Algae Emerges as DOE Feedstock of Choice for Biofuel 2.0

There was a sense of deja vu in the biofuels sector this week when U.S. Energy Secretary Chu announced nearly $80 million in funding for research and development of algae-based fuels.

The dream of turning pond scum into diesel began with a similar flood of government investments by the Carter administration during the oil crisis of the 1970s. In fact, many of the buzzed-about algae-to-fuel startups today are basing their technology on seminal research from that era.

The government spending dried up after Carter left office, and research efforts suffered. Despite 30-plus years of work on a smaller scale since then and the fact that a wide range of backers, from the Silicon Valley venture community to major oil companies such as Chevron and Exxon, have begun investing heavily in the algae-based fuel business again over the last couple of years, a lot remains to be done before the potential of algae as a feedstock is realized.

Last year brought the closure of an early darling of the industry: GreenFuel, which grew out of research at MIT and planned to site its algae bioreactors next to coal plants, essentially using the coal emissions to grow algae that would in turn become fuel. Despite having made deals with several institutional clients in Europe and invested hundreds of millions in building pilot plants in the United States, the company couldn’t make the economics of its business pencil out, particularly once funding for its capital-intensive bioreactors dried up.

The sector still faces some major hurdles: figuring out which strains of algae are best suited to diesel production, deciding whether algae is best grown in giant (and expensive) bioreactors or in open ponds, and bringing down the cost of production.

According to Lissa Morgenthaler-Jones, founder of algae-based fuel company LiveFuels, which has partnered with the NREL scientists involved in the initial work in the 1970s, there are hundreds of thousands of strains of algae, and four algal genomes have been mapped. Each algae strain has particular characteristics that determine the type of fuel it could make: Strains high in fat are suitable for biodiesel, while strains high in carbohydrates are better for ethanol.

By even the most optimistic of predictions, however, actually producing fuel from algae at scale and at a cost that is palatable to consumers is a good 10 years away.

Nonetheless, the Department of Energy showed a preference for algae with this week's funding announcement.

It pledged $78 billion for two consortiums working on algae-based biofuel, including $44 million to the National Alliance for Advanced Biofuels and Bioproducts to develop "a systems approach for sustainable commercialization" of algae-based gasoline, diesel and jet fuel. One member of the NAABB is North Carolina-based Palmer Labs, which is working with rapid-growth algae and cyanobacteria to produce fuel at a scale to replace petroleum without infringing on fields that can be used for food production — avoiding one of the largest complaints about growing corn for ethanol.

"We take the biggest problems — currently in energy and food resources — and find cheaper and better solutions through innovative combinations of proven technologies," said Palmer Labs President Miles Palmer. "The DOE stimulus funds provide timely support of this pressing goal to us and our consortium partners."

The other group, the National Advanced Biofuels Consortium, led by the National Renewable Energy Laboratory and Pacific Northwest National Laboratory, is receiving up to $33.8 million to develop biomass-based hydrocarbon fuels that can work within the existing refining and distribution infrastructure.