GreenFuel Technologies Corp. on Tuesday announced it has reached 100 square meters of algae production in partnership with Aurantia SA in Spain.

The project captures carbon-dioxide emissions from a Holcim cement plant near Jerez, Spain, in the Iberian Peninsula, and uses it to grow algae that can be used for feeds, foods and fuels, according to the GreenFuel.

The company said it plans to expand the project into a $92 million, 100-hectare greenhouse by 2011, at which point the project will be expected to absorb approximately 50,000 metric tons of carbon dioxide and to produce 25,000 tons of algae per year - enough to produce around 1.3 million gallons of algal oil annually, GreenFuel CEO Simon Upfill-Brown said.

"This big project is confirmation of the kind of progress we've been making," Upfill-Brown said. "We've moved to the point where we feel comfortable announcing it and our partners feel comfortable. It's a significant announcement for both companies."

As prices for vegetable oils used to make biofuels has remained high, algae advocates have looked upon the slime as a possible savior. After all, algae are oily and could potentially produce more oil per acre than palm or other oil-yielding crops.

Companies haven't yet succeeded in producing algae affordably and at significant volumes in spite of years of research and development, but a number of venture-backed companies cropped up to take on the challenge.

According to the Cleantech Group, algae companies raised a record-breaking $179.5 million between January and September, compared with only $32 million in the whole of last year, including a $50 million deal that Sapphire Energy closed with Bill Gates' Cascades Investments (see Algae Biofuel Investments Explode and Bill Gates Digs Algal Oil). And 40 percent of participants in a Greentech Media biofuels survey, released earlier this month, said they saw algae-based biodiesel as the most promising green fuel technology (see Industry Gains Confidence in Algae).

Founded in 2001, GreenFuel had previously hoped to begin full-scale installations by 2007 (see a 2006 profile of the company here). The company suffered a setback last year when algae in an Arizona greenhouse grew faster than they could be harvested, causing them to die, and the company found its system would cost more than twice its targets, according to Xconomy

The setback resulted in layoffs and the hiring of Ethernet inventor Bob Metcalfe as interim CEO to put the company back on course. After restarting and decommissioning the Arizona project after a successful trial, signing partnerships and raising $13.9 million in funding, Metcalfe turned the reigns over to Upfill-Brown in July.

The project is not completely new.

In March, Cary Bullock, GreenFuel's vice president for business development, confirmed that the company was in the first phase of building its first commercial plant and planned to complete the plant in two to three years (see GreenFuel Nearly Finished with Phase One for First Commercial Factory).

Xconomy had previously reported the company had reached a $92 million agreement to build an algae-based plant in Europe.

But this is the first time GreenFuel has released details about its first commercial project, which it began developing in December.

The 100-square-meter farm is the second phase of the project, which began with the companies growing and testing a variety of naturally occurring algae strains using the flue gases from the plant owned by Holcim, a cement, concrete and asphalt supplier. 

Testing of the farm began about six weeks ago, Upfill-Brown said.

Starting next year, the companies hope to grow the project to 1,000 square meters and then - by 2011 - to 100 hectares, he said.

So far, the company is feeling "very comfortable" about its chances of growing its model from 100 square meters to 100 hectares, but also acknowledges the potential challenges, Upfill-Brown said.

"You never know with these things; you've got to keep testing [during] long-term exposure," he said. "We're comfortable thus far, but proceeding cautiously. That's why we're doing this phased approach."

Challenges could include maintaining productivity rates, keeping bigger bioreactors at "reasonably constant" temperatures and processing the algae after harvesting, for example, he said.

"There's nothing that we foresee is going to bite us there, but these are things we need to make sure of, just to name a few," he said. "It's a complex system. But we think we have solutions for all of those."

Also, unlike the Arizona plant - which was located at gas-fired power plants that were used only during times of peak demand, making life difficult for the algae, according to Metcalfe - the cement plant produces emissions fairly constantly, Upfill-Brown said.

The company plans to time its system maintenance to match up with planned cement-plant shutdowns, and - if a shutdown was going to last for more than a couple of days - would try to find other sources of carbon dioxide to keep its algae happy, he said.

GreenFuel also is ready to harvest a lot more algae than it was prepared for in Arizona, where it was harvesting algae by hand, he said.

The company has developed an automatic harvester that has been working well at the 100-square-meter size, he said. "This shouldn't be an issue the next time around," Upfill-Brown said. "We've been learning."

Aurantia is financing the project and expects to be eligible for some regional and national subsidies to help offset the cost, he said.

The partner also is working to line up customers for the oil, but plans to get most of those contracts pinned down during the next phase, when the partners are testing the 1,000-square-meter farm, he said.

The 100-hectare greenhouse would amount to the eagerly anticipