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Hope for Biofuels in ‘Oilgae’?

Courtesy of Steve Jurvetson

With growing concern over the ethics and efficiency of first generation biofuels (see here), interest has increased in third generation, or algal, biofuels. Some, however, question the technology’s real-world potential, and call publicity surrounding investments in the technology, such as this Exxon Mobil TV commercial, “green-washing.” To help properly assess the debate, here’s an overview of algae biofuel technology and what stands in the way of its deployment.

Biofuels are fuels produced from biological raw materials. In the case of algae biofuels, the biological feedstock is algae, which are grown in in systems that provide them with sunlight and nutrients such as nitrogen.

Although other fuel types can be generated, the two most common algal fuel products are biodiesel and jet fuel. The conversion processes that transform algae into these useable fuels are similar to those used with other biodiesels and traditional jet fuel refining. With biodiesel, fuel is generated from oil extracted from the algae that is then submitted to transesterification, which decreases the viscosity to within the range of current petroleum diesel (ASP report). For algal jet fuel, hydroprocessing technologies like those already used by refineries create a kerosene-like fuel (NREL).


Algal fuels have several advantages over first generation biofuels, as elaborated by Pienkos and Darzins (2009). Foremost among these is high per-acre productivity compared to terrestrial oilseed crops (DoE). Single-celled algae grow quickly, doubling their biomass within 24 hours.  This high growth rate enables them to be harvested daily rather than once a year (Popular Mechanics). They also have high oil yield, since the oil content of some strains of microalgae can exceed 80% by weight of dry biomass (Christi, 2007). So while converting the entire 2007 US soybean oil yield to biofuel would replace only about 4.5% of annual US petroleum diesel consumption, using the same amount of land to cultivate algae would replace 61%, even at very conservative productivity projections (Pienkos and Darzins, 2009).

Secondly, algal biofuels do not have the same ethical concerns as first generation biofuels because algae are not a food resource. In addition, since algae are grown in water, marginal land can be used. Thus algae production does not compete with food or other biomass-based fuel production (Mata et al, 2010).

Another advantage is that algae can utilize diverse water sources, including brackish, saline, and wastewater. Consequently, algae technology does not represent additional demand on freshwater supplies (ASP report).

Algal fuels have particular climate benefits above first generation biofuels. Algae capture two pounds of CO2 in each pound of algae produced (Subhadra and Edwards, 2010). For optimal productivity, CO2 levels much higher than the 0.03-0.06% in Earth’s atmosphere are required. If waste CO2 from emissions from coal-fired power planet is pumped into algae-culture systems, algal biofuel production can have the added benefit of CO2 recycling, converting waste CO2 into a useable form of energy (ASP report).

Finally, algal fuels produce valuable co-products, such as nutritional supplements and animal feed which may be able to offset some of the costs (ASP report).

Algal Biofuels Today

Currently, algal biofuels are technologically and environmentally viable, especially when recycling resources, such as emissions from energy production and nutrients from wastewater. High costs, however, prohibit commercial viability. While the Department of Energy estimates $8 per gallon after scale-up of current technologies, the Navy recently paid $425 per gallon in an algal fuel purchase. The primary challenge is the difficulty in scaling up from the laboratory setting (Pienkos and Darzins, 2009). Opinions differ over how far and how fast these costs will decrease, but the Department of Energy estimates “many years.”

Yet research continues. Exxon Mobil is only one of the many investors in this technology. Outside the laboratory, some commercial applications have been successfully completed, such as OriginOil and MBD Energy’s pilot project using CO2 emissions from an Australian coal power plant to produce algal biofuel. MBD is now planning on extending these algae production capabilities to three of its plants.

Policy Framework

Sustained supportive funding and policy measures are needed to ensure the confidence to invest substantially. Since the end of the Aquatic Species Program in 1996, funding for algal research has been sporadic (Pienkos and Darzins, 2009). The two main policy measures supporting biofuels, the Renewable Fuel Standard and ethanol tax credits (and corresponding import tariffs), give an advantage to cellulosic biofuels.  Tax credits do not apply to algal fuels, and while the EPA has officially designated algae biofuels “advanced biofuels” and included them within the Renewable Fuel Standard, algae biofuels are largely left out of the USDA “roadmap” for achieving these targets.

However, there have been recent investments pledged from both the Department of Energy and the Department of Defense (from DARPA, the Airforce, and the Navy). The defense sector has also acted as an “early adopter,” taking on the higher prices typical of a new technology, and executing demonstration projects such as the Navy’s successful test of a boat powered by algae-petroleum mix fuel.

Things may also be looking up with regards to policy. The Algae Based Renewable Fuel Promotion Act would extend the $1.01 per gallon cellulosic production credit to algae producers. The bill was introduced in the Senate in 2009 and passed in the House in September 2010 (Reuters). It will have to be reintroduced in the current session for any hope of future advancement toward law.


Overall, while algal biofuels are a theoretically viable alternative to fossil fuels, they currently stand in a place of great uncertainty, with their success dependent on breakthroughs that are unlikely without a policy environment conducive to significant investment into further innovation.

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Tom Catino
Tom Catino
13 years ago

There has been over $2 billion spent on algae oil in the past several years. Production may be closer than you believe & at a lower price. There has been a lot of venture capital & government money spent. Results are positive & future funding seems likely as we approach the downslope of Peak Oil

12 years ago

Throughout history great & viable ideas like biofuels have been shot down only because something less expensive and better was developed at the same time.

I think that is what we will see with biofuels vs natural gas. New horizontal drilling and fracturing advances have not only pushed back “Peak Oil” but they have also unlocked an enormous amount of cheap clean burning natural gas under our feet.

It’s going to be hard for biofuels, solar, wind or any other form of alternative energy to compete with that without subsidies.

Great advances have been made with biofuels but as long as natural gas remains $3 MMCF-when the dust settles natural gas will be on top.