Sector Portrait: Energy
PetroAlgae grows specially bred species of algae in a series of test ponds in Indian River County.
Algae and other non-food crops, such as the fast-growing jatropha being planted en masse in south Florida these days, are seen as the "next-generation" of biofuels. As part of the 2009 economic stimulus bill, the federal government poured $800 million into next-generation fuels. That cash is buoying Algenol, which received a $25-million grant from the Department of Energy to build a pilot-scale algal-fuel biorefinery with partner Dow Chemical in Texas. After Lee County commissioners invested
$10 million to help Algenol build its biology and engineering labs in job-hungry Fort Myers, the company agreed to build its full-scale biorefinery in southwest Florida, too.
Rather than grow algae in ponds like most of its competitors, Algenol cooks algae, sunlight, CO2 and seawater in 50-foot-long, soda-bottle-shaped bioreactors to produce ethanol. CEO Paul Woods says his company "will be the largest consumer of CO2 on the planet."
Scalability is the key. While more than 100 companies nationwide have now jumped into the algae-to-fuel business, all of their testing to date has been so small-scale that "the state-of-the-art in this field is wanting in almost all respects, from the ability to achieve long-term culture stability to high productivities to low-cost harvesting to extraction and processing of the oil," according to a recent national analysis of the industry by a team of researchers at Cal Poly State University and Lawrence Berkeley National Laboratory in California.
According to the Cal Poly report, as of mid-2010, not one pilot algae plant of 10 acres or more was operating anywhere in the world. Only two small-scale, "pre-pilot" plants had progressed for more than two years, one in Israel and one along Florida's east coast, at the Florida Institute of Technology's Institute for Marine Research. Professor Junda Lin, director of FIT's marine institute, was principal investigator on that project, funded by Aurora Algae, an Alameda, Calif.-based company.
For the past four years, Aurora and FIT scientists have tested different algae species in myriad conditions at a four-acre site adjacent to the ocean at Vero Beach. Lin says the project, now coming to a close, was successful enough that Aurora executives believe they have the technology they need to commercialize production. Last fall, they announced they'll build the company's first large-scale facility in northwestern Australia, which they say has "the combination of a perfect climate and the right blend of resources — including abundant seawater, industrial CO2 and skilled labor."
Still, the economics of algae are problematic enough that Aurora last year repositioned itself to also produce pharmaceuticals, protein bars, oils and fishmeal. In addition to oil that can be refined into fuel, algae can yield omega-3 fatty acids, proteins and other oils at more profitable margins than other methods of production. "Food or pharmaceuticals give us the possibility to be profitable from day one," says Aurora CEO Greg Bafalis.
The omega-3, "fish-oil" strategy is a linchpin of VandenBrekel's business plan as well. His profit margin from turning algae into biofuel, he says, is too small to justify investing only for that reason. The economics for omega-3 oils — a byproduct of his process — work a lot better. "Omegas have a wonderful market price," he says. "On the fuel side, we show Americans that we can reduce our dependence on fossil fuels. On the fish-oil side, we have a business."
VandenBrekel criticizes the level of government support subsidizing his competitors. Yet the New Mexico non-profit from which his technology is licensed relied on years of government funding to achieve its results. VandenBrekel has funded the company's proprietary distillation and other techniques.
In any event, the industry burns through cash faster than algae eat CO2. Take Florida's PetroAlgae. The company has been growing specially bred species of algae in its series of sun-lit tubes and checkerboard test ponds west of Fellsmere in Indian River County since 2006. PetroAlgae's executives say its bioreactors are generating more than 10 times the fuel yields typical in the industry. But in three years of operation the company hasn't generated any revenue and has burned through $80 million. It's now trying to raise $200 million in an IPO.
FIT's Lin says in addition to pharmaceuticals, proteins and pigments, algae companies may find profitability in another natural byproduct: Clean water. The primary work of Orlando's AquaFiber is to restore surface waters impaired by high nutrient loads or pollution. CEO Tom Bland says the realization that the process generates biomass came later, and "it's potentially earth-changing." AquaFiber's dried algae has been made into both algal oil and jet fuel. Sarasota's Algae Aviation Fuel also dries algae into a powder its developers say can be used to fuel jet engines.
But so far, it's all just enough to fill a beaker rather than a barrel.
"We need to adjust our expectations," says Lin, who agrees with Philippidis and many top national scientists in the field that algal-fuel technology needs about another decade of R&D.
"On the other hand, we've got to realize that this is important, that it is worth our investment," Lin says. "One of these days, there's going to be a crisis. If we have to face it without alternative energy sources — we're going to be in trouble."
"We need to adjust our expectations," says Junda Lin, director of Florida Institute of Technology'’s Institute for Marine Research. He believes algal-fuel technology will take another decade of research and development. [Photo: Scott Wiseman]