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Summary:

It’ll be a long road for algae biofuel producers to make any significant dent in the world’s overall fuel supply. How long? Consider this: By 2020, the algae biofuel industry is likely to produce only 61 million gallons per year globally, Pike Research said Wednesday.

Blue green algae

It’ll be a long, long road before algae biofuel producers make any significant dent in the world’s overall fuel supply. How long? Consider this: By 2020, the algae biofuel industry is likely to produce only 61 million gallons per year globally, research firm Pike Research said Wednesday.

That number, which translates into $1.3 billion in market value, is tiny considering how much fuel is needed to power today’s cars these days. The U.S. alone consumed nearly 138 billion gallons of gasoline in 2009, according to the U.S. Energy Information Administration. The government has set an ambitious plan to produce 36 billion gallons of biofuel of all kinds by 2022. Just last week, the Department of Agriculture launched a $461 million subsidy program to help growers cultivate and transport energy crops, including algae, to processing facilities.

None of the dozens (even hundreds) of algae biofuel developers have yet to start supplying the mass market, so getting to any meaningful volumes will certainly take time. The world won’t likely see the first commercial plants with a capacity of at least 1 million gallons until 2014 at the earliest (could even be 2016), according to Pike’s report.

Algae seems a promising fuel stock partly because it can produce 2-20 times more oil per acre than other energy crops, and it can live in freshwater, seawater and wastewater, Pike said. But growing and processing them in mass quantities has proven an onerous challenge.

In fact, technical challenges, coupled with the difficulties of lining up money to finance production plants, have struck a number of startups in recent years. We took stock of those changes and recently assembled an updated list of 15 algae companies worth watching.

Some of the algae biofuel developers also are seeking alternative markets to generate revenues while they march toward commercial production of transportation fuels. Solazyme, for one, is selling algae oil for food and skincare. And Aurora Algae changed its name from Aurora Biofuels recently to reflect a move away from the fuel market.

The largest algae biofuel producing country will be the U.S because it’s home to 50 percent of the world’s research and development efforts, Pike said. Europe accounts for 30 percent of the pie, but will not be a big producer because of its access to land, water and other resources. China, hungry for all types of energy, could be a big player, too. By 2020, the U.S. could produce 47 percent of the world’s algae biofuel, followed by 21 percent from China and 14 percent from Australia/New Zealand, according to Pike’s report.

For more research, check out GigaOM Pro (subscription required):

Photo courtesy of Steve Jurvetson

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  1. Another decade from now hopefully we will have much more efficient vehicles. It’s really sad to see that fuel efficiency has become stagnant since the 1980′s, even though there have been so many oil crisis.

    It’s certainly a step in the right direction, but not the answer.

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  2. Major University Admits Hard Science
    Problems Relating to Algae Have Been Solved

    Arizona State University Senior Vice President Rick Shangraw recenty said “…algae will “deliver soon” because…most of the hard science problems science problems regarding algae have been solved…Now…it’s largely an engineering problem.”

    The REAL question is: Does the DOE really want to get off of foreign oil or do they want to continue giving grants to algae researchers at universities to keep them employed for another 50 years?

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  3. I have to agree with FatAlgae below – but I don’t know if it’s just the DOE whose intent needs to be questioned. How and why would the USDA launch ‘a $461 million subsidy program to help growers cultivate and transport energy crops, including algae, to processing facilities’ when it knows full well that the only ones who are growing in sufficient quantity and will benefit from this subsidy are (again) the corn growers!??! This after the USDA ‘loan guarantee’ program received a lot of attention, with a lot of people not realizing that it was a guarantee program and our banks are not lending (as in, if there’s not a loan, there’s nothing to guarantee)! So, we have algae growing in lots of little test tubes and research centers all around the country, with funding going to the universities (one has already claimed that the hard science problems have been resolved) for more research, and we have funding to transport it to processing facilities, but we still don’t have the money to build large enough growing facilities to make it economically worthwhile. And the DOE’s latest move was to fund 4 more ‘centers’ to do even more research. When is someone going to halt DOE funding and replace the people who were given the task of developing alternative fuels (ie NREL -according to its website: NREL is the only federal laboratory dedicated to the research, development, commercialization and deployment of renewable energy and energy efficiency technologies. Backed by 33 years of achievement, NREL leads the way in helping meet the growing demand for clean energy) with people who have a clue how to get algae out of the labs and into production and commercialize and deploy the rooms and rooms of intellectual property that has been developed at taxpayer expense?!!

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    1. The $461M USDA program only applies to corps that can’t be used for food or animal feed, so corn growers can’t qualify.

      I don’t know what Arizona State’s Rick Shangraw meant by “most of the hard science problems regarding algae have been solved.” There is no end to scientific pursuit of any subject — there’s always potentially a better material or process to improve how we create something. And besides, and you guys should know this, making a leap from lab to manufacturing is a difficult one. The “engineering problem” Shangraw referred to is not trivial and does require a lot of money to get there. Now, how much public money should be spent does make for a good debate.

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  4. So about one 2000th or 0,05% of the US transportation fuels need by 2020. Very importantly, where will algae fuels be in 2050? Will it still have sub-percentage impact or will it scale to a meaningful size?

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