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Exxon’s Algae Dry Hole ($300 million greenwashing failure continuing)

By Robert Bradley Jr. -- December 16, 2020

“That points to another potential challenge [to algae fuel commercialization]: the availability of land. NREL’s model for a commercial-scale algae facility calls for 5,000 acres of open-air algae ponds plus an additional 2,000 acres for support facilities. Yet all that land would produce only a limited amount of fuel.” [E&E News, below[

“Algae nevertheless serve a purpose for the company, [Robert] Brulle said. ‘They’re not selling you algae. They’re selling you, there’s good guys at Exxon,’ he said. ‘You don’t need to regulate us, you don’t need to sue us. We’re good guys.’ [E&E news, below]

Although nothing like the fall of once mighty General Electric (GE) under Jeff Immelt, the post-Lee Raymond Exxon Mobil is a sad corporate governance story of missed market opportunities and a wrong turn toward political correctness. Both, in fact, are part of the contra-capitalism disease where imaging replaces reality, imprudence grows, and rent-seeking replaces Good Profit.

In the case of Exxon Mobil, a lack of innovation allowed the independents to discover and perfect current drilling technology (hydraulic fracturing), which Exxon Mobil then tried to hijack with its purchase of TXO in 2009 for $30 billion. That failed miserably with a $40 billion writedown last month, most associated with TXO assets.

Another failure, begun in 2009, when oil prices were at a peak, involves Exxon Mobil’s $300 million bet (to date) on biofuels as a competitor to oil in transportation. A recent E&E News ‘Energy Transitions’ article by Benjamin Storrow, Exxon’s climate fix is algae. Experts say it won’t work (November 2, 2020) tells the story.

Exxon Mobil Corp. debuted a television ad dubbed “Energy Farmer” in 2017. An electric guitar belts out a searing rendition of the children’s tune “The Farmer in the Dell” as company scientists slog through ponds of algae, peer at an oozy substance beneath microscopes and fill test vials with florescent green liquid.

A printed script overlays the scene: “Algae. A renewable source of energy. ExxonMobil is researching it. To revolutionize biofuels. For more energy. And fewer emissions.”

Biofuels represent one of Exxon Mobil’s primary answers to climate change. In television ads and presentations to investors, the company showcases it as an example of its dedication to cutting greenhouse gases. But after more than a decade of research, serious questions remain about Exxon Mobil’s biofuel efforts….

Burning money on inferior energy is what Honest Lee Raymond would never have done.

Exxon Mobil is the only major oil company looking at algae as a potential source of biofuels. Scientists say there is good reason for that. The technology, while technically feasible, is wildly expensive.

“It’s like I give you $1 million and you convert it to $1 bills, and you light it on fire to make energy,” said Avigad Vonshak, a professor at Ben-Gurion University in Israel who has studied algae for decades. “I think it will be from stupid to nonsensical to believe that in any given time it will be an economically feasible process to extract fuels from microalgae.”

Poor Exxon Mobil can’t even get away with greenwashing!

The question facing Exxon Mobil today is whether biofuels are a real climate solution or just green washing. The company says biofuels could reduce commercial transportation emissions by 50%. That assessment is shared by many energy analysts, who believe biofuels could be an important tool for greening hard-to-decarbonize sectors like aviation. But many experts doubt algae will become a major source of that biofuel, saying other alternatives are more likely to compete on cost.

Critics contend Exxon Mobil’s spending on algae research represents a drop in the bucket compared with its efforts to boost oil and gas production…. Internal company documents estimate the additional oil and gas would increase Exxon Mobil’s emissions by 21 million tons annually, or by about five coal plants. That figure does not include emissions associated with customers burning all that additional oil and gas (Climatewire, Oct. 6).

Massachusetts Attorney General Maura Healey has seized on Exxon’s biofuels program as part of her lawsuit against the company, writing in the suit, “These ads constitute a highly effective greenwashing tactic, because they send the false and misleading message ExxonMobil is working to reduce its greenhouse gas emissions, when in fact, the Company is increasing fossil fuel production, and its profitability turns on its sales of fossil fuels, which necessarily increase the greenhouse gas emissions that are driving dangerous climate change impacts.”

The company’s bet on greening its existing business reflects a calculation that Exxon is best served by playing to its core strengths. Biofuels and carbon capture preserve the value of the company’s existing assets, essentially offering them a second life in a world where oil and gas consumption is significantly reduced. Pipelines and refineries would still be needed in a world running on biofuel.

Exxon first bet on algae in 2009 when oil prices were above $100 per barrel. Then came the fracking revolution, and prospects are grim.

But by then the world had changed considerably. The advent of hydraulic fracturing and horizontal drilling sent oil prices plummeting and drove scores of biofuel companies into bankruptcy. Algae researchers, meanwhile, found other profitable uses for their product, which is now used in everything from fish feed to high-quality polymers to human nutraceuticals. Some scientists believe algae-based biofuels are possible, but they say government investment is needed to make the technology viable. Algae are likely to mirror renewables in that it will take decades to come to fruition, Stephen Mayfield, a professor of biology at the University of California, San Diego, wrote in an email.

