Exxon to develop biofuel from algae

The energy giant to invest $600 million over the next 5 to 6 years, even as it says renewable energy will only be a small part of global energy.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

To buy or not to buy?
From a 1997 Mercury Cougar to a 2009 Honda Pilot, 8 readers tell us why they decided to buy a new car or keep their old wheels.
What's most important to you when choosing where to live?
  • Good jobs
  • Affordable homes
  • Top schools
  • Low crime
  • Things to do

LONDON/HOUSTON (Reuters) -- Exxon Mobil Corp will invest $600 million over the next five to six years on trying to developing biofuel from algae, even though the oil major has said renewables will be only a small part of global energy supply.

Exxon (XOM, Fortune 500), placing its largest financial bet on renewable fuels, is forming a research and development alliance with Synthetic Genomics Inc, a privately held company that focuses on gene-based research, the company said Tuesday.

The project, which would cost billions to fully develop, is in its initial stages, so commercially viable biofuel made from algae would be many years away, Exxon told reporters on a conference call.

"We need to be realistic," said Emil Jacobs, vice president of research at Exxon. "This is not going to be easy, and there are no guarantees of success."

Spending on the algae fuels project will require only a fraction of Exxon's annual capital budget of $25 billion to $30 billion, but it will be the world's largest biofuels development project of its kind, said Craig Venter, genome pioneer and founder of Synthetic Genomics.

Exxon's algae research will not likely silence critics who have argued that the oil major needs to sharpen its focus on renewable and cleaner-burning fuels, but it is a step in the right direction, said Fred Burke, president of Johnston Lemon Asset Management.

"I think it's terrific," Burke said. "It indicates to me that they are reaching out and trying some alternative ideas when frankly I didn't have the idea that they were doing that before."

Even though renewable energy sources are forecast to show rapid growth, crude oil, gas and coal will meet nearly 80% of global energy needs through 2030, Exxon said in its latest energy outlook.

Building in California

As one of its first steps, the Exxon and Synthetic Genomics plan to build a research facility in San Diego, the companies said.

Other companies, including Europe's largest oil company by market value, Royal Dutch Shell Plc (RDS.A), are also researching the possibility of generating motor fuel from algae, but all parties agree a commercial solution is years off.

Exxon said it reviewed the viability of all other types of biofuels and determined the algae project was best after considering factors including environmental performance and economies, Jacobs told reporters.

Biofuel from algae would have a key advantage over existing biofuels in that it would not compete with food crops for land, thereby meeting energy needs without pushing up food costs.

To make biofuel from algae, sunlight and a large source of carbon dioxide would be needed. Exxon said it could source its carbon dioxide for the research product from power plants, natural production or refineries.

In the past, Exxon has been skeptical about green energy such as wind, biofuels and solar power and has supported research that questioned the scientific basis of man-made climate change.

The company also fended off proposals that it invest in renewable fuels at an investors' meeting in May.

Shares of Exxon rose 25 cents, or less than one percent, to $65.95 in afternoon trading on the New York Stock Exchange. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.