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 Department of Energy 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 Algenol, Phycal, Sapphire Energy, Solazyme 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 heralded by ABO as an “important milestone” in algae’s growth.
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, S.1250, 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, H.R. 4168, 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.”
Changing the perception of algae at the U.S. Department of Agriculture (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 recent roadmap 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.