Investing in Algae Biofuels

August 27, 2008 by Chris Hunter
Filed under Biofuels

It doesn’t take rocket science to determine the world needs to employ more alternative fuels and technologies.

Oil production and discoveries are waning. And the countries with the worlds remaining oil are hotbeds of anti-U.S. sentiment, with their best interests directly juxtaposed to U.S. interests. Biofuels, on the other hand, can be produced domestically or purchased from friendly nations.

That’s just the security side of things.

There’s also a looming climate crisis spurred by thrusting increased amounts of CO2, once stored underground as coal and oil, into the atmosphere. Certain biofuels significantly reduce the amount of CO2 spewed into the air per gallon.

But a rush to grow the biofuel industry rapidly has had some unintended consequences. Corn prices have skyrocketed along with demand as biorefineries spring up across the nations heartland, putting ethanol companies in direct competition with livestock farmers for raw material.

And the CO2 output of corn ethanol is much worse than previously thought. Corn ethanol is responsible for about 85 Kg of CO2 for every mega joule of energy released.

But despite the problems now being realized, there is a definite market for biofuels. Government mandates are not going away, and we have to get more of the stuff in our pipelines if we’re ever to make a significant short-term dent in out oil consumption (electric vehicle will provide the long-term dent).

While some technologies and crops–like cellulosic ethanol, switchgrass, and jatropha–have offered some promise and will be developed, the biofuel panacea will surely be algae biofuels.

Algae Biofuel

First and foremost, algae biofuels offer a significant reduction in CO2 emissions. For every mega joule of energy released, algae biofuels actually consume 183 Kg of CO2. It’s literally carbon negative.

That’s because there are no fertilizer inputs for algae. Instead, algae consumes massive amounts of CO2 as it grows. Plus, it doesn’t require massive farm equipment or energy intensive factories to convert it to usable fuel because nearly half of algae’s weight is oil.

What’s more, algae grows exponentially, meaning, in some cases, it can be harvested everyday.

Spiraling Crude odeail prices high and volatility in international energy markets are dictating the need to develop commercially sound and effective third generation biofuels, like algae biofuels.

Naturally, companies are taking interest in the development of the same.

Shell got into a joint venture with HR Biopetroleum to produce algal biodiesel. In addition, aviation companies such as Virgin Airlines and Boeing are exploring possible usage options of algal biodiesel for jets.

Several companies have issued press releases about technologies using closed photobioreactors to produce bio-fuels from algae, claiming enormous amounts of biomass that can be turned into liquid fuels at low cost.

But, none of those projects have actually operated on a large scale or over a long time period until late 2007.

The shortage of venture capital in this industry, high capital costs, and processing costs are few of the principal reasons accounting for non commercialization of the projects.

Processing costs of third generation biofuels observed throughout their entire process is a major restraint, but, as technology improves, the costs will be reduced and third generation biofuels will become more competitive.

Policy support from governments in the form of subsidies, green certificates and regulations can also facilitate reduction in the costs involved.

Algae Biofuel Companies

Here’s a shortlist of algae biofuel companies.

Though still nascent, they could offer great upside as the industry matures.

A partial list of algae biofuel related companies includes: