Algae: Pond Scum or Gold?

Last year, algae was gold. Oil companies, venture capitalists and even the Pentagon were embracing dozens of biotech companies that promised to turn the tiny one-celled plants into miniature factories for the production of biofuels.

This year, the bloom is off. The skeptics are out in full force, offering disparaging assessments like this memorable put-down from GreenTechMedia:

Hundreds of millions of dollars have been invested. So far, maybe a few thousand gallons of very expensive algae oil have been produced. . . . [A]t the moment, the only people making money in the algae biofuels business are artists doing graphic renderings of what algae plants might someday look like.

 

There are still a dozen or so significant algae-fuel start-ups in the market, but a new report by the Energy Biosciences Institute in Berkeley—a partnership of BP, the University of California at Berkeley, Lawrence Berkeley National Laboratory and the University of Illinois—casts more doubt on the size of their potential market.

 

The report estimates that with current technology, a 250-acre algae biofuels plant would need to sell its oil at $332 a barrel to break even—a price that would make even OPEC green with envy (pun intended).

 

Algae biofuel makes the most economic sense when made as a byproduct of treating wastewater—since the value of remediation is so high. But given the limited number of wastewater ponds in sunny areas with available CO2 supplies, this application could supply “at best a small fraction of 1% of total demand” for liquid fuels, the report allows.

“Even with low capital charges, it is not possible to produce microalgae biofuels cost-competitively with fossil fuels, or even with other biofuels, without major advances in technology,” it concludes, warning that it may take 10 years before the technology is commercially viable.

 

“Finally, even with such advances, the resource potential of microalgae biofuels will always be modest, mainly due to the lack of sites having all the needed resources, in particular available  CO2.”

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