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Algae Fuel Inches Toward Price Parity with Oil

With over 100 start-ups hard at work, industry predicts it can deliver success in under a decade if granted production tax credits

By Stacy Feldman

Nov 22, 2010

The promise of making motor fuel out of pond scum is inching closer to reality as the algae industry and its supporters plow forward with technology demonstrations and demand tax credits that are needed to cut costs.

The head of the 170-member , Mary Rosenthal, predicts the fledgling fuel source could be cost competitive with oil in seven years.

"We're hoping to be to be at parity with fossil fuel-based petroleum in the year 2017 or 2018, with the idea that we will be at several billions of gallons," Rosenthal told SolveClimate News in a phone interview.

Some are more optimistic.

Dan Simon, president and CEO of , an algae technology company based in Arizona, thinks industry could deliver commercial algae at the price of oil after about three years. However, he acknowledged it may take longer — perhaps as long as a decade.

For now, the industry has yet to produce a drop of fuel for commercial production. And while producers pin their hopes on cost breakthroughs, some researchers maintain a skeptical eye.

Berkeley Report: 'Neither Quick Nor Plentiful'

A new by the University of California, Berkeley's (EBI) said it would take a decade of testing to determine if algae companies can produce affordable biofuels in mass quantities.

The current cost of a barrel of algae biofuel ranges from $140 a barrel to $900 per barrel.

"Algae oil production will be neither quick nor plentiful — ten years is a reasonable projection for the R&D to allow a conclusion about the ability to achieve relatively low-cost algae biomass and oil production, at least for specific locations," the authors, Nigel Quinn and Tryg Lundquist of the , wrote.

The industry still must leap at least one key hurdle: finding the right strain of algae that will produce reliablyand cheaplyat high yields. The goal is to "at least double biomass and oil productivity through strain selection and genetic modification," the report said.

But Rosenthal, who spent more than 20 years in corporate work, is quick to dismiss any suggestion that the technology may not be poised for prime time.   

"The technology is mature," she said. "We’re going through the same nascent issues of any emerging industry — where you're going from lab to pilot, from pilot to scale."

100-Plus Startups at Work

Algae converts sunlight and carbon dioxide into oil. Some strains can be made into diesel fuel, aviation fuel and gasoline and are processed in two basic ways — in open-air ponds or closed photobioreactor systems like those used by Heliae.  

Algae yields up to 20 times more energy per acre than leading biofuel crops like corn, according to estimates. Unlike corn ethanol, algal strains can sprout on marginal lands so they need not gobble up acres used to grow food.  Because the slimy organisms suck up CO2, they also have potential to cut climate-altering greenhouse gases.

The says algae grown on a 15,000-square-mile area, about the size of Maryland, could theoretically meet the nation's oil needs.

Currently, more than 100 companies worldwide are at work to bring algae to market. In the U.S., scale-up demonstration projects by startups , , , and Heliae are being planned or running in eight states.

For two years, Heliae has churned out algae-based biofuel at its pilot site at Arizona State University. Its first demo plant is expected to be operational in Gilbert, Arizona — about 20 miles southeast of Phoenix — in the first quarter of 2012.

"We will build out a truly scaled model from algal-strained development all the way through refining," Simon said.

Last month, the U.S. navy successfully tested a 49-foot gunboat fueled by a 50-50 blend of diesel and algae in a first-ever move as an "important milestone" in algae's growth.

Tax Credit Bill Advances, But Not Enough

But even as the industry quietly builds steam, producers have big concerns.

They worry about the lack of capital to grow the burgeoning industry and say their future depends on government efforts to encourage investment.

"It's the same as the process with ethanol back in the 2000 time frame. Until we invested in the industry we weren't driving down the production cost of ethanol from corn," Simon said.

A crucial first step, advocates say, is the passage of a tax credit bill that would level the playing field with producers of non-food cellulosic fuels made from switchgrass, wood waste and other materials.

The Algae-Based Renewable Fuel Promotion Act, , introduced in the Senate last year, would expand the $1.01 per gallon cellulosic production credit that expires at the end of 2012 to algae producers.

The House approved the companion bill, in September.

Rosenthal said it has been placed on the Senate's lame duck calendar for after the Thanksgiving holiday and is "very positive" about its prospects.

Simon, who worked for about 15 years in the renewable energy sector, said he would welcome the measure but seeks Washington's guaranteed support over the long term. 

"The bigger impact for us right now as an industry is our government simply not having a long term-view of renewable energy development."

He continued: "We're at least three years from commercial viability. If you take that in mind we need anywhere from five to ten years of committed investment from our government in the form of tax credits, investment credits or producer credits."

USDA Has Role to Play

Changing the perception of algae at the (USDA) could secure more federal support, ABO says.

The nation's renewable fuels mandate, part of the 2007 energy law, requires the use of 21 billion gallons of advanced biofuels a year by 2022, and 15 billion gallons of corn-based fuels.

The USDA largely left algae out in its for achieving those targets. According to ABO, the exclusion threatens its potential as a key energy crop and green jobs engine across rural America.

"If this omission continues, it will deter future investments in these promising technologies as investors flock other technologies that are more strongly supported by the federal government," ABO said in comments to the USDA.

See also:

U.S. Navy Tests Boat Powered by Algae

Airlines Could Be Flying on Biofuel Within 5 Years

Algae Emerges as DOE Feedstock of Choice for Biofuel 2.0

Algae based biofuels are ready for scale up, now.

We've been ready to get on with de-centralized algae based biofuels production for over a year. Unfortunately, our worthless leader decided he would use that money for "Cash for Clunkers" after turning their backs on our biofuels commercialization grant application and lied to the public saying "Nobody applied". This enabled him to rob our nation of billions of dollars for his corporate buddies who could afford to pay for his campaign. We were left out in the cold when we have the technology those in the know within our industry are flat scared of when we can find capital to finally begin moving forward again. 

Personally I want Obama and Dr. Steven Chu out on the street by the end of the day. Haven't these people performed poorly enough for us to terminate their employment early? I refuse to pay for anything Obama crams down my throat, I won't do it. Not after it was the people who asked us to make the sacrifice and left us twisting in the wind after we did so. I call that treason and I call it unconscionable that either of these bufoons continue to draw a payheck. I won't pay for such piss poor performance. If I did this poorly at my job, I wouldn't have one any more. Obama has got to go!!!

Algae Fuel

Combining bio-remediation, multi-use and multi-purpose site utilization, oil extraction and dry algae exploitation not only gets us past the strict price barrier, but also makes the projects profitable enough to attract the next-level capital investments. Tri or quad generation systems are not only the path of the future, they are the path for today.

And many Americans would pay an extra dollar a gallon if they knew that all of the money stayed in their County, Town or City, for what goes around, comes around, in local jobs, local sales, local food, and local fuels.

It is time we quit sending our nation's wealth to the Middle East, Chavez and Nigeria, and started keeping our hard earned monies in our own pockets.

Current costs of algae oil mistated.

You left the key word out of this sentence. "The current cost of a barrel of algae biofuel ranges from $140 a barrel to $900 per barrel." That word is "projected" as in projected cost - rather than actual cost. I challenge you to provide your readers with one source where say 10,000 gallons of algae oil can be purchased today for $140 per barrel. The Navy had to pay in excess of $800/gal to purchase enough algae oil for its test this year. After 80 years of research, the lack of algae oil at any where near competitive prices is the most exact comment on it's current state as an economically feasible energy source.</p><p>Rosenthal is correct - "The technology is mature," she said. "We’re going through the same nascent issues of any emerging industry — where you're going from lab to pilot, from pilot to scale." Because the technology is mature and is still an order of maganitude more expensive than petroleum and other alternatives like solar and wind, and worse - algae oil is dependent on non-renewables like petroleum and phosphates for it's fertilizer nutrients (competing with human food crops for them) at large commercial scale - it is highly improbable that algae oil will ever be a primary source of energy, but rather a useful indirect tool in environmental remediation and waste recovery.

Taxpayers are looking for results, not more research

Algae has been reserched in the US for over 50 years and NOTHING to date has been commercialized at the university level.  As long as algae researchers can continue to say it's too expensive, cannot be done and needs more research the DOE will continue giving them grants.  Taxpayers are looking for results, not more research. 

The DOE is only set up to give out grants for RESEARCH, NOT SCALE-UP.  The USDA is set up to do LOAN GUARANTEES, NOT LOANS.  The VC's are not investing.  The banks are shut not lending.  So please please tell us where the money is coming from for scale-up??? 


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