Exxon Mobil Corp.: Warming Up to Green Technologies

Aug. 18, 2009
Company leadership embraces alternative-energy solutions after years of skepticism

More than two years after Exxon Mobil Corp. Chairman and CEO Rex Tillerson famously characterized biofuels as "moonshine," the company has launched a program that could turn the so-called swill into future profits.

Exxon formed an alliance in July with biotech company Synthetic Genomics Inc. to research and develop biofuels from photosynthetic algae.

The company expects to spend more than $600 million to convert algae into fuels. Exxon decided to explore algae over other fuel sources because it has a higher yield potential and wouldn't require significant infrastructure investments, said Emil Jacobs, vice president of research and development at Exxon Mobil Research and Engineering Co., in a July 14 statement.

"After considerable study, we have determined that the potential advantages and benefits of biofuel from algae could be significant," Jacobs said. "Among other advantages, readily available sunlight and carbon dioxide used to grow the photosynthetic algae could provide greenhouse-gas mitigation benefits. Growing algae does not rely on fresh water and arable land otherwise used for food production. And lastly, algae have the potential to produce large volumes of oils that can be processed in existing refineries to manufacture fuels that are compatible with existing transportation and technology infrastructure."

This new direction seems to be an about face from the comments Tillerson made during the CERAWeek energy summit in February 2007 when he reportedly said, "I'm not an expert in biofuels. I'm not an expert in farming. I don't have much technology to add to moonshine."

At the time, Tillerson was viewed as less abrasive than former chief executive Lee Raymond, who retired in 2005 and was vilified by environmentalists for his global-warming skepticism.

Exxon Mobil Corp.
At A Glance

Exxon Mobil Corp.
Irving, Texas
Primary Industry: Petroleum & Coal Products
Number of Employees: 79,900
2008 In Review
Revenue: $466.3 billion
Profit Margin: 9.70%
Sales Turnover: 2.05
Inventory Turnover: 24.98
Revenue Growth: 17.85%
Return On Assets: 18.68%
Return On Equity: 37.14%
The company's recent foray into algae research should reinforce some of those initial impressions, although staunch environmentalists will remain cynical. ( Earth First.com said Exxon is "still not green, and it's highly unlikely that they ever will be. Now the question is, how long before we're bombarded with Exxon ads proclaiming their greenness for making this investment?")

But Tillerson and his executive team have been making their voices heard over the past few years about the company's ongoing sustainability efforts.

Earlier in the year Tillerson addressed the Global Climate and Energy Project at Stanford University. Exxon is a founding sponsor of the initiative, which began in 2002 to explore newer, more environmentally friendly energy technologies.

Tillerson commented at the forum that oil will continue to play a major role in meeting worldwide energy demand.

"Huge investments over many decades have enabled oil and natural gas to meet close to 60% of the world's enormous energy needs today, and the projections are that oil and natural gas will account for the majority of the world energy demand through at least the year 2030," said Tillerson in a transcript of his forum speech. "They are simply indispensable and irreplaceable at scale."

But Tillerson remarked that wind, energy and nuclear power will make significant contributions to the world's energy needs, if the infrastructure is in place. He also pointed out that the company has been active in hydrogen fuel-cell developments and has developed a new technology called the Controlled Freeze Zone (CFZ) process. CFZ uses cryogenics to freeze and melt carbon dioxide and remove other impurities found in natural gas.

Exxon has invested more than $100 million to build a demonstration plant in Wyoming where the company will test the CFZ process.

Tillerson called on state and federal governments to develop "simple, transparent and predictable" energy policies that will enable further research, though he opposes proposed cap-and-trade policies.

"We believe that a carbon tax would be a more effective policy option to reduce greenhouse-gas emissions than alternatives such as cap and trade," he said. "Pricing carbon through a direct and transparent tax could incentivize the search for lower-emissions energy solutions while also providing the stability and predictability industrial companies need to make long-term, capital-intensive investments in research."

It's obvious that Exxon has made efforts to shed its image as a reckless polluter, but the company still has far to go before environmentalists are ready to embrace it as a good corporate citizen.

That was most recently evidenced by its guilty plea and agreement to pay $600,000 for killing migratory birds between 2004 and 2009 from exposure to natural gas well reserve pits and waste water storage facilities in five western states.

The settlement is a reminder that the company still has work to do before people forget those images more than 20 years ago of oil-soaked birds washing to shore along the Alaskan coastline after the Exxon Valdez oil spill.

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About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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