Scores of firms, startups and Fortune 500 companies alike, are working on algae-based biofuels.  Hundreds of millions of dollars have been invested.  And so far, maybe a few thousand gallons of algae oil have been produced. The question is: Can algae be economically cultivated and commercially scaled to make a material contribution to mankind’s liquid fuel needs?  The jury is still out. Ghosts of NREL Algae Programs Past The basement of the marine biology department at the University of Hawaii has a hallway lit by a dim incandescent bulb.  At the end of the hallway is a cardboard sign with the faded letters “ASP�? written on it.  A creaky door leads to a dank-smelling room crowded with beakers and algae scientists, milling aimlessly.  They share the same slightly green tinge and defeated look. This is the last remains of the Aquatic Species Program or ASP. These letters are spoken in hushed reverence by today’s crop of phycologists, NRELians and algae-fuel entrepreneurs. The Program identified hundreds of algae species that could potentially be farmed and cultivated for their lipids -- lipids that could be converted to biodiesel and used to wean the U.S. from its dependence on foreign oil. The Aquatic Species Program was launched in 1978 by president Jimmy Carter to explore the potential of algae as an energy source. About $25 million was put into the program until it was shelved by the Clinton administration in 1996.  They never found the "lipid trigger." The echoes of that program reverberate in today’s algae fuel renaissance. Why Algae? On paper, algae is perhaps the perfect feedstock for biofuels. It grows in a wide variety of climates. It can be used to mitigate carbon dioxide. The liquid fuels produced by these single-celled creatures are only one of their byproducts, and potentially not even the most valuable. Cosmetic supplements, nutraceuticals, pet food additives, animal feed, and specialty oils for human consumption may well fetch higher per-gallon prices. The tantalizing quality of algae is that some algal species contain up to 40 percent lipids by weight.  And therefore, according to some sources, an acre of algae could yield 5,000 to 10,000 gallons of oil a year, making algae far more productive than soy (50 gallons per acre), rapeseed (110 to 145 gallons), mustard (140 gallons) jatropha (175 gallons) palm (650 gallons) or cellulosic ethanol from poplars (2,700 gallons). More optimistic data from less informed people indicate the theoretical biodiesel yield from microalgae is in the range of 11,000 to 20,000 gallons per acre per year. But according to Dr. John Benemann, a cantankerous algae consultant whose research is widely cited in the field, the realistic potential production level (despite claims to the contrary) is about 2,000 gallons of algal oil per acre per year. VCs and Algae Farmers “VCs cannot come in here and just harvest ripened fruit, this is not shovel ready technology,�? said  Dr. John Benneman. Considering the immense technical risks and daunting capital costs of building an algae company, it doesn’t seem like a reasonable venture capital play.  And most if not all of the VCs I’ve spoken with categorize these investments as the longer-term, long-shot bets in their portfolio.  But given the size of the liquid fuels market, measured in trillions of dollars, not the customary billions of dollars, it makes some sense to take the low-percentage shot. These firms are going to continue to need capital.  According to Jennifer Fonstad of VC investor, Draper Fisher Jurvetson: “The current strategy of many of these companies has been to turn to the government stimulus plan – this is the risk capital we can rely on today.�? A Few Conclusions We need lots more time and more money Technologists tend to overestimate what can be accomplished in two years and underestimate what can be accomplished in ten to twenty years.  Algae as biofuel looks more like a ten to twenty year project.   DARPA is betting on three to five years, VCs are betting on three to five years, the algae roadmap from DOE takes a decade. The scope of the algae to large-scale biodiesel effort is more along the lines of the Manhattan Project or the Apollo moon shot, which cost $24 billion and $360 billion respectively.  A $25 million Aquatic Species Program or $300 million in venture capital is not going to get it done.  It will take tens of billions of dollars and decades. All of the process steps need to be addressed In the words of Courtney McColgan of DFJ, "There are many pieces to the algae puzzle that seem like afterthoughts, but are actually crucial to the economics -- co-products, nutrients, harvesting, drying, and conversion technology. System design and algae strain (which seem to be the focus of most discussions) are important, but not the only components." Algae producers admit that there’s a massive difference between growing large, consistent quantities of algae versus growing it on a fish tank wall. Standards for growth, strain selection, breeding, genetic modification, water extraction, oil extraction, and oil refining have yet to be established. Set realistic expectations for the technology Exploit near term, intermediate technology deployment opportunities such as wastewater treatment. Cost constraints restrict consideration to the simplest possible devices, which are large unlined, open, mixed raceway ponds. And finally a word from our favorite curmudgeon… "Engineering studies do not conclude that we can or will actually be able to produce algal oil/biodiesel. They conclude that the R&D to develop such processes can be justified, at least until it can be demonstrated to be impossible," said Dr. John Benemann.

