advanced biofuels. Shell has taken a similar approach, as has Chevron.

Algae have the potential to avoid most of the problems of conventional biofuels production, such as competition with food crops, and in principle can have dramatic effects on carbon dioxide emissions, even consuming emissions from sources such as coal-fired power plants.

The principal problem is that the fuel yields from algae are still too low for it to be even close to commercially viable. Crack that, and you have a product that will change the world.

Third, Exxon has signed up Craig Venter, the pioneer of DNA research, as its partner. Mr Venter has a spectacular record of achievement in his work on the human genome: the FT described him as a “scientific superhero” for some. If you were betting on anyone to make biofuels from algae a reality, you would probably bet on him.

Even so, producing commercial quantities of biofuels from algae will not be easy. Commercial viability is said to be five years away, according to the optimists; the pessimists say it always will be. Mr Venter has been working on fuel research since 1995.

www.ft.com/energysource

Copyright The Financial Times Limited 2009

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