Every few years, J. Craig Venter of Synthetic Genomics and Exxon issue a joint proclamation about progress in biofuels derived from algae. Venter gets funded, Exxon gets green cred, breathless articles get written in the business press, and we are once again reminded that algae is the fuel of the future.
Venter has made brilliant contributions to modern genetics. He was part of the team that sequenced the second human genome.
Still, the team of Exxon and Synthetic Genomics have been working on algal biofuels since 2009, and although they are claiming a biofuel "breakthrough" in their latest release, the time frame for commercialization verges on generational as opposed to the decade-scale promises that have been made. Exxon called this a $600 million investment in 2009.
According to the most recent release, the partners have developed an algal strain that has "more than doubled its oil content without significantly inhibiting the strain’s growth." The research team claims to have modified the algae species Nannochloropsis gaditana to stretch the algae’s oil content from 20 percent to more than 40 percent. (That 40 percent figure has been tossed around by other researchers in recent years, as well.)
The release is careful to stress that this is deep research and "a proof-of-concept approach." Despite the laudatory articles being written, we are not much closer to commercial biofuels derived from algae oil.
In 2009, current U.S. Secretary of State and former Exxon CEO Rex Tillerson said that the venture might not produce real results for another 25 years.
“We’re still at the research phase in this program,” cautions Vijay Swarup, a vice president at ExxonMobil, as quoted in Forbes. “It’s not just doubling [lipid production], but it’s understanding why it doubled and how it doubled," he said. "There’s still a long way to go in making an algae that can produce even more fat, live comfortably in saltwater pools outside, and be processed into fuel for cars, planes and trains."
The release notes that an objective of the collaboration "has been to increase the lipid content of algae while decreasing the starch and protein components without inhibiting the algae’s growth. Limiting availability of nutrients such as nitrogen is one way to increase oil production in algae, but it can also dramatically inhibit or even stop photosynthesis, stunting algae growth and ultimately the volume of oil produced."
Bloomberg notes that the team "searched for the needed genetic regulators after observing what happened when cells were starved of nitrogen -- a tactic that generally drives more oil accumulation. Using the CRISPR-Cas9 gene-editing technique, the researchers were able to winnow a list of about 20 candidates to a single regulator -- they call it ZnCys -- and then to modulate its expression."
As we've reported, from 2005 to 2012, dozens of companies managed to extract hundreds of millions in cash from VCs in hopes of ultimately extracting fuel oil from algae.
The promise of algae is tantalizing. Some algal species contain up to 40 percent lipids by weight, a figure that could be boosted further through selective breeding and genetic modification. That basic lipid can be converted into diesel, synthetic petroleum, butanol or industrial chemicals.
Today, most of the few surviving algae companies have had no choice but to adopt new business plans that focus on the more expensive algae byproducts such as cosmetic supplements, nutraceuticals, pet food additives, animal feed, pigments and specialty oils. The rest have gone bankrupt or moved on to other markets.
The Exxon-SGI partnership is one of the few remaining algae biofuel efforts.
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), jatropha (175 gallons), palm (650 gallons), or cellulosic ethanol from poplars (2,700 gallons).
The question remains: Can algae be economically cultivated and commercially scaled to make a material contribution to humanity's liquid fuel needs? Can biofuels from algae compete on price with fossil-derived petroleum?
Once capital needs, water availability, energy balance, growing, collecting, drying, and algae's pickiness about light and CO2 are factored in -- the answer, so far, is an emphatic no.
Here's a recently compiled list, by no means complete, of algae companies attempting to pivot away from biofuels.
- Algae Floating Systems is "temporarily shifting its focus away from fuel to nutraceutical and animal feed markets."
- Algenol intended to use nitrogen-fixing blue-green algae (cyanobacteria) in photobioreactors to produce ethanol directly. With tens of millions of dollars in public money and hundreds of millions in private-sector investment, Algenol once claimed its technology "enables the production of the four most important fuels (ethanol, gasoline, jet, and diesel fuel) for around $1.30 per gallon each using proprietary algae, sunlight, carbon dioxide and saltwater at production levels of 8,000 total gallons of liquid fuel per acre per year." In 2015, the firm fired its CEO and shifted its focus to carbon capture and nutraceuticals.
- Algae Tec: An Australian PBR penny stock company with algae oil and algae byproduct dreams.
- Algix develops fish farms and algae harvest equipment.
- AlgaeLink was a sketchy retailer of photobioreactors and commercial algae cultivation equipment.
- Alga Technologies grows algae in closed bioreactors to harvest astaxanthin in Israel’s Arava desert.
- Aquaflow Bionomics once intended to produce biofuel from wild algae harvested from open-air environments. The company is now a biofuel site developer called NXT Fuels.
- Aurora Biofuels: Aurora moved from fuel to food with its genetically modified algae in 2011. The firm went bankrupt in 2015 after winning more than $23 million from Oak, Noventi Ventures and Gabriel Venture Partners.
- Cellana and its Hawaii-based algae feedstock production system received DOE funding to boost algae productivity as a way to reduce cost. The firm produces DHA and omega-3 EPA and DHA oils, animal feed/food, and biofuel feedstocks.
- Global Algae Innovations is exploring algal biofuels at a 3.2-acre algae farm co-located with a power plant in Hawaii. The firm has received $11 million from the U.S. DOE.
- GreenFuel Technologies, long bankrupt, was backed with more than $27 million in funding from Polaris Ventures, Draper Fisher Jurvetson and Access Private Equity.
- Heliae raised $80 million from two $20 billion food conglomerates in 2016, and has spent years developing a "platform technology" to produce nutraceuticals, personal care products and perhaps fuel through a mixture of phototrophic and fermentation processes.
- LiveFuels received $10 million in funding from The Quercus Trust in 2007. Lissa Morgentahler-Jones and David Jones are still listed as officers of the firm on LinkedIn.
- OriginOil is now OriginClear and has shifted to water decontamination.
- PetroAlgae changed its name to Parabel as it shifted from fuel to foods in 2012.
- Phycal received significant DOE funding to design a high-yield algae farm and biorefinery in Hawaii.
- Pond Technologies is cultivating algae for carbon capture and nutraceuticals.
- Renewable Algal Energy is a microalgae products company that received DOE funding to prove out its algal oil harvesting and extraction technologies.
- Sapphire Energy produces omega-3 oils and animal feed ingredients. Sapphire raised more than $100 million from Bill Gates’ Cascade Investments and ARCH Venture Partners.
- Seambiotic uses raceway/paddle-wheel open pond algae cultivation. According to Israel 21C, Seambiotic "recently launched a commercial algae farm in China" to produce a "valuable nutraceutical food additive."
- Solix, once a well-funded algae fuel aspirant, repositioned itself as an astaxanthin, DHA and omega-3 supplier.
- Synthetic Genomics, founded by Craig Venter and ExxonMobil, announced earlier this year that it has extended its agreement on joint research into advanced algae biofuels "after making significant progress in understanding algae genetics, growth characteristics and increasing oil production."
- TerraVia (formerly Solazyme) shifted from supplying fuels to oils, algal flour and proteins with a heterotrophic process that ferments genetically modified algae fed sugars.
- XL Renewables developed algal production systems using dairy waste streams, then changed its name to to Phyco Biosciences and went out of business.
There are many pieces to the algae puzzle that seem like afterthoughts, but which are actually crucial to the economics -- including co-products, nutrients, harvesting, drying and conversion technology. System design and algae type (which seem to be the focus of this and most discussions) are important, but not the only components.
Considering the immense technical risks and daunting capital costs of building an algae fuel 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 occasionally take the low-percentage shot.