With GreenFuel’s Demise, What Happens to Algae?

Is algae doomed?

That seemed to be the first question that popped up after the news that GreenFuel Technologies had closed its doors broke. (Employees learned last night. We wrote it this morning. Official press release still pending.) GreenFuel was one of the first companies to tout algae fuels, and one of the best funded. It had raised over $70 million dollars from top-tier VC firms. Moreover, it had started testing its processes earlier than others and a CEO from the oil industry.

To top it off, a number of companies are using the same basic concepts that GreenFuel tried to popularize. Namely, growing algae in bioreactors, i.e., plastic bags filled with microbes and algae.

On one hand, this is really bad news for a number of algae companies. Four years ago, there were probably only four algae biodiesel companies. Now there are over 50. Many of them are not much better than copycats of GreenFuel. If greenFuel can't get credit to continue operations, others will have similar problems. And, although GreenFuel denies that technology played a role in its demise, the company did have to endure a number of delays and technical glitches. It could grow algae, but not at a rate or in a manner that was optimal for producing oil. Anyone in the bioreactor business suddently has a lot of new questions to answer.

On the other hand, bioreactors aren't the only way to grow algae. Solazyme grows algae in the dark, in vats. Early on, it tried to grow algae through photosynthesis but concluded it wasn't economically viable. Growing algae in this manner adds feedstock costs: rather than grow from a diet of carbon dioxide and sunlight, algae have to be fed sugar. That adds cost. However, you can control the growth rate far better in a fermentation kettle. The algae also don't have to be extracted from water, a headache for bioreactor companies.

Then there are companies like OriginOil that are coming up with microwave instruments to shake oil out of microbes. And some companies like Solix are engineering better bioreactors.

Plus, there are the overall market conditions to consider. No matter how wonderful electric cars are, it will be difficult for them to take over the transportation market in the next 20 years. The world will continue to rely on liquid fuels and, on a per acre basis, algae is more productive per acre than other plants. Algae advocates claim that they should be able to get 5,000 to 10,000 gallons of feedstock per acre per year. 16,000 square miles of pond space (or the equivalent) would be enough to supply the U.S. with fuel. Palm, jatropha and other plants would need more.

So stay tuned.