Although it has quietly existed, seemingly since the beginning of time, living a pond scum existence, the unassuming tiny algae plant is starting to make big headlines in alternative fuel circles.
The appeal is understandable: low land requirements, high oil yields and an unending growing season all seem to add to algae’s attractiveness for those looking to invest in next generation alternative fuels. And unlike some biofuels which have ignited a food versus feed versus fuel debate, the production of algae as a biofuel may actually yield additional food and feed products that would otherwise never be realized.Hard Economics
But while environmental benefits make everyone warm and fuzzy, it’s hard economics that will make or break every new generation alternative fuel and algae is certainly no exception. What makes algae’s success particularly difficult to predict is that estimates of what it will take to bring algae production up to necessary commercial scale has varied widely, though it seems clear that the economics surrounding the cost of extracting oil has slowed algae’s development as an alternative fuel.
That isn’t to say algae doesn’t have its champions and those cheering most loudly are also willing to make sizable investments to back up their beliefs that the tiny plant could pay off as a profitable renewable fuel source. The key for many investors has been to hedge their bets on biofuel production with some strong markets for byproducts. Algae, tiny as it is, has many viable uses beyond that of a biofuel. It is a proven protein source, a supplier of valuable chemicals, a means of carbon sequestration and could even be the answer to wastewater remediation.Attracting Investors
The more companies are able to diversify their investment and realize additional benefits from a broad product line, the better the chances dollars will flow into its development as a biofuel as well and the greater the chances that algae can take its place as a viable alternative fuel. While companies diving into the algae business have found their costs to be as high as $30 a gallon at the onset, those same companies are looking to the development of energy-saving practices to bring costs down to about $5.50 a gallon and possibly nearer the $3 mark in the years to come.
That sounds good, but remember that’s cost of production and would still equate to about $150 per barrel. To become a viable biofuel, algae’s challenge—and the challenge faced by all alternative fuels—is to compete not just with other renewable fuel cources, but with petroleum itself. Research and development efforts are going to have to do better than they have in a lot of cases, bringing costs down to under the $2 per gallon mark with production yields in the neighborhood of 5,000 to 10,000 gallons per acre.Innovation Necessary
Financial advisors to the alternative energy sector are telling would-be investors that innovation is going to be necessary if algae is ever going to be competitive with oil. Depending on the production method, current cost for producing algae has ranged from $17 to nearly $26 per gallon, though companies may be able to implement algal oil production via hybrid methods that help to reduce costs.
The question is whether algae, like other alternative fuels, will garner enough public and private funding to make the necessary leaps in development. Likewise, those investors willing to take a chance on algae may find the more profitable route leads to so-called byproducts, not biofuels, which will further hinder algae’s development as an alternative to petroleum.