Major oil companies investments in biofuels

The status quo isn’t a problem for big oil companies, who seem to be constantly breaking their own record profits. However, these corporations know that they must also look to the future and sustain their competitive edge.

The competitive landscape of the future is not clear for the oil industry, with financial, political, and environmental considerations coming into play.

The technologies and processes behind various renewable energy sources are improving, and may eventually lead to a renewable product that is cost competitive with oil.

Even if no renewable source is strictly cost competitive, the overall cost to society may be deemed lower because of the carbon pollution associated with oil. This will lead, and is already leading to political pressure and regulations. And it’s not just the price of renewables coming down that oil companies have to worry about, but also the price of oil going up as global energy demand rises.

Oil companies have been aware of these forces for some time now, and have been  investing in a range of renewables.

Recently, major oil companies seem to be sharpening their focus and concentrating on commercially viable biofuels. This pragmatic approach may spring from a recessionary mindset, but also speaks to the evolution of biofuels to the point where there are commercially viable alternatives on the near horizon.

The specific competencies and competitive advantages that have made oil companies successful are easily transferable to biofuels. These companies are good at producing, distributing, and marketing transportation fuels, which is what the biofuel industry requires.

Below is a list of recent investments in biofuels by oil majors, from an October 19th article in the Wall Street Journal. While these investments are significant and seem to represent a trend in the industry, WSJ author Guy Chazan also points out that they represent only a small fraction of these companies investment budgets.

Any feelings of hypocrisy and greenwashing are understandable, but to accomplish all of its most ambitious goals the green movement needs big business’ muscle behind it.

BP

• Investments of around $1 billion in ethanol-expansion efforts in Brazil.
• Grant to the Energy Biosciences Institute of California, Berkeley, and the University of Illinois in Urbana-Champaign.
• Partnership with DuPont to construct a biobutanol demonstration plant in the U.K. next to an ethanol plant.
• Joint Venture with Verenium, a maker of cellulosic ethanol.

Chevron

•  Joint venture with Weyerhaeuser to make fuel from biomass such as switchgrass.
• Grants to Georgia Institute of Technology and University of California at Davis for biofuels research.

Exxon Mobil

• Invested $600 million in an algae-to-fuel start-up, Synthetic Genomics.

Petrobras

• Planning to invest $2.8 billion  in biofuels over the next five years.

Shell

• Working with Canada’s Iogen to produce fuel from wheat straw, and with Choden Industries of Germany to make fuel from wood residue.
•  Invested in Codexis, which is developing enzymes that rapidly turn plants into fuel.
• Partnership with Virent Energy Systems, a company planning to produce biogasoline using technology that can process various kinds of feedstock.

Total

• Invested in Gevo, a biofuels company that makes renewable fuels from agricultural waste.

More from ecomii:

• Have biodiesel? get biodiesel
• Pros and cons of vegetable oil as fuel
• How does a hybrid work?
• What is your carbon footprint?
• Fuel efficient luxury cars