One by one, Big Oil firms have touted their investments in algae biofuels as the future of low-carbon transportation—and one by one, they have all dropped out. Now in the wake of the last remaining algae proponent, ExxonMobil, announcing its withdrawal, insiders say they are disappointed but not surprised.

Algae research was central to Exxon’s green marketing campaigns for years, and frequently criticized as greenwashing rather than a genuine research effort.

But several of its former research partners told me that Exxon was serious about the potential of algae biofuels—explaining why it stayed in the field long past the point where other oil companies dropped out—but not serious enough.

In its 12 years in the space, Exxon invested $350 million in algae biofuels, according to spokesperson Casey Norton. (Norton says that’s more than double what the company spent on touting this research in ads.). Even so, every algae researcher who spoke to me said a real effort to commercialize biofuels, algal or otherwise, requires several billion dollars, and a long-term dedication to overcoming seemingly fundamental biological limitations of wild organisms. And no oil company was ever willing to go that far.

“It’s very challenging and very expensive to bring these technologies to market,” said George Huber, whose biofuels research at the University of Wisconsin at Madison was funded by Exxon for years. “It’s not gonna happen overnight. It’s great they make these commitments, but you know they need to start putting in more capital into these projects.”

He added: “They’re driven by Wall Street and they have to keep their stock prices high and keep their shareholders happy. And usually that’s making a large amount of money. All the oil companies have been talking about the need to get into more sustainable things, but it’s hard to make money with. And most of their money comes from oil.”

What made algae so appealing as a feedstock for biofuels was twofold. Because they grow in large concentrations in ponds, they don’t compete with food crops for arable land. And some strains produce large amounts of lipids—fatty acids that can produce an oil, which can be turned into fuel relatively easily. But competing with abundantly available and heavily subsidized fossil fuels, particularly gas, was not so easy.

One of the biggest challenges was that wild strains of algae couldn’t deliver the high levels of lipids needed to produce large quantities of fuel, said Todd Peterson, the former CTO of Viridos, Exxon’s longstanding and now former algae research partner.

That’s why Viridos was focused on genetically modifying the organisms to maximize lipid production. And they were making real progress. The magic formula for commercial viability of algae biofuels is a strain that can produce 15 grams of oil per square meter in an outdoor environment, and one Viridos strain had reached 10. “It’s hard to engineer an organism that is hundreds of millions of years old to behave differently,” Peterson said.

Peterson, who worked for the company from 2013 to 2018, said he always got the impression that the scientists at Exxon that Viridos worked with were serious about the research. “I’m disappointed,” he said of Exxon’s withdrawal from algae, “but trying to keep an open mind. You never know what the shifting priorities are within a company.”

Viridos laid off 60 percent of its workforce after Exxon’s December 2022 withdrawal from the sector, which was only revealed by Bloomberg last month. On Monday, Viridos announced a $25 million round of funding led by Bill Gates’s Breakthrough Energy, with Chevron and United Airlines contributing as well.

Despite their making enormous progress over the past decade, most algae researchers say having algae biofuels at the sort of scale necessary to meet current fuel demands is still at least a decade, and more likely two decades, away. It’s possible that more investment during the years in which oil companies touted their investments in the space would have moved the needle faster. Exxon ultimately invested just over half of the $600 million it once promised, back in 2009, according to Norton.

Multiple former Viridos employees, who requested anonymity because they had signed non-disclosure agreements, said the Exxon research funding never seemed like much, but the company would send big crews out to the algae ponds to get video for its ads. “I would see them running and think, ‘I wish they had given us more research funding versus spending so much on advertising,’” one former employee said.

It’s not unusual for companies to shift their investment priorities over time as markets and revenues change.

The first big investments in algal biofuels research happened during the 1970s, when the oil supply was constrained thanks to the OPEC embargo against the United States, and all the oil majors plowed funds into alternative fuels and renewable energy tech. At the time, Exxon was investing in everything from solar and nuclear to lithium batteries and climate change research. When the bottom dropped out of the oil market in the 1980s, all of that stopped.

Similarly, oil majors BP, Shell, Chevron, and ExxonMobil all swung big for algae beginning in 2008, announcing hundreds of millions of dollars in research funding. Then the fracking boom went bust in 2015, and one by one they dropped out. Some, like Shell, continued major investments in biofuels more broadly, but only Exxon stayed in algae.

Today, in addition to Exxon’s pullout, there are other reasons to question algae’s promise.

The algae boom emerged at a time in the early 2000s when it seemed like the world still needed to run on some sort of liquid fuel, said Matthew Posewitz, of the Colorado School of Mines and National Renewable Energy Lab. Posewitz’s algae lab was funded by Exxon for eight years. “Now there’s another transition—a lot of ground transportation will become electrified and you might not need liquid fuels there, which means a smaller market, basically just jets and boats.”

Posewitz credited Exxon with being a very involved partner. “They’re paying attention to the data and influencing research directions and informing academics of market needs,” Posewitz said. “And that’s what you want. Sometimes academics can go in a direction that doesn’t fulfill any market need.”

All the researchers who spoke to me agreed: What was needed to make algal fuels a success was a longer runway and funding in the billions—closer to what oil companies spend on fossil fuels.

“It was great while Exxon was interested,” Posewitz said, “but in the end it’s going to take more time and investment to mature this from a fuels perspective, and they have other priorities.”