Algae Holds Promise as Renewable Fuel — Just Not Yet
Special to CNBC.com
Algae is fast becoming a promising renewable biofuel because it can grow nearly anywhere, be b
lended with, or replace most traditional fuels, and can't be used as food.
But algae is far from a perfect solution. Industry observers say it will take anywhere from five to 15 years for algae to be produced on a scale that would be meaningful to the nation’s fuel needs.
“There’s a significant amount of capital required for algal oil producers to scale up to commercial meaningful quantities,” says Jim Rekoske, general manager at Honeywell’s UOPdivision, which provides technologies to the gas processing, refining and petrochemical industry.
Still, several privately held companies as well as academic institutions are actively pursuing practical, cost-effective methods of developing algae for use as a fuel. Several major energy companies—including Valero, ConocoPhilips and Chevron — are working with university research efforts, providing financing for small companies, or both.
That’s because maybe, someday, big oil companies can consider algae a fuel source for their existing extensive networks of refineries and pipelines, industry sources say.
Today, the U.S. uses about 150 billion gallons of gasoline a year, and 50 billion gallons of diesel and jet fuel, says Philip Pienkos, acting group manager of the applied science group at the National Renewable Energy Laboratory.
Algae could be used to address all those fuel needs as a stand-alone fuel, or if it’s blended with other fuels, depending on the refinery process used, Pienkos says.
Unlike corn-based ethanol, the most common biofuel, algae production does not contribute to rising food prices by diverting production away from consumption.
“It has the potential to impact our entire petroleum-based fuel portfolio,” he says.
But at the moment, efforts to understand what strains of algae are best, or what methods of converting it to fuel are the most practical, are largely in pilot stages, and the real financing to scale up operations through demonstration and commercialization stages won’t come until investors see longer-term results, Pienkos says.
To spur those results the U.S. Department of Agriculture and the U.S. Department of Energyawarded grants and loan guarantees in December 2009 to three algae companies with different technologies to create so-called biorefineries, refineries using biological solutions.
Algenol, based in Bonita Springs, Florida, has what it calls a direct-to-ethanol process to make ethanol from hybrid algae, carbon dioxide, water, and sunlight in closed systems (instead of outside in open ponds). For the USDA/DOE project, the CO2 comes from industrial emissions and is created in a pilot-biorefinery plant in Lee County, Florida.
Solazyme, which filed to go public in March, makes biofuels by growing algae in fermenters, which speed the ability of algae to make lipids, or oils. And Sapphire Energy, based in San Diego, is using a more conventional approach by growing algae in ponds, using sunlight, CO2 and saltwater in deserts. Sapphire extracts lipids from the algae and turns that into fuel.
Solix BioSystems, which did not get the USDA/DOE funding, uses yet another approach by growing algae in contained systems called photobioreactors,which let in light. The photobioreactors are made into panels that float in water, which allow the algae to grow rapidly, says Joanna Money, vice president of business development.
“Our focus is on engineering systems that enable algae to be cultivated at a large scale,” Money says.
At a demonstration planton three-quarters of an acre owned by the Southern Ute tribe near Durango, Colorado, Solix BioSystems uses waste water from coal-bed methane produced near the site, and CO2 from a mine scrubbing plant to create algae in the photobioreactor panels.
The plant produces about 3,000 gallons per acre per year of lipids, and has done so now for three years. While 3,000 gallons a year is a lot for the fledgling industry, it does speak to the challenge of making a difference in the nation’s 200 billion gallon a year oil appetite.
Making “green” diesel
Once oils are produced from algae, then what? One answer comes from Honeywell UOP’s renewable fuels business: green diesel.
UOP doesn’t grow, collect and process algae or other plant oils (tallow and camelina are the main ones), but it devises the technology for what they say are “drop-in” fuels that by themselves can replace diesel and fuel oil, he says. UOP then licenses the technology for others to use.
Green diesel is Honeywell’s trademark name for this drop-in technology. Green diesel is better than other biodiesels, industry sources say, because they work the same as petroleum diesels do at lower temperatures.
The business has grown by a factor of 20 since UOP created a separate renewable fuels unit in 2006. “This year we’re projecting 40 to 50 percent growth relatively easily,” Rekoske says.
Among companies using their technology is Eni , an Italian refining company, and Galp Energia, a conversion facility in Portugal.
Another is Diamond Green Diesel, a joint venture between Valero and Darling International to create a renewable biodiesel facility in Norco, Louisiana. Once operational, Diamond Green is expected to produce about 137 million gallons a year.