Algae growing at Synthetic Genomics' labs. Credit: Synthetic Genomics

Houston-based ExxonMobil has made its first big investment into alternative energy with a $600 million deal to make fuel from algae. The company's agreement with Synthetic Genomics, of La Jolla, California, announced on July 14, is the single largest research program to date in the biofuels space. Algae as a source of fuel are attractive from an environmental standpoint because they actively consume carbon dioxide, have greater energy density than plant-based feedstocks, and can be grown on marginal land, using wastewater or ocean water. From an engineering perspective they are also advantageous, as oil companies can integrate algal biofuels into their existing infrastructure. “Most likely we'll be producing hydrocarbons that will look a lot like intermediary streams in a refinery,” Emil Jacobs, vice president of R&D at ExxonMobil Research and Engineering, said on a press conference call. The biotech company's cofounder and CEO Craig Venter explained that “one of the advances we've made at Synthetic Genomics is making cells that actually secrete the hydrocarbons into the solution, in a pure form, which potentially changes it from a farming process to a bioreactor program.” ExxonMobil's move into third-generation biofuels coincides with a degree of retrenchment on the part of rivals such as BP, who are cutting capital expenditure and operating costs on the back of plummeting profits. “I think they've very much gone back to what they would see as their core business model,” says Andrew Logan, from Ceres, a Boston-based not-for-profit organization, which tracks the environmental performance of large corporations. Also in July, London-based BP exited a joint venture with D1 Oils of London to make biodiesel from Jatropha curcas seeds. BP spokesman David Nicholas, says its other academic and commercial partnerships in biofuels remain intact. Indeed, on August 11, BP entered a $10 million alliance with Martek Biosciences, of Columbia, Maryland, to explore the potential of using the latter firm's technology for converting biomass-derived sugars to microbial oils for biodiesel production. Nevertheless, the oil industry as a whole remains firmly interested in, but not yet fully committed to, building a large-scale biofuels business. Whether ExxonMobil, long regarded as a laggard in the alternative energy space, will now engage more fully with renewable fuels is unclear. “The scale and scope of their investments are quite modest compared to the scale and scope of the challenge,” says Logan. The US Department of Energy is also renewing its interest in the area, recently committing $85 million to fund further research. Algal biofuels are still five to ten years from achieving commercial scale.