Friday, November 20, 2009

Algae oil: when green turns to gray

Years away from commercial production

I ended Part 1 of my analysis report on algae oil noting that Part 2 would address the cultivation and production challenges facing this nascent industry. I was then going to move on to a look at the financial state of the sector in Part 3; political, cultural and environmental impacts in Part 4; and, end with a summary and investment recommendation for the sector in Part 5. Well, mission aborted. My initial excitement about algae oil has turned south. It’s not that there isn’t a possibility for algae oil to contribute some percentage of our energy needs, but that it’s so far in the future that chances are high that some other clean energy (or combination) will capture the market instead.

I recently heard an engineer on NPR (National Public Radio) discuss the reality of prototypes. What looks like a stripped-down, scaled-down version of the final product humming along for an audience is actually being tweaked and prodded and monitored by a team of engineers making sure (sometimes, manually) that all the systems are working. That seems to be where we are with algae oil. It can be produced, but not without putting a lot more energy in than we get out. That’s not a good plan for making money in the marketplace.

I came to this conclusion, at first, simply because of the jumble of techniques used to cultivate and process algae into biofuel. Although this could be considered a sign of strength that this marvelous little organism could be turned into the energy we all love and crave, it became clear from researching web sites and papers that we were perhaps only one or two doors down the hall from the lab where the algae oil idea was hatched. As skeptics are saying, if somebody tells you algae oil is now at competitive prices, ask where you can buy a gallon. Best estimates put the current price at about $100/gallon.

At last count, there were well over 50 start-up companies looking to turn algae into biofuel. There are about six methods being used:
  1. Bioreactors -- Algae is grown in closed glass or plastic tubing, or polyethylene bags. CO2 and nutrients are fed into the system. Light can be natural (sunlight) or artificial lighting.
  2. Fermentation -- Algae grows in closed tanks with no sunlight. Sugar is introduced to feed algae growth.
  3. Wastewater -- Companies clean up algae-infested bodies of polluted water and turn algae into biofuel.
  4. Gasification -- High temperatures are used to turn algae into biogas.
  5. Green Crude -- Various methods are used to create a fuel product that can be fed directly into our current refinery system for eventual consumer use, instead of conversion to ethanol or biodiesel.
  6. Open pond -- Algae is grown in shallow ponds and fed CO2 and nutrients. CO2 often comes from nearby factory smokestacks.
There are more, as well as more combinations, of these methods. My problem with the sector, rather than the companies or methods, is that there seems to be no consolidation around any one or two methods, with the possible exception of bioreactors. This indicates to me that we are still experimenting with methods that are neither cost-effective or scaleable.

Enter Robert Rapier, who I ran across in my research. I could end here and just send you to his blog and web writings, but instead I will attempt to summarize his conclusions in my next post about the dimming prospects for algae fuel, as well as my own thoughts. Remember, of course, that he is the scientist/engineer; I’m the journalist.

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