• This is a small excerpt from the April issue of the Greentech Innovations Report which dives deep into the algae pond.  You can subscribe to it here.

First, hats off to John Carey of BusinessWeek for breaking the story on the controversy between Calera, the green cement company funded by Khosla Ventures, and Ken Caldeira, a well-regarded and notable climate scientist with the Department of Global Ecology at the Carnegie Institution of Washington. The debate is thus: Calera says it can make cement out of seawater and carbon dioxide. The process would curb energy use because cement production is incredibly energy intensive and sequesters carbon dioxide. Caldeira says the vague statements don't add up. Instead, Calera may just be taking calcium carbonate, the principal ingredient in cement, putting it through chemical reactions with other materials like magnesium hydroxide to get magnesium oxide, calcium and carbon dioxide. The company then likely remixes to get calcium carbonate. "They are just putting back what they started out with," he said. "I think all they are doing is taking alkaline minerals and returning them back to be carbonate materials." Calera, Caldeira noted, built its prototype plant at a magnesium oxide factory. MIxing seawater, carbon dioxide and heat, he added, typically ends up as water vapor, salt and carbon dioxide. Sources, however, told me a while back that Calera creates its carbonates through metabolic engineering, i.e., microrganisms. The organisms consume carbon dioxide and are able to produce, directly or indirectly, carbonates. Founder Brent Constantz has said in interviews that the process mimics marine cement, which is produced by coral extracting calcium and magnesium from seawater. Calera, in other words, might have figured out a way to harness this process for industrial purposes. Like coral and other marine animals, the mineralization process can occur at somewhat normal temperatures and pressures. Constantz is also an expert in biomineralization. Metabolic engineering is in its infancy but drawing considerable interest. Algae companies are growing algae through carbon dioxide. Abalone shells are made out of calcium carbonate: the abalone accomplishes by secreting specific proteins. MIT researchers earlier today showed off a battery cathode that is coated with carbon nanotubes. Startup Climos has raised money to experiment with ways to fix carbon dioxide out of the atmosphere with plankton. Is this the answer to the controversy? Possibly. Or not. Turning carbon dioxide into cement would still require massive feeder ponds, so Calera may not be scalable. There is also no confirmed evidence that this is what they are doing. And most metabolic engineering companies are in lab experiments with their magic microbes at the moment. The company doesn't comment in much detail on its process. Calera may also be exaggerating its effect on greenhouse gases. Its process might produce less carbon dioxide than standard cement, but may not cause a net reduction in atmospheric CO2. Researchers are also looking at other ways to produce similar minerals. At Harvard, researchers are examining whether hydrochloric acid, produced from hydrogen harvested from the "green" electrolysis of water, drizzled over silicate rocks could work, or grinding silicate materials. (Startup Carbon Sciences turns carbon dioxide into carbonates with heat. The company, however, readily admits it is a carbon sequestration play that will rely on greenhouse gas regulations.) UPDATE: A patent application surfaced in January with Constantz name on it that indicates that the company may just be working with ordinary chemical processes after all. See here. One section reads:

[0049]In normal sea water 93% of the dissolved CO.sub.2 is in the form of bicarbonate ions (HCO.sub.3.sup.-) and 6% is in the form of carbonate ions (CO.sub.3.sup.-2). When calcium carbonate precipitates from normal sea water, CO.sub.2 is released. Above pH 10.33, greater than 90% of the carbonate is in the form of carbonate ion, and no CO.sub.2 is released during the precipitation of calcium carbonate. While the pH of the water employed in methods may range from 5 to 14 during a given precipitation process, in certain embodiments the pH is raised to alkaline levels in order to drive the precipitation of carbonate compounds, as well as other compounds, e.g., hydroxide compounds, as desired. In certain of these embodiments, the pH is raised to a level which minimizes if not eliminates CO.sub.2 production during precipitation, causing dissolved CO.sub.2, e.g., in the form of carbonate and bicarbonate, to be trapped in the carbonate compound precipitate. In these embodiments, the pH may be raised to 10 or higher, such as 11 or higher.

It's a long application and most of it goes over my head, but it sounds like they are manipulating the pH balance to maximize carbonates and minimize off-gassing. Would something like this work? Or would would you just have with salt and CO2? Calera has not returned calls for comment.

It's expensive to make the transition to renewable energy. The shift will have a big impact on carbon and power prices if the European goal of procuring 20 percent of the E.U.'s energy from renewable sources by 2020 are met. This according to the ICF International study European Power and Carbon Outlook. The price on carbon allowances could increase by seven times today's rates to about 25 dollars per allowance (estimated from latest auction results).  And to reach the goal of 20 percent renewable energy it takes great investments, both in technology and supporting infrastructure. This will also affect electricity prices and cause them to double between 2010 and 2020, according to the ICF International study. The investments will also need to be done in gas-fired capacity and carbon capture and storage (CCS). “EU ETS participants should look beyond the current economic and credit crisis and adopt a long-term carbon market strategy that anticipates a sharp rise in demand for emission reductions over the next five years,� said Diane Simiu, carbon analyst, in a statement. “Anyone going for the ‘dash-for-cash’ approach is in for a rude awakening when the carbon market picks up.� IFC International is responsible for a number of studies on climate change and emissions economics, and they tend to be more gung-ho on fossil fuels than others. Among others their research backed American Petroleum Institute President and CEO Jack N. Gerard in saying that "more drilling for oil and natural gas will mean more energy for America, more well-paying jobs, and trillions of dollars of much-needed revenues that will help federal, state and local governments pay for critical services" according to Energy Tomorrow.

President Barack Obama says that the best plan for recovery for General Motors might be a quick bankruptcy, according to a report in Bloomberg. The report comes the same day that GM issued another turnaround plan. GM says it wants $10.3 billion dollars in loans to develop fuel efficient cars. The federal government has already loaned GM $13.4 billion. It's been a wild week in Detroit. On Sunday night, news leaked that the federal government told GM that it would have to get rid of CEO Rick Wagoner. On Monday, Wagoner (a dead ringer for local TV anchormen everywhere) resigned. President Obama also rejected GM's turnaround plan and told Chrysler that it had to link up with Fiat within 30 days or else. Bloomberg quotes experts that a surgical bankruptcy may not be easy: “Surgical bankruptcy is a made-up term to give people comfort,� said James Shein, a Northwestern University Kellogg School of Management professor and a turnaround expert. “Unless the court makes some really gutsy moves, we’ve got the odds of it bracketed somewhere between slim and none. Conceptually it’s a good idea, but practically it’s going to be tough.� If anything, all of this news is making one of America's most moribund industries fun again. And the Chicago Tribune chimes in. If you bought $1,000 of GM stock in 2000, it would be worth $40 today, it points out. Glad I put my money in Pets.com

Aquamarine Power will no longer carry the distinction of being a player in both of the ways to capture ocean power. The Edinburgh, Scotland-based company said Wednesday that it's scrapping development of its Neptune tidal power devices to concentrate on its Oyster wave power devices.  Aquamarine said the change won't affect its deal with Scottish and Southern Energy's renewable energy division Airtricity to develop 1 gigawatt of ocean power by 2020 (see Aquamarine to build 1GW of Ocean Power).  Ocean power has seen some setbacks. One wave power leader, Pelamis Wave Power, recently revealed that it had canceled testing of three of its 750-kilowatt wave machines off the Portugal coast due to technical problems and financing difficulties (see Pelamis Wave Machines Cranking Hundreds of Kilowatts, Pre-Crisis).  And Finavera Renewables saw one of its test wave power buoys sink in a test off the Oregon coast. That played a part in leading the California Public Utility Commission in October to deny what would have been the first wave-power purchase contract in the United States, between the company and utility Pacific Gas and Electric Co. (see California Sinks Its First Wave Energy Project).   Unlike the devices from those two companies, which are designed to float on the surface of water from 60 meters to 100 meters deep, Aquamarine's Oyster is designed to sit under water that's 10 meters deep or so. The Oyster's bottom half will rest on the ocean floor and a top "oscillating flap" will generate power by capturing wave motion. (For an image of the device, click here).  How the device will fare in real world conditions remains to be seen. The Oyster is set for testing this summer at the European Marine Energy Centre (EMEC) in Stromness, Scotland. While it accounts for less than 10 megawatts of installed capacity today, ocean power could be a prominent source of renewable energy if technical difficulties can be overcome. The Electric Power Research Institute has estimated wave and tidal power could provide up to 10 gigawatts of power in the United States by 2025. Global marine power could grow to 1 gigawatt in the next six years, according to GTM Research analyst Daniel Englander (see Trawling for $500M in Ocean Power). Aquamarine is likely to continue to get support from Scottish and Southern Energy, given the utility's stake in the startup. In October 2007 the utility invested £6.3 million ($9 million) through its Renewable Technology Ventures Ltd. subsidiary, and another £1.5 million ($2.1 million) from subsidiary Sigma Capital Group.