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Thursday, November 5, 2009


The United Nations Environment Programme recently published its first Biofuels Assessment Report, ever. You can read the press release and view who participated. Much of this assessment dealt with conventional biomass, and mostly, the report did a fine job saying some bio systems are good, some are not so, and much depends on how you do it. Global warming remediation and economics were dominant parameters, although water, state of the technology and other factors were considered.

Let me focus on what many think might be the most promising ultimate bio option. I’ve been surveying colleagues for several years now on biofuels from algae, and the speculations on potential cost are all over the map. But the potential is exciting, for it is said that you can grow several times (factor of two to ten, you pick a number) more biomass from an aqueous environment than on land. Mind you, this point remains debatable.

Part of the reason given is that terrestrial plants need to pass nutrients only through thin roots, defying gravity, while aquatic micro and macro species can use the total surface area. Plus, genetic engineering can more readily be applied for a micro system, which has an effective doubling time of hours, not weeks, months or years.

For this analysis, I will focus on microalgae grown in saline water on land. A follow-up article will review prospects for macroalgae (such as kelp), the form pioneered in the open ocean by Howard Wilcox as early as 1968, and now, mostly being investigated today by the Japanese. This early work mostly led to methane by fermentation and as feed for animals. Recent interest added ethanol to the product mix. A third posting will blue-sky the prospects for actually attempting to utilize the effluent from ocean thermal energy conversion (OTEC) plantships to manage microalgal farms at sea. My speculation is that terrestrial microalgal and marine macroalgal biofuels/feed systems are a decade away from commercialization if the price of oil by then exceeds $125/barrel. The combination of our sun, the ocean, microalgae, OTEC, and genetic engineering for sustainable marine biofuels (hydrogen, alcohols, biodiesel, etc.) is probably a generation or two away. This would be an element of the Blue Revolution.

I begun to be involved with growing algae in raceways a third of a century ago, and from then till now, have observed that federal funding was spotty and mostly non-existent. There was never a truly orchestrated national program and sporadic attempts at organization were thwarted by the fickle price of oil. There remain today too many unknowns and uncertainties, for the due diligence and science have not yet been performed. The fundamental engineering was never initiated, and remains a knowledge gap, for this work should proceed in parallel to someday mesh with the science. The National Science Foundation for the past few decades has tended to avoid funding energy projects, mostly a jurisdictional attitude in favor of the Department of Energy, but is finally beginning to recognize this deficiency and has initiated steps to take a more active role.

So let’s get to the heart of the matter regarding terrestrial microalgal biofuels production: the eventual cost of production. In general, the price of crude oil is a good an indicator as any of what biofuels from algae facilities must meet to be competitive. Let us look at the numbers. Crude oil today costs $80/barrel, or $1.90/gallon. The current USA average is $2.73/gallon for regular gas. The ratio is 1.43, that is, gasoline costs 43% more than crude oil. This ratio was 1.64 in 2008, 1.85 in 2007 and 1.92 in 2006. The differential accounts for profits, taxes, marketing, etc., and will drop as the price of crude oil rises, save for added taxes. European gasoline taxes, for example are considerably higher than in the U.S. There were times last year when gas sold for more than $11/gallon in Norway and Germany.

One way of looking at this is if the best industry can do is produce biofuels for $5/gallon, then oil needs to go up to $220/barrel. If the production cost can be reduced to $3/gallon, then, oil would only need to rise to $126/barrel. My gut feeling is that $3/gallon will only be attained with considerable R&D over a period of 10 years or more, and maybe never. However, there is the matter of life cycle costing, and if the financing can proceed with the confidence that oil will rise beyond $150/barrel, with attractive government incentives, there is no reason to doubt the establishment of these operations relatively soon, even if oil only might be in the range of $100/barrel.

Recognizing my mental assessment of what knowledgeable colleagues tell me about microalgal biofuels today costing about $50/gallon, and a current Department of Defense estimate showing a minimum figure of $20/gallon, let us look at the latest possible biofuels from algae speculative future cost of production per gallon:

$ 1.....A few entrepreneurs (of significant dubiousness)

$ 2.....Department of Energy (very unofficial, but murmured)

$ 3.....Defense Advanced Projects Agency (desired)

$ 4.....Noted scientific authority (someday if all goes right)

$ 5.....DARPA definition of affordable

$10+...Noted industrial authority

My noted scientific authority (until this writing, I had real names for the science and industry individuals) said this is like comparing apples and asteroids. He is right, of course, for what do those above figures mean? Someday with major breakthroughs in genetic engineering? He provided a dozen more qualifiers. Well, for one, almost surely, these guesses represent the cost after a decade of development, not today. Even then, the Department of Energy projection must be more wishful than anything else. At least, though, that department is now treating this field with some urgency and has applied $50 million of stimulus funds toward this cause. DARPA, more so, is reported to have set aside $100 million for this adventure. But half of energy use in the military is for jet fuel, so they better be concerned. Ah, the private sector: Exxon Mobil is said to have dedicated $600 million, in partnership with the genome table co-champion, Craig Venter.

So to summarize, don’t believe $1/gallon biofuel from algae, hope for $3/gallon someday, but for the next few years, don’t be surprised if biofuels from algae only become competitive when oil reaches $200/barrel ($4.76/gallon). The only other way is for some very generous tax incentives, as for example, presently provided for ethanol, plus an uncharacteristic financial attitude incorporating life cycle costing and externalities. For their $600 million investment, you can bet that Exxon Mobile is covering their future by setting the stage for this eventuality through traditional Congressional and White House discussions.

There is an additional pathway: linking microbial biofuel production to pollution control. The added value factor might well be the key to earlier commercialization.

The situation seems more difficult for jet fuel, as the current price is about $2/gallon, almost the cost of crude oil itself. It is more expensive to refine jet fuel than gasoline, yet, over time, the selling price of jet fuel has been cheaper than gasoline. The ratio for jet fuel has over the past few years been in the range of 1.25. How can this be? Well, bulk purchases, advanced commitments and lower taxes. In any case, a microalgal jet fuel producer, thus, will actually be faced with the same production cost to match crude oil, as one selling biogasoline, for the price to the consumer is, for the investor, almost irrelevant.

The State of Hawaii absolutely depends on DARPA succeeding beyond all expectations, for at those astronomical future oil prices, which could come at any time, and certainly in five to ten years, airline fares will go sky high, tourists will stop coming to our state and we will enter into a prolonged great depression. Unless, of course, the Hawaiian Hydrogen Clipper, by some miracle, suddenly gains an Apollo-like following, with mushrooming wind farms, geothermal fields and OTEC plantships providing cost-effective hydrogen. Yes, dreaming…but not much more than the reality of bio jet fuel from algae.


The Dow Jones Industrials surge 204 to 10006, while markets in the Orient swoon and those in Europe rise. Gold rose $2/toz to $1091 and oil is now back to $80/barrel.


Tropical Storm Ida made landfall, and will bring considerable rain to Nicaragua and Honduras, but will weaken, than escape into the Caribbean, and possibly strengthen.


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