Post 1: The Algae Boom (Bubble?)

So, these days, even the average grocery clerk has heard the hooplah about algae biofuels and wants to know if this is really going to solve the end-of-oil problem.  This is a very new phenomenon.  When I first started working on algae biofuels in 2006, the Google filter I set up to find news about algae brought back 95% stories about the dangers of algae blooms (more ‘bout that later), and how to kill algae — precious little about algae farming.

That has changed, in a major way.  Now, every time one turns around, there’s a new, heavily-funded algae play.  Billions of $$$ are being pumped down a global algae biofuels R&D pipeline.  Everyone from governments (e.g. DARPA and DOE, and now NASA) to giant corporations (see Exxon’s $600M), to small-scale DIY-ers (like my algaelab.org) are throwing their hats into the ring.

Why?

Well, before we launch off into peak oil, etc., let’s look at fundamentals.  For those new to this, algae are microscopic plants that float in water.  Through the natural process of photosynthesis, which algae perform at higher rates than land plants because of their small size, algae produce more than half of all the oxygen we breath, and remove a corresponding amount of carbon from the atmosphere, an amount far exceeding what we humans produce.  Despite being microscopic, algae blooms are frequently visible from outer space, can annihilate huge ecosystems, and even threaten to stop the Olympics.

There is much more to say about algae as they exist on our planet already – their astonishing diversity and ancientness, for example, but given their sheer mass and reproductive capability it would seem natural to want to redirect this to human profit, as we have with their multicelled brethren.  And recent events – related to the exhaustion of current approaches to agriculture and fuel production — have kicked development of algae farming into high gear.  Triple-digit oil prices have motivated a global drive to find renewable replacements for fossil fuels – i.e., biofuels – creating a demand for agricultural output that far outstrips what land crops could ever provide, given available arable land and fresh water.

Which brings us to the main bullet points of any algae biofuel production pitch:

1. Algae don’t need arable land, any special kind of land, or even land at all – they can be grown in deserts, or on the surface of the ocean;
2. Algae don’t need fresh water – they can be grown in salt water, or in saline ground water, and especially love waste water, i.e. sewage;
3. Algae are extremely productive on a per-area basis, producing more biomass per area than land crops;
4. Algae can convert over 50% of their biomass into oil, far more than the few percent of land crops, so their per-area oil production is 100x or more of typical current oil-generating crops;
5. Algae can clean up waste water, efficiently removing nutrients that would otherwise pollute the environment;
6. Algae can clean up carbon dioxide and smog-forming nitrogen oxides from industrial exhaust sources such as power plants;
7. Algae can produce a wide range of products from biofuels to nutraceuticals, fertilizers, chemical precursors, etc.

Algae are also astonishingly diverse, and incredibly ancient, dating back to near the origin of life.  Referring to “algae” as a group is almost a misnomer, as the evolutionary-genetic expanse of micro-algae is vast.  Pick two algae, even two that look identical under the microscope, and they may be no more closely related than you are to a fungus, or even further apart.  It has been about three and half billion years since the first cyanobacterium emerged from the primordial ooze — for organisms that reproduce daily, this means a trillion or more generations — compared to a measly hundred thousand or so separating us from Australopithicus.  Add to this the huge range of organisms that have engulfed algae to take advantage of their photosynthetic apparati (and who were often engulfed in turn), and even the algae who have lost their chlorophyll to live off of chemicals and other creatures, and “algae” becomes a term so wide it almost loses meaning.

What this means, practically, is that algae grow anywhere there is water, sunshine, and CO2, producing a dizzying array of possible products.  This fact is beginning to be reflected in the diversity of algae companies — from Solazyme and Martek, growing milky yellow algae on sugar in the dark, to Aurora Biofuels, Seambiotic, LiveFuels, and many others using open ponds to make fuel from exhaust in the sun, to AlgaTech growing bright red algae in tubes in Israel, making an antioxidant worth more per gram than Colombian nose candy.  And this is just scratching the surface.

But for now, everyone is focused on one potential algae product — fuel.

Algae Biofuel — What the Fuss is All About (for now)

So, fuel.  Well, it’s no secret that oil is running out (though we may argue about the timing), or that the extraction and consumption of fossil fuels cause a great deal of harm to people and the global environment.  Triple-digit oil prices have triggered a run on alternative fuels, mostly made from land crops, but since the vast majority of potential farmland is already in use or consists of vital ecosystems, this can’t be done on a large scale without tragic consequences for food markets and the few remaining intact ecosystems, not to mention limited water resources, increased demand for fossil fuel-based fertilizers, more agricultural pollution, etc…
In rides algae to the rescue!

Such was the slogan of algae pioneer GreenFuel Technologies.  Founded in 2001, with MIT roots, GF jumped into the algae ring years before the “algae boom” — in fact, in some ways, they launched it.

By 2004, GreenFuel had a row of triangular acrylic tube photobioreactors capturing carbon dioxide and NOx from the exhaust of a power plant on the MIT campus.  They made wild claims as to the yield of algae that would be attainable, obtained $20M from a top-flight Wall Street venture capital company, and were fundamentally ‘powned by Australian physics graduate student Krassen Dimitrov, who proved using the most basic assumptions that GreenFuel’s bioreactors could never turn a profit.  (We will go into this analysis, and its limitations, soon.) They were also publicly mocked by veteran algae biofuel researcher John Benneman.

GreenFuel fired back at its critics, rebutting Dimitrov, and legally threatening Dr. Benneman.  And the fundamental disdain which they showed toward basic physics and economics did not prevent them from getting further funding.  But reality ultimately caught up with them; in mid-2007, they fired half their staff, and in 2009, they went out of business, but not before they managed to get involved in a mafia-linked scam in South Africa.  $70M+ down the drain.

Losing money on alternative energy technologies is nothing new.  But have we learned anything?  Are people giving money to current algae co’s showing GreenFuel-like signs?

And what was this “Reality” that GreenFuels ran up against?

Next: Sub-Prime Algae Companies!