“Fuel is the cheapest commodity on the planet, so it will likely be the last product from algae to be commercialized, but if we stay on the path we are on now, we will eventually get to the efficiencies that allow algae biomass to be used as a biofuel,” he wrote. “I doubt very much it will be because of any single discovery, and almost certainly not one made by Exxon ;-).”

Doherty expressed doubts algae-based biofuel could compete on a cost basis at scale. “Unless they see the intervention that we’ve seen in road fuels, you won’t see massive penetration of biofuels in hard-to-abate sectors,” Doherty said. “Why would an airline, which is thin on margin, switch to a four times more expensive fuel unless they are required to? That’s for basic biofuel. Then algae is next level.” …

But many of the same traits that made algae attractive to Exxon also present challenges. An ongoing study carried out by the National Renewable Energy Laboratory in Arizona shows why.

High evaporation rates in arid regions can cause saline levels to rise to dangerous levels for algae, and removing the salt is expensive. NREL assumes a commercial-scale facility in Arizona would need to dispose of the salty water by injecting it deep into underground wells, much as oil and gas drilling operations do, significantly adding to the overall costs.

Minimizing costs would likely require using fresh water or building facilities in areas like the Gulf Coast, where evaporation rates are lower, the researchers said.

That points to another potential challenge: the availability of land. NREL’s model for a commercial-scale algae facility calls for 5,000 acres of open-air algae ponds plus an additional 2,000 acres for support facilities. Yet all that land would produce only a limited amount of fuel.

NREL demonstrated daily production last year in Arizona of 15.9 grams per square meter, with a goal of reaching 25 grams in 2030. At that production rate, Exxon Mobil would need a facility at least NREL’s size just to reach its 10,000-barrel-a-day goal, said Vonshak, the Israeli researcher.

“It doesn’t work. The numbers don’t fit,” he said.

Jeremy Martin, a senior scientist who studies transportation fuels at the Union of Concerned Scientists, was similarly pessimistic. Algae-based fuel may yet become an alternative to high-value petrochemical products, which would aid the world’s attempts to green the economy, he said.

“But the premise that this technology will fuel a significant share of transportation, even for aviation, remains very much in doubt,” Martin said. “If this is their answer for liquid transportation fuels, it tells me they are not serious about replacing petroleum in this space.”

Exxon Mobil’s PR push has continued unabated.

In one, an elementary-aged girl queries an Exxon Mobil researcher about her work. When the girl asks why Exxon is studying algae, the researcher responds, “We’re looking for alternative forms of energy that are better for the environment for your generation.” Exxon Mobil spent a total of $1.5 billion on corporate promotion across all media over the last decade, according to Kantar Media filings reviewed by Robert Brulle, a researcher at Brown University who tracks climate denial funding. That sum exceeds its spending on algae-based research. Algae nevertheless serve a purpose for the company, Brulle said.

“They’re not selling you algae. They’re selling you, there’s good guys at Exxon,” he said. “You don’t need to regulate us, you don’t need to sue us. We’re good guys.”

Appendix:Does Exxon Know Something About Biofuel That Its Peers Don’t? (Haley Zaremba, OilPrice, January 28, 2020)

Oilprice has been reporting on the long, drawn-out death of the dream of algal biofuel for years. A field once crowded with startups and hyperbolic promises of industry disruption and energy innovation, the pool has all but dried up. The incredible abundance of microalgae (there are approximately 70,000 species) and the species’ incredible resilience and ability to acclimatize to seemingly any environment seemed to make it the perfect candidate for the kind of cheap, efficient biomass an economically viable biofuel model needs. What’s more, the fact that it could be grown in the sea or in a lab and not on land that would otherwise be used to grow food crops (as in the case of corn- and sugar-cane based biofuels), made it an especially promising field of research. But, as it turns out, all these promising traits just weren’t enough to make the promise of algal biofuel a reality.

In practice, making the model commercially viable just hasn’t been possible. As Robert Rapier reported back in 2018 in his “Algal Biofuel Obituary,” the process is just far too expensive. While these biofuel startups have focused on making the process more affordable by decreasing inputs and maximizing output, and even turning to gene editing and CRISPR to make the algae itself more biologically suited to fuel production, it simply hasn’t worked, and any promises that a breakthrough is just around the corner have proven to be empty ones. 

While algal biofuel research was all the rage ten years ago, by 2012, Shell had ended its $12 billion Brazilian algae biofuel venture, news had dried up of BP’s $10 million deal with bioscience firm Martek, and Chevron’s five-year partnership with the government-funded National Renewable Energy Laboratory had produced no significant breakthroughs. By early 2018, Chevron’s website had gone from promising that algae biofuel development was ‘still in the research stage’ to openly admitting its work was unsuccessful, documents the Harvard Political Review

The author, Haley Zaremba, concludes:

Ultimately, algal biofuel simply requires far too many finite inputs–“too much fertilizer, too much water, and too much energy” — in an era when all of these inputs are already at a premium and will continue to become scarcer as the world gets warmer. Unless ExxonMobil truly does have some aces up its sleeves that the greater scientific community is unaware of, it’s highly likely that their algal biofuel program, like almost all the others before it, will soon go the way of the dodo. 

One Comment for “Exxon’s Algae Dry Hole ($300 million greenwashing failure continuing)”

  1. Mark Bahner  

    “hydraulic fractionation” –> “Hydraulic fracturing” is the proper term.


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