Is Exxon Going Green?

It isn't big, but at least it's a start.

ExxonMobil (NYSE: XOM  ) , which has received more than its share of criticism for its refusal to involve itself meaningfully in renewable energy, announced on Tuesday that it'll become a partner in a $600 million biofuels effort. It will team up with California company Synthetic Genomics in an effort to use algae to develop transportation fuels.

According to an Exxon official involved in the project, "the real challenge to creating a viable next generation biofuel is the ability to produce it in large volumes." In addition to being suitable for such high-volume production, algae can be grown in places that are inappropriate for other crops. At the same time, it also consumes greenhouse gases, thereby reducing the likelihood of climate change. Also, algae-based oil approximates the molecular structure of conventional petroleum products, such that Exxon can create fuels from the algae at its existing refineries.

In announcing their venture, officials of the companies were careful to emphasize that the project will not come to fruition overnight. As Exxon senior vice president Michael Dolan noted, "significant work and years of research and development still must be completed." Exxon's Emil Jacobs also identified the key steps that lie ahead in the project:

  • identifying suitable low-cost algae strains
  • deciding upon the optimum way to grow the algae
  • determining the best methods for harvesting the algae

Beyond ExxonMobil's joint venture, several other major energy and chemicals companies are active in the development of biofuels. For instance, Royal Dutch Shell (NYSE: RDS-A  ) (NYSE: RDS-B  ) has toned down its efforts in wind and solar to focus on biofuel projects. At the same time, BP (NYSE: BP  ) , the second-largest European energy company, is preparing to join Verenium (Nasdaq: VRNM  ) to build a cellulosic ethanol plant in Florida.

In addition, only a couple of weeks ago Dow Chemical (NYSE: DOW  ) announced that it would also join a project to use algae and carbon dioxide in biofuel production. Not to be left out, Dow's rival, DuPont (NYSE: DD  ) , is using a sophisticated process to create a high-performance biofuel called biobutanol with the help of BP.

Exxon's energy efficiency efforts don't stop with biofuels. Last month the company announced a program to foster a fleet of electric vehicles powered by Exxon’s new lithium ion battery in Baltimore. So let the critics wail. I, for one, am convinced that ExxonMobil is a tough company to beat.

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Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, welcome your questions or comments. The Fool has a constantly renewable disclosure policy.


Read/Post Comments (4) | Recommend This Article (18)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2009, at 3:56 PM, hutch2fool wrote:

    Verenium is a great little company with HUGE upside potential.

  • Report this Comment On July 15, 2009, at 4:19 PM, dbbfool63 wrote:

    I agree, whats even better is the fact they seem to have the biggest edge over the others who are just now starting to get in the game of Bio-fuels which sounds like will be the governments biggest energy sector investment from the stimulus.

    Can't Dispute the Facts about Verenium

    1.) Doubled it sales for enzymes.

    2.) Built demo cellulosic plant.

    3.) Built pilot cellulosic plant.

    4.) Building worlds first production cellulosi plant that produces ethanol from energy cane, crop waste, wood, etc..

    5.) Solid partnership with a multi-billion dollar oil company.

    6.) Built a solid corporate leadership.

    7.) Has been selected for the final phase of DOE loan.

    8.) Has received grants and loans from DOE, New Zealand, Florida, etc....

    9.) Has a close relationship with head of DOE, Dr. Chu.

    10.) Can produce 1800 gallons of ethanol per acre.

    11.) Has proven technology, patented and protected.

    Now this is a GEM @ .60/shr

  • Report this Comment On July 16, 2009, at 8:53 AM, swimtag wrote:

    Exxon is a disciplined, focused, cash generating machine. When they decide to enter an arena, they play to win. This may be a bit of political posturing by XOM, since $600m is basically chump change compared to development offshore or in FSU states, however it makes me think they have other arrows in the quiver yet when it comes to biofuels.

  • Report this Comment On July 16, 2009, at 9:17 AM, farmnut1985 wrote:

    don't forget conoco phillips and check out this blog for so me cellulosic ethanol info.

    http://caps.fool.com/Blogs/ViewPost.aspx?bpid=223913&t=0...

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