Market Research and Insight

Is algae the answer to greener transport? Is algae the answer to greener transport?
Energy – not even fossil-fuel energy – isn’t in short supply for the short-term future, globally speaking. Liquid fuel for transport, on the other... Is algae the answer to greener transport?

Energy – not even fossil-fuel energy – isn’t in short supply for the short-term future, globally speaking. Liquid fuel for transport, on the other hand, is a concern. And it’s hard to imagine a global economy functioning for long without transport.

Could algae ultimately provide the solution other biofuels (corn ethanol, especially) have failed to deliver?

Several fossil fuel developments in recent years have led some commentators to declare that peak oil is dead, and the world is awash in energy … particularly from “new” sources like Canada’s oil sands, the US Bakken shale deposits and hydrofracturing-derived natural gas. But most of today’s cars don’t run on natural gas, and increases in unconventional oil might not be enough to make up for aging, depleting conventional sources and increasing demand from a growing global population of first-time car owners.

Commenting on heavily publicized pronouncements that the US could soon become energy-independent, for example, petroleum geologist and consultant Arthur E. Berman recently wrote, “But the problem for the US is not total energy. We have always had an abundant endowment of coal and natural gas. The problem is liquid fuel for transport and that comes from crude oil.”

Or, one day – possibly – from algae.

Corn ethanol, while it’s been affordable (when subsidized), interferes with food production and has been shown to have a questionable environmental impact on top of that. And cellulosic ethanol has started to resemble fusion energy … perpetually “a few years away” from being ready for prime time.

Algae-based biofuels, on the other hand, show promise. In 2012, the US Department of Energy’s (DOE) Biomass Program estimated the market price of open-pond-grown algal biofuel to be $9.28/gallon – still prohibitive by US gas-pump standards. With projected improvements and the addition of high-value co-products, however, the DOE forecast the price could eventually drop to $2.27/gallon.

We’re not close to the point yet, though. A report from the National Research Council in late 2012 found that algae-based biofuel production technology as it stands today remains unsustainable at a large scale. Producing just 5 percent of the US’s transport fuel supply from algae, it concluded, would require at least 123 billion gallons of water, 6 million to 15 million metric tons of nitrogen and 1 million to 2 million metric tons of phosphorus. Those nutrient levels would represent anywhere from 44 to 107 percent of today’s total nitrogen use in the US, and 20 to 51 percent of current phosphorus use.

Algal fuel FAQ

Q: Is algae-based biofuel available on the market? A: It has been, but only on a limited test basis and not in pure form. In November 2012, a few service stations in Northern California offered an algal biofuel blend (20 percent algae, 80 percent petroleum) at the pump as part of a pilot project with renewable fuel company Propel and algal fuel developer Solazyme. The alternative fuel was sold for about $4.25/gallon, about the same price as regular diesel.

Q: Is algal biofuel in regular use anywhere? A: The US military – one of the country’s biggest users of transport fuel – has been testing algae-based fuels in various capacities for a few years. Working with companies like General Atomics and SAIC, the US Defense Advanced Research Projects Agency (DARPA) has been investigating the use of algal fuels for aviation. And the Navy inked a deal with Solazyme for algae-based jet fuel back in 2010.

Q: Is algal fuel used much outside the military sector? A: Not much yet, but that is changing. Commercial airline companies are playing a big role in testing alternative fuels.  Airbus, for example, is working with China to scale up the use of alternative fuels in commercial aviation, and expects to begin flight tests this year. United Airlines made the first algal-fuel-based commercial flight in late 2011, using a blend of about 60 percent petroleum-based jet fuel and 40 percent biofuel from Solazyme. Qantas has also been working with Solazyme.

Who’s who in algal fuel?

Algae-tec – On Jan. 14, 2013, Australia-based Algae.tec received a AU$12.15 million cash award from the Australian government for funding at least three algae bioreactor facilities in Australia, Asia and the US. Algae-tec’s enclosed system is designed to grow non-genetically modified algae for fuel. It opened its first algae-to-biofuels facility, designed to produce aviation fuel, in New South Wales in August 2012. The company is listed on the Australian Stock Exchange, the Frankfurt Stock Exchange and on the ADR market in the US.

Algenol Biofuels – Florida-based Algenol aims to commercialize its patented DIRECT TO ETHANOL algae technology, and is currently developing a pilot-scale biorefinery in Fort Myers. It has targeted commercial production rates of 6,000 gallons of ethanol per acre per year at an eventual production cost of less than $1/gallon.

HDS International Corp. – Headquartered in Providence, Rhode Island, HDS International provides technology for algal biomass production, carbon capture and biosequestration.

OriginOil – Based in Los Angeles, OriginOil is working to develop not only algae-based liquid fuel but to use algae as a way to clean waste water generated while producing oil from oil sands. A pure technology company rather than a producer or service provider, OriginOil is publicly traded.

Sapphire Energy – Headquartered in San Diego, Sapphire Energy recently partnered with the Institute of Systems Biology to “further the scientific research and development of algae biofuels”. Sapphire recently began a 300-acre commercial demonstration in New Mexico that is projected to be able to produce about 100 barrels of algae-based “Green Crude” per day by the end of 2014. Its Green Crude fuel has already been tested by Continental Airlines and Japan Airlines.

SEE Algae Technology – Like OriginOil, SEE Algae is not an algal-based fuel producer. Instead, the Vienna-based firm specializes in developing the infrastructure for commercial algae production operations, whether for livestock feed, fuel or other purposes. The company recently won the Brazilian Bioenergy Innovation of the Year 2012 Award.

Solazyme – Based in San Francisco, the publicly traded Solazyme is working to develop not only algal-based fuels and chemicals, but personal-care products and nutritional products. It recently announced the ground-breaking achievement of reaching commercial-scale production levels and aims to produce 20,000 metric tons of oil a year starting in early 2014.

Dan Ilett