ExxonMobil to invest up to $600 million in algal fuels R&D; partnership with Synthetic Genomics; biggest biofuels investment to date

In California, ExxonMobil, the last of the oil majors to commit to a major investment in biofuels, announced that its Research and Engineering unit will invest $300 million into in-house algae research, and up to an additional $300 million in La Jolla-based Synthetic Genomics, the genetics firm founded by J. Craig Venter that has been working on algae-to-energy research since 2005.

SGI has developed techniques for harvesting algal oils, and will focus research on increasing lipid content by manipulating algal strains. The ExxonMobil investment in SGI is contingent on the meeting of R&D goals, according to a report in the New York Times.

“This agreement between SGI and EMRE represents a comprehensive, long-term research and development exploration,” said Venter. “We are confident that the combination of our respective expertise in science, research, engineering and scale-up should unlock the power of algae as biological energy producers in methods and scale not previously explored.”

“After considerable study, we have determined that the potential advantages and benefits of biofuel from algae could be significant,” said Emil Jacobs, EMRE’s VP of R&D.

The venture is presented as a research collaboration rather than a commercialization effort at his stage, and could be classified to some extent opposite a $500 million investment made in 2007 by BP in the Energy Bioscience Institute. Chevron has also previously partnered with Solazyme and the National Renewable Energy Laboratory on research efforts in the algae-to-energy field. But for sheer magnitude of investment, the focus on a single bioenergy feedstock, and the focus on a single R&D partner in Synthetic Genomics, the announcement is without parallel in biofuels history.

It may not be possible to interpret this investment as, in itself, a new and imminent path towards algal fuel commercialization, but it can be regarded as confirmation that ExxonMobil, after a famously long delay, has entered the renewable energy arena, and is placing its bet on algae.

What does this bode for other high-profile algae-to-energy companies?

“We think it’s good for algae, and good for us,” said Tim Zenk, VP of Corporate Affairs for Sapphire Energy. “The research collaboration announced today sends a loud and clear message that drop-in-replacement liquid transportation fuel produced from algae, above all other biologic choices, is the most viable option to replace crude oil.  Algae fuels have significant environmental benefits over crude oil with lower carbon emissions, and are scalable to help nations transition to a secure energy future.”

Algae 2020 author Will Thurmond was similarly bullish. “Exxon-Mobil’s $600 million dollar commitment to algae based bio-crude and biofuels,” Thurmond said, “represents another affirmative commitment by major petroleum companies, research laboratories, private investors and governments that are looking beyond the research and development phase, and are now entering the next stage to scale up and build out industrial-scale systems based on innovative, emerging and disruptive technologies.”

Pressure has increased on ExxonMobil in recent years to make a stronger commitment towards renewable energy, including a series of resolutions made by members of the Rockefeller family that have been voted down at the last two annual meetings of the company. But ExxonMobil has been famously late to several parties that have proven in the end to be land-ofice business for the oil giant, including a 15-year wait after the discovery of the Gulf oil reserves to join SoCal, Texaco, and the formerly independent Mobil in the formation of Aramco.

The investment of up to $600 million by the world’s largest independent oil company into algal fuels R&D is sure to dominate headlines for some time to come. Combined with the increasing focus on biofuels at BP and Shell (including Shell’s investment in Codexis and algae developer Cellana, and BP’s JV’s with DuPont, British Sugar and Verenium), it emphasizes that corporate investment in biofuels may yet overshadow public sector spending on algal fuels, despite stimulus bill spending on renewable energy. (Congress recently earmarked $35 million in spending for algal fuel commercialization research).

Further, it confirms the critical role that oil majors will continue to play in the commercialization phase of biofuels development.

It also provides evidence that the informal alliance formed in the early 2000s with the environmental movement at the expense of Big Oil has proven unwise, and that the petrochemical industry may well represent, for the best of biofuels developers and investors, one of the few reliable sources of capital that has an ongoing strategic interest in liquid fuels. “It’s the smartest source of capital and maybe the only exit,” Biofuels Digest editor Jim Lane said at the Advanced Biofuels Development Summit in Washington, DC last April.

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