In response to the growing number low-carbon policies popping up in developed world, major oil companies have started to look at biofuels producers in a new light.

“The oil companies…see a world of restrictions coming on high-carbon fuels, and they need alternatives,” Bruce Jamerson, chief executive of cellulosic ethanol producer Mascoma Corp., told the Wall Street Journal.

While European players BP and Royal Dutch Shell have been the most “active” investors, a recent $600 million investment by Exxon Mobil in Synthetic Genomics, an algae-to-fuel start-up, really turned some heads.

“It was a major signal to the biofuels industry,” said Jamerson.

For oil companies looking to expand their alternative fuel portfolio, biofuels were an obvious choice, according to BP’s Katrina Landis, who heads the company’s Alternative Energy division

"Oil companies have a natural affinity for the biofuels business," she told the newspaper.

She added that oil companies’ understanding of how to produce and market fuels for transport, combined with entrepreneurial biotech companies creates “a very powerful partnership”.

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