Issue Date: April 20, 2009
Economic Realities Of Algae As Fuel Source
IT WAS GOOD to see the following sentence in the article on algae oil: "They [start-up executives] also acknowledge that production costs need to come down by about a factor of 10" (C&EN, Jan. 26, page 22).
The best results thus far from attempts at large-scale algae production were from HR BioPetroleum, which achieved 422 gigajoules per hectare per year (GJ/ha/yr) total bioenergy in their best year, 2001. That project cost more than $20 million. Still, HR apparently didn't have the resources to actually make fuel from the algae. Had they been able to do so, HR probably could have achieved about 36 barrels per hectare (bbl/ha), a far cry from the 200 bbl/ha mentioned in this article, which is based on the severely flawed studies from the 1990s. Conventional energy crops such as switchgrass and corn have demonstrated higher total bioenergy per area year after year.
One of the best recent algae studies comes from the University of Tennessee. The mean of their cost estimates for hydrogen from photosynthetic algae is about $50/kg. A reasonable extrapolation is that oil from photosynthetic algae would cost 30% less per unit energy, or about $35 per gal. There are no data yet indicating that any of the processes being used in lab-scale experiments will lead to photosynthetic algae for less than $5,000 per ton (the low end of current commercial-scale algae for the food industry) or fuel-grade oil for under $25 per gal.
The nonphotosynthetic route advocated by Solazyme will probably cost less as long as the cellulosic feedstocks are cheap, but that situation will not persist for many years. A severe pine-beetle blight began in North America in 1999, and today vast expanses (over 500,000 km2) of the forests in the U.S. are dead. These forests will be largely destroyed by fires over the next six years, and the price of cellulosic feedstocks will then soar.
When these feedstocks are $400 per ton, which is likely by 2014, oil produced from algae feeding on it will cost well over $9.00 per gal. How much more is anyone's guess, as we have not seen a useful paper on algae-oil cost projections in the past decade. For example, cost projections in a paper from HR BioPetroleum assumes bioenergy production an order of magnitude greater and operating costs an order of magnitude less than what they actually achieved.
Venture capitalists are clueless when it comes to figuring out how to solve technical challenges, but they usually are fairly quick to abandon their bad bets. Renewables are crashing because they have largely been guided by investor-driven hype rather than sound science. If algae investments in 2009 are down by an order of magnitude compared with 2008, that may not be bad, as it could leave more venture capital for carbon-neutral fuels based on better chemistry and economic realities.
F. David Doty
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