A TV ad for ExxonMobil featured a scientist talking about researching algae as a source of biofuel.
In the advert, a scientist said that "in using algae to form biofuels, we're not competing with the food supply, and they absorb CO2, so they help solve the greenhouse problem as well".
But a complainant, who noted that any carbon dioxide absorbed by algae would be re-released back into the atmosphere when it was burned as fuel, objected that the ad misleadingly implied that the technology would reduce CO2 levels.
ExxonMobil said it would appeal the ruling, arguing that the decision was "unreasonable and inconsistent with expert opinion on the role of advanced biofuels in addressing growth in greenhouse gas emissions".
The company insisted that claims that algae biofuels can reduce CO2 emissions were still valid. "It is a universally held view among the international scientific community that renewable fuels such as algae can play an important role in reducing emissions by absorbing CO2. The ASA appears to take a different view."
ExxonMobil also cited a study by the European Commission's in-house research body, the Joint Research Centre, which it claimed proved that second-generation biofuels achieved greenhouse gas reductions on a comparative basis.
However, the UK Advertising Standards Authority (ASA) considered that the ad's claim "went beyond stating the mitigation benefit".
According to the authority, the scientist's statement may mislead viewers to conclude that it was due to the absorption of CO2 from the atmosphere that using algae to form biofuels helped "solve the greenhouse problem," by acting as a carbon sink.
The ASA said it understood that any CO2 absorbed by algae would eventually be re-released into the atmosphere and concluded that the ad was misleading because it "overstated the technology's total environmental impact".
The UK authority previously upheld a complaint against an advert by Shell, another oil giant. It judged that the ad, which showed refinery chimneys sprouting flowers, misled viewers into thinking that the company uses all of its waste CO2 to grow flowers.