Genetics Pioneer Craig Venter and Exxon Claim Algae Biofuel Breakthrough (Again)

We’re still not much closer to commercialized algae biofuels.

Photo Credit: CSIRO creative commons

by Eric Wesoff
June 21, 2017

Every few years, J. Craig Venter of Synthetic Genomics and Exxon issue a joint proclamation about progress in biofuels derived from algae. Venter gets funded, Exxon gets green cred, breathless articles get written in the business press, and we are once again reminded that algae is the fuel of the future.

Venter has made brilliant contributions to modern genetics. He was part of the team that sequenced the second human genome.

Still, the team of Exxon and Synthetic Genomics have been working on algal biofuels since 2009, and although they are claiming a biofuel "breakthrough" in their latest release, the time frame for commercialization verges on generational as opposed to the decade-scale promises that have been made. Exxon called this a $600 million investment in 2009.

According to the most recent release, the partners have developed an algal strain that has "more than doubled its oil content without significantly inhibiting the strain’s growth." The research team claims to have modified the algae species Nannochloropsis gaditana to stretch the algae’s oil content from 20 percent to more than 40 percent. (That 40 percent figure has been tossed around by other researchers in recent years, as well.)

The release is careful to stress that this is deep research and "a proof-of-concept approach." Despite the laudatory articles being written, we are not much closer to commercial biofuels derived from algae oil.

In 2009, current U.S. Secretary of State and former Exxon CEO Rex Tillerson said that the venture might not produce real results for another 25 years.

“We’re still at the research phase in this program,” cautions Vijay Swarup, a vice president at ExxonMobil, as quoted in Forbes. “It’s not just doubling [lipid production], but it’s understanding why it doubled and how it doubled," he said. "There’s still a long way to go in making an algae that can produce even more fat, live comfortably in saltwater pools outside, and be processed into fuel for cars, planes and trains."

The release notes that an objective of the collaboration "has been to increase the lipid content of algae while decreasing the starch and protein components without inhibiting the algae’s growth. Limiting availability of nutrients such as nitrogen is one way to increase oil production in algae, but it can also dramatically inhibit or even stop photosynthesis, stunting algae growth and ultimately the volume of oil produced."

Bloomberg notes that the team "searched for the needed genetic regulators after observing what happened when cells were starved of nitrogen -- a tactic that generally drives more oil accumulation. Using the CRISPR-Cas9 gene-editing technique, the researchers were able to winnow a list of about 20 candidates to a single regulator -- they call it ZnCys -- and then to modulate its expression."

As we've reported, from 2005 to 2012, dozens of companies managed to extract hundreds of millions in cash from VCs in hopes of ultimately extracting fuel oil from algae.

The promise of algae is tantalizing. Some algal species contain up to 40 percent lipids by weight, a figure that could be boosted further through selective breeding and genetic modification. That basic lipid can be converted into diesel, synthetic petroleum, butanol or industrial chemicals.

Today, most of the few surviving algae companies have had no choice but to adopt new business plans that focus on the more expensive algae byproducts such as cosmetic supplements, nutraceuticals, pet food additives, animal feed, pigments and specialty oils. The rest have gone bankrupt or moved on to other markets.

The Exxon-SGI partnership is one of the few remaining algae biofuel efforts. 

According to some sources, an acre of algae could yield 5,000 to 10,000 gallons of oil a year, making algae far more productive than soy (50 gallons per acre), rapeseed (110 to 145 gallons), jatropha (175 gallons), palm (650 gallons), or cellulosic ethanol from poplars (2,700 gallons).

The question remains: Can algae be economically cultivated and commercially scaled to make a material contribution to humanity's liquid fuel needs? Can biofuels from algae compete on price with fossil-derived petroleum? 

Once capital needs, water availability, energy balance, growing, collecting, drying, and algae's pickiness about light and CO2 are factored in -- the answer, so far, is an emphatic no.

Here's a recently compiled list, by no means complete, of algae companies attempting to pivot away from biofuels. 

There are many pieces to the algae puzzle that seem like afterthoughts, but which are actually crucial to the economics -- including co-products, nutrients, harvesting, drying and conversion technology. System design and algae type (which seem to be the focus of this and most discussions) are important, but not the only components.

Considering the immense technical risks and daunting capital costs of building an algae fuel company, it doesn’t seem like a reasonable venture capital play. And most -- if not all -- of the VCs I’ve spoken with categorize these investments as the longer-term, long-shot bets in their portfolio. But given the size of the liquid fuels market, measured in trillions of dollars, not the customary billions of dollars, it makes some sense to occasionally take the low-percentage shot.