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Up From The Slime

Start-up companies see algae as the new renewable fuel source

by Melody Voith
January 26, 2009 | A version of this story appeared in Volume 87, Issue 4

Good Slimes
Credit: Solazyme
Solazyme looks for algae strains that can consume cellulose and produce large quantities of oil.
Credit: Solazyme
Solazyme looks for algae strains that can consume cellulose and produce large quantities of oil.

ALGAE, considered lowly organisms by many, are challenging their more popular cousins, corn and soy, to become the biofuel feedstock of the future. It is precisely algae's off-putting qualities—they're oily and fast multiplying—that have attracted fans and financing from the renewable energy sector.

Supporters say the ubiquitous pond scum can produce a renewable fuel without taking arable land or clean water away from food production. They say oil harvested from domestically grown algae is carbon neutral and can be used in place of fossil fuels. But skeptics counter that overcoming the high cost of growing and processing the algae will take several years, if it is possible at all.

Many entrepreneurs believe it can be done, and they have formed more than 100 start-up companies in hopes of cashing in. Venture capital investments in algal biofuel efforts accelerated in 2008, reaching $180 million in the first three quarters, compared with $32 million in 2007, according to the industry watcher CleanTech Group. The firm says algae absorbed roughly 20% of all venture capital invested in biofuels last year.

The majority of the investment went to three start-ups: Sapphire Energy, based in San Diego; Solazyme, from San Francisco; and Solix Biofuels, with headquarters at the Engines & Energy Conversion Laboratory at Colorado State University, in Fort Collins. All three companies say they now have enough funding to build large-scale pilot facilities.

But to overcome the problems of scale and cost, each start-up is working with a different combination of inputs, conversion methods, extraction techniques, and outputs. Algae have been sampled from local sources, extreme environments, and genetics labs. They have been grown in sunlight and in the dark, in high-tech tanks and low-tech ponds. And they have been processed to produce various fuels, chemical feedstocks, and ingredients for food and cosmetics.

So far, none of the approaches is a clear winner. Among the seemingly endless scenarios, "there is not yet, today, a commercially viable algae approach," points out David H. Kurzman, managing partner of renewable energy consultants Kurzman Capital. He says the best strategy will take three to five years to reach commercialization. At that point, Kurzman predicts, algal fuel "could be a useful arrow in the quiver of solutions to our dependence on foreign oil."

Researchers have long known that algae could be used as an energy source. In 1978, the Department of Energy first examined algae as a possible source of hydrogen. In the 1980s, DOE changed direction and focused on using algae's oil-producing capacity to make biodiesel as a transportation fuel. Scientists were able to make the fuel, but DOE canceled the program in 1996, saying the process could not be made cost-competitive with petroleum refining.

Now, with today's focus on high fuel prices and domestic energy production, researchers, including ones at DOE, are taking another look at algae. "It seems that $150-per-barrel oil makes everyone want to dredge the swimming pool," says Bryan Willson, chief technology officer of Solix.

Algae absorbed roughly 20% of all venture capital invested in biofuels last year.

LIKE BETTER-KNOWN biofuel feedstocks, algae use photosynthesis to convert CO2 and energy from the sun into biomass. But compared with terrestrial plants such as corn or switchgrass, algae are six to 12 times more efficient at creating usable biomass.

Part of what makes algae so much more productive is that they get a structural assist from the water in which they grow. Support from water means algae don't have to form cellulose and lignin, the "recalcitrant" structural components of terrestrial plants. Breaking down these substances is one of the big challenges of converting wood and grasses into a liquid fuel.

Inside their mushy cells, algae contain up to 50% vegetable-oil-like lipids by dry cell weight, depending on the strain and the growing conditions; most of the rest is starch and sugars. Algae can be grown on nonarable land and with methods that consume very little water. In fact, algae farmers can get higher productivity by using nutrient-rich wastewater and CO2 from industrial emissions.

Researchers at the National Renewable Energy Laboratory, in Boulder, Colo., looked at algae and calculated that a hectare of the stuff could produce about 200 bbl of oil, compared with 2 bbl of oil from a hectare of soybeans.

Like soy raised for fuel, algae are being targeted because of their high oil content, although many companies also hope to turn the remaining biomass into animal feed or ethanol. But farmers who grow traditional crops have a head start. Their expertise with growing techniques, herbicides, and pesticides allows them to dependably raise productive monocultures. In contrast, algae growers are still learning how to protect their fragile crop from predators and invasive species.

Executives at the start-ups agree that high productivity and growth rates are what make algae an attractive choice for producing fuel. They also acknowledge that production costs need to come down by about a factor of 10. And that's about all they agree on. Among their many disagreements is the best way to house the hard-working little oil producers.

Algae can be grown either in specialized vessels, called bioreactors, or in ponds that are open to the elements. Sapphire has chosen to put its algae in open ponds at its demonstration facility in the New Mexico desert. "We start with a 'seed' that is grown in a bioreactor," explains Brian L. Goodall, a chemist and Sapphire's vice president of downstream technology, "but ultimately the vast majority of the crop has to be grown in an open pond, or else the capital expense would be prohibitive, in our opinion."

Through genetic engineering, Goodall claims, the company can "tailor the oil composition, productivity, and other traits" of the algae. Some of these other traits include the ability to live in extreme environments. For example, in New Mexico, the algae strains are designed to grow in water with salinity levels from brackish to higher than seawater.

Sapphire's algae are designed to yield oil that is easily processed into liquid transportation fuel. But first, the algae must be harvested, and that is where the open-pond method gets expensive. "At the end of the day, you can expend a lot of energy to remove the water; that alone could potentially make it too expensive," Goodall says. He says that Sapphire has designed a cost-effective dewatering process.

After removing the water, Sapphire uses another proprietary process to extract the oil, which it calls "green crude." The company then subjects the oil to catalytic cracking to obtain gasoline or to hydrogen treatment to obtain diesel or jet fuel. Goodall stresses that Sapphire is committed to producing an energy source that is cleaner than regular crude oil but so similar to crude that it can be dropped into the existing fuel infrastructure.

Green Thumbs
Credit: Solix Biofuels
Solix Biofuels employees and Colorado State students examine algae growing in a photobioreactor.
Credit: Solix Biofuels
Solix Biofuels employees and Colorado State students examine algae growing in a photobioreactor.

ALGAE-FUEL rival Solazyme also grows genetically engineered algae to produce a crude oil designed for today's fuel infrastructure. "We made our first fuel and drove our first car exactly one year ago. To this date, we are still the only one that has made ASTM-standard biodiesel," says Harrison F. Dillon, cofounder and chief technology officer, referring to the fuel standards setting group.

But the two firms use processes as different as night and day. In an unusual twist, Solazyme feeds its algae various cellulosic and other waste materials rather than CO2 and sunlight. By choosing different strains of algae, Solazyme can also target its oil at higher-margin industries such as specialty chemicals, food, and cosmetics.

"Algae are efficient at using cellulosic material to make oil. We can leverage the huge amount of work that has already gone into cellulosic energy research," Dillon says. He asserts that it is too expensive to rely on the sun for energy, because once the top section of algae expands, it shades the rest, limiting productivity. Solazyme uses traditional industrial fermentation equipment, he says, where it takes only three days to grow algae at 100 times the density of an open pond.

Meanwhile, in southwest Colorado, Solix is working to combine the best of both approaches. It is breaking ground on a large-scale pilot facility that will contain rows and rows of photobioreactors. Each is specially designed to produce dense quantities of algae through exposure to sunlight and waste CO2. "We create a protected place for the algae to do their work. If you've gone to the ends of Earth or transplanted gene sequences, you want to grow only that species. If I put it in my pond, I will find it is outcompeted by local algae," Solix's Willson says.

Solix will depend on its engineering strengths—Willson is a professor of mechanical engineering at Colorado State—to help it bring down photobioreactor costs. "We've got to find ways to get the high growth rate of a protected, closed environment at the low cost of open ponds," he says. The Solix system tries to do this by growing the algae in vertical envelopes of thin plastic that are suspended in water.

To extract oil from the algae, Solix employees first dry and then pulverize the algae, use hexane to extract the oil, and recover the hexane by boiling and condensation. Willson says the pilot facility will allow the firm to lower costs by recycling energy from other parts of the process. Indeed, all three companies say they are counting on cost savings through scale-up to help make the numbers work.

Whether a company focuses on biological or mechanical engineering, consultant Kurzan says it must carefully weigh all the costs before settling on a business model. "Think of all your inputs. If you want free sun, you need to buy land; if you use cellulose, you have supply and logistics costs."

Even with very productive algae, start-ups must contend with high costs for equipment and operations, Kurzan explains. And learning to work with a new, living source of energy is also risky. "In this business, killing your algae might be a big issue," he warns.


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