A New Standard: Chevron, United, Breakthrough Energy replace ExxonMobil as Viridos algae biofuels backers

News has arrived from California that Viridos, focused on the production of algae biofuels primarily in the form of SAF and renewable diesel, has raised $25M in a Series A equity investment led by Breakthrough Energy Ventures, joined by Chevron and United Airlines Ventures. The funding will be used for R&D to further increase algae oil productivity to reach commercially deployable levels.

The Viridos rationale

Here’s how they put it:

Globally, diesel and jet fuel account for over a third of the liquid fossil fuel used. The heavy transportation sector comprising aviation, shipping, and long-distance trucking relies on these fuels with demand expected to continue to grow for decades, creating major decarbonization challenges. Viridos aims to solve this challenge by leading the bioengineering of microalgae and has already achieved seven times the oil productivity compared to wild algae. This sets the stage for the scalable and sustainable production of algae oil as the feedstock of choice for sustainable aviation fuel (SAF) and renewable diesel (RD). In fact, SAF and RD made from Viridos algae oil are expected to have a 70% reduced carbon footprint.

Now, in English, please

What they are saying is that carbon credits and the trajectory of productivity bring the company to the point where algae fuels make sense. Lately, the value of carbon has reached such levels that fuels, once thought unthinkable, now seem feasible. So, why not vitamins (or the equivalent), as most makers of algae have been pointed at for the past 7 years or so? In the end, there’s no national Low Carbon Everything, Standard, nutraceuticals just have not commended the attention of lawmakers owing to the small markets they command. 

When it was about carbon back in the 200s, it was algae fuels, fuels, fuels. Now, carbon is pricey, and it’s fuels, fuels, fuels again. Give Viridos an “attaboy” for persistence, for it is a breakthrough in yield that’s proved as important as the rise in carbon value. Now, they are not there yet, as my father said to me once when I asked five miles into an 800-mile drive “are we there yet?” There’s more R&D, presumably productivity, then the engineering of the process, the design, the build, the commissioning, the securing of offtake, the drive to normal production; indeed we are just a few yards down the pikeway, but sometimes the first yards are the hardest yards of commercialization. 

And some of that later-stage work has been done; we reported in November 2021 that Viridos Inc., previously Synthetic Genomics had signed a joint development agreement with ExxonMobil Research and Engineering Company with the intent to bring Viridos’ low-carbon intensity biofuels toward commercial levels.

They like three things, the investors. These are saltwater algae, no need to find massive sources of fresh water, and can be grown in harsh non-arable climates. They have high oil content. Downstream processing is less tough. 

The Exxon Exxit

Before this investor group there was ExxonMobil, the patient supporter and investor in this technology until recently. Of that, we wrote a few weeks back:

They were against biofuels because they were too low-yield and expensive, until they found algae, which was too low-yield and expensive, but they said they could work on the yields until they were less expensive. They expected to spend up to $500M on the R&D effort, until they stopped at around $320M . Perhaps that’s because they spent something like $160M on algae television commercials. 

Good news, they increased the yield, after years of R&D, by an order of magnitude. But, wait a minute. On second thought, they’ve concluded that algae is too low-yield and expensive. It might be decades away, and the one thing none of us has is that much time, given all the pressure.

Now, they have focused their efforts on carbon capture, except that it is too low-yield and expensive, but they say they can work on the yields until they are less expensive. So, if they store more carbon in the ground and sell it as a public service, they can extract more carbon from the ground and sell it as a private enterprise. 

Great news, scientists think that underground, carbon dioxide gas eventually becomes a liquid, and then a solid, and because of that, ExxonMobil will become more liquid, and their liquidity will be more solid. Squarely, they become more circular because they have triangulated carbon and petroleum, and they can sell more gas to the Pentagon, and that’s solid.

They were solid for algae except they found that getting the algae out of the liquid wasn’t exactly a gas. Now, they have new technologies to pursue, except they are low-yield and expensive, and they’re going to work on that. It’ll be commercial in the end and, in the meantime, just wait ’til you see the commercials.

The bottom line

Exxon’s loss, Chevron’s gain. How nice to get, for some slice of $25 million, access to a technology built on $300 million or more of the competitor’s money. It’s the old Standard Oil of California and Standard Oil of New Jersey, swapping places in pursuit of an oil we might appropriately point to as The New Standard for oil, algae oil, that is.

Think of it as very young petroleum, and you get the idea of why fuels aficionados like it. Think of algae as a little bitsy plant and you get the idea of why carbon capture aficionados like it. Will it work this time? Less a question of technology than carbon prices and corporate will, so you tell me.

Reaction from the stakeholders

“By establishing production sites to grow Viridos-engineered microalgae in saltwater, we are creating the foundation for a biofuel future that moves away from fossil fuels without competing for precious resources such as fresh water and arable land. We are excited to have the support from BEV, the leading energy transition venture capital fund, Chevron, and United Airlines. Together we can build the ecosystem needed to bring algae biofuels to the market,” said Oliver Fetzer, Viridos Chief Executive Officer. “We look forward to bringing our oil-producing algae to commercial readiness and then growing them to produce scalable quantities of SAF and RD.”

“Decarbonizing the heavy transportation industry is critical for addressing climate change and therefore a top priority for BEV,” said Carmichael Roberts, Breakthrough Energy Ventures. “Oliver and his team at Viridos have a promising technology for converting algae into sustainable liquid fuels. The science behind their platform positions them to crack the code on the critical barriers to scale, making Viridos an important addition to BEV’s portfolio.”

“SAF is proven, scalable, and the best tool we have to reduce our carbon emissions from flying, but we face a significant shortage of available feedstock,” said United Airlines Ventures President Mike Leskinen. “As the global aviation leader in SAF production investment, United remains committed to reaching net zero carbon emissions, without relying on traditional carbon offsets by 2050. Viridos’ algae-based biofuel technology has the potential to help solve our supply problem without the need for farmland or other agricultural resources, and marks our inaugural investment in our new cross-industry Sustainable Flight Fund.”