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A New Bloom for Algae

A DOE roadmap marks a return to research on a source of fuel that was once thought too costly.

This week the U.S. Department of Energy released a new roadmap for the development of algal biofuels. DOE researchers had dismissed this type of biofuel as too costly to be commercially successful in the mid-1990s following a nearly two-decade-long research project.

Green fuel: Algae, pictured here in a tank, is being studied by researchers at the National Renewable Energy Lab for its potential to make biofuels.

The new roadmap was accompanied by the announcement of $24 million in new DOE funding for algal biofuels research. That money is in addition to $140 million in algae funding from last year’s Recovery Act.

“Biotechnology has come a long way” since the earlier project, says Valerie Sarisky-Reed of the Office of Energy Efficiency and Renewable Energy, one of the lead authors of the roadmap. “With a dedicated research and development program, we can bring the economics to a suitable place within a 10-year time frame,” she says. “We chose to invest in it again because we felt we were within striking distance.”

The DOE originally considered algae as a means of making biofuels because some types of algae naturally produce large amounts of oil. The prolific organisms, if grown in ponds or closed bioreactors, could be used to produce more fuel per acre than other biofuels approaches, such as biochemically or thermochemically converting cellulosic biomass into fuel.

But the DOE program, which concluded in 1996, found that growing algae, and then harvesting and processing the oils, would only be cost-effective at high petroleum prices–between $59 and $186 a barrel. About that time, oil prices were less than $20 a barrel. Current estimates of the required price of petroleum for algae to be competitive range widely, from $10 to $100 a barrel, Sarisky-Reed says. Some estimates are even higher. Conventional approaches are only competitive when oil prices are as high as $400 a barrel, says David Berry, a partner at Flagship Ventures, based in Cambridge, MA.

The roadmap lays out a wide-ranging plan to bring the cost of algal biofuel production down. It identifies a broad set of challenges and research goals rather than selecting the most promising approaches. Sarisky-Reed says more research is needed to know whether it’s better, for example, to grow algae in an open pond and then harvest the oil, or to grow algae that’s been genetically engineered to continuously secrete fuels inside closed bioreactors.

The roadmap also details the reasons algal biofuels have proved challenging. For example, growing algae in open ponds is likely the lowest capital cost option, but pilot projects have shown that highly productive strains in these open ponds are quickly crowded out by less productive wild strains from the environment. Sealing algae in bioreactors can help protect them, but can also cause algae to overheat.

One of the attractive features of algae is that it can grow in wastewater, which could reduce water costs and leave fresh water for other uses, such as growing food. But the roadmap notes that, in practice, water-associated costs could be higher than expected. For example, wastewater could introduce pathogens that kill algae, requiring potentially expensive water treatment. In open ponds, water that evaporates has to be replenished with fresh water (otherwise contaminants will get more and more concentrated over time). In closed reactors, cooling systems could also increase the need for fresh water. The roadmap concludes, “If not addressed adequately, water can easily become a showstopper” for the technology.

For these and other reasons, many investors continue to be skeptical of algal biofuels. “Of the two or three dozen business plans we have evaluated, none seem to be economically viable for fuels in the next five years,” says Vinod Khosla, the entrepreneur who founded Khosla Ventures in part to promote alternative energy companies. “A comparison of biomass to algae suggests that costs are almost always going to be higher for algae.”

Yet, as the DOE roadmap notes, private investment in algae has been racing ahead of government investment lately. The Biotechnology Industry Association estimates that over $1 billion in private funds has been invested in algae R&D in recent years, including a deal for up to $600 million from ExxonMobil. This investment, and the DOE’s renewed interest, has in part been due to advances in biotechnology that could make it possible to greatly increase the productivity of algae and reduce the cost per gallon of biofuel.

One approach that’s emerging is to genetically engineer algae and other photosynthetic organisms to make and continuously secrete fuels such as ethanol and diesel rather than making oils that have to be harvested and further refined to make fuel, as is the case with conventional approaches to algae. Berry says newer approaches could be much more economical. “There are vast differences in productivity,” he says.

Flagship Ventures founded and is backing a company, Joule Biotechnologies, that is taking the genetic engineering approach. Other companies, such as Synthetic Genomics, a company founded by the biologist Craig Venter that is being supported by ExxonMobil, are also working on heavily engineering algae to increase yields. Khosla says that making algal biofuels viable will require a departure from conventional algae. “I personally think it will be hard for algae to be a competitive fuel source,” he says, “unless a radical approach, like Craig Venter’s, works.”

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