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Financial Times: Microscopic alternative to biofuels

By Cristina Jimenez
Published: Friday December 28 2007

Oil from algae, the microscopic plants that produce a green covering on the surfaces of ponds and neglected outdoor swimming pools, may soon be filling diesel pumps.

As crude oil has moved towards $100 (€70, £50) a barrel and sustainable alternatives are sought in a bid to reduce carbon emissions, researchers are investigating “second- generation” biofuels – those not made from food crops such as soya or corn. Scientists have found that, in terms of oil yield, algae could be the most efficient source of biofuel.

Algae produces oil yields more than 100 times those of common biofuel crops such as soya, yet requires a fraction of the cultivation area. For example, one corn crop covering an acre nets about 81 gallons of ethanol a year, while palm may produce 650 gallons of biofuel. Algae may yield up to 15,000 gallons.

“No other source comes close in magnitude to the potential for making oil of algae,” says Al Darzins, director of the Research Center for Biofuels at the National Research Energy Laboratories of the US Department of Energy.

Researchers at the laboratories have also found they can greatly increase the amount of oil produced using genetic engineering techniques. Modified algae can produce oil yields of 60-70 per cent compared with the 5-20 per cent in oil contents of natural algae.

One of the advantages of sourcing oil from algae is that algal biodiesel could be used in diesel cars without further modification of the engine. But for relatively small volumes, bio-ethanol needs to be blended with petrol unless the vehicles have been adapted. Biodiesel is also a versatile source of fuel which, Mr Darzin says, could be used for ships, trains, jet fuel and cars.

This month Royal Dutch Shell, Europe’s biggest oil company, became the latest business to put its faith in algae, announcing that it hopes to build a commercial research plant which it believes will produce biodiesel from algae in two years.

It is taking a majority stake in a joint venture, with Hawaii-based HR Biopetroleum, that will initially build a small research plant but hopes to move to a full-scale commercial plant of 49,421 acres.

Shell says that algae’s environmental credentials are greatly superior to those of “first-generation” biofuels. This is because algae does not need to be grown on farmland and deforested land, thus minimising the damage to ecological systems. Unlike soya or corn, it does not add pressure to food prices when grown as a biofuel.

Obtaining oil from algae is not new. Scientists working in the 1950s discovered some strains of algae had a very high oil content that could relatively easily be converted
to fuel.

However, the real barrier to algae taking off as a source of fuel has been the cost of production. Growing algae in open ponds reduces cultivation costs but makes it difficult to control the environmental conditions. The algae can easily get contaminated with naturally occurring but less efficient strains.

But if algae are grown in closed tanks, the process may end up being too expensive. “The bottleneck in the process is the expensive technology required for algae oil production,” says Ralph Simms, a senior analyst at the International Energy Agency in Brussels.

Growing high concentrations of algae is difficult and the costs of obtaining oil from it make algae more expensive than other biofuels. At the moment, bio-ethanol production costs about $2 a litre compared with the wholesale price of gasoline of $0.45.

“In order to be competitive, algal biofuel costs should be cut down to less than that of the bio-ethanol price,” says Mr Simms.

Don Paul, chief technology officer at Chevron, the US energy company which is also funding a research programme on algae, thinks the success of second-generation biofuels depends on collaboration among industry, universities, research institutions and governments.

Their co-operation will be essential to overcome the technological and commercial challenges that these products involve.

Shell admitted at the launch of its algae joint venture that it would be a substantial journey to make algae-based biofuels commercially viable, and there would need to be technological innovations along the way.

Even then, it added, the economics of algae-based biodiesel would probably have to be supported by tax breaks or incentives that reflected its superior environmental impact compared with first-generation biofuels.

For the moment, algae oil output remains small, with the largest production volume at a few hundred gallons a year, claimed by several US start-up companies working on this technology.

But as the oil majors and clean technology companies race to discover the technological breakthrough, the days of algae oil may soon be on us.

Copyright The Financial Times Limited 2007

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1 Comment on “Financial Times: Microscopic alternative to biofuels”

  1. #1 Thomas Sullivan
    on Dec 28th, 2007 at 09:55

    My personal favorite, waiting-in-the-wings, renewable energy strategy with truly large-scale potential would have to be, hands down, the burning of easily grown, wild algae (think massive algae blooms appearing virtually overnight worldwide) in power plants as a carbon-neutral substitute for our greatest greenhouse gas offender of all: coal.

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