Algae Fuel’s Long Road to the Pumps: 61M Gallons by 2020

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.

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Photo courtesy of Steve Jurvetson

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