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.
"Biofuels must be compatible with the nation's engines, pipelines and refineries to play a substantial and effective role in reducing carbon emissions and reducing oil imports," explained Dale Gardner, associate director for renewable fuels and vehicles at NREL,making a not-so-subtle jab at ethanol, which is known to corrode engines (part of the reason the automotive industry has lobbied against expanding ethanol blend limits is concerns over the effect on vehicle engines).
"The Department of Energy's investment will allow NREL and the consortium to systematically identify and develop commercially sustainable biofuels from renewable sources for this critical energy supply."
The Other Biofuels
In 2009, it was still up for debate which of the biofuel 2.0 feedstocks would win out, with jatropha and algae jockeying for position as the best biodiesel feedstock and competing against cellulosic ethanol made from plant waste or rapidly renewable non-food crops. But this week, the only mention of another type of fuel was the $1.6 million distributed among the states to install or retrofit pumps at 60 gas stations to facilitate the distribution of E85 or other ethanol blends.
That investment in E85 infrastructure suggests that the EPA may be ready to move ahead with its intention, announced in December, to increase blend limits for ethanol from 10 to 15 percent, a move ethanol and farm groups have been lobbying for. Still, $1.6 million is a small amount compared with the $78 million for algae-based fuel.
Ethanol trade groups are worried about other changes. Ethanol trade groups Growth Energy and the Renewable Fuels Association have joined with state and local farm groups to sue the State of California over its low-carbon fuel standard, which is scheduled to be phased in beginning in 2011 and may set an example for future federal regulation.
The lawsuit claims that the standard unfairly discriminates against corn-based ethanol, and that its "indirect land use changes" component, which take into account shifts in land use elsewhere to grow food when U.S. cropland is used to grow fuel, "penalizes all corn ethanol based on the purported indirect effects of assumed farming practices that occur predominately outside California." The ethanol groups further claim that "through the regulation, California seeks to curb or eliminate these farming practices throughout the United States and beyond by making the entire corn ethanol market responsible for them."
This is the same issue ethanol groups are raising with the EPA as it works to revise its biofuel rules to better regulate the greenhouse gas emissions associated with the production of alternative fuels.
The EPA is proposing an international indirect land-use changes component to the rules, which is being loudly protested by agriculture states and ethanol groups. Palmer Labs aims to solve that problem with its biofuels, and NREL also stresses that algae-based biofuel doesn't compete with food or livestock feed, that it can use marginal land and degraded water, and that it can make use of CO2 emissions.
However, ethanol has some powerful backers in Congress. U.S. House Agriculture Committee Chairman Collin Peterson (D-Minn.) secured a provision in the House-passed energy and climate bill that would block the EPA from regulating land-use-related emissions for six years.
Between the powerful agriculture-state politicians, farm groups and ethanol trade groups lobbying for increased use of ethanol and the genuine obstacles facing algae-based fuels, it remains to be seen whether algae will realize its potential this time around, or if we'll just be left with another batch of promising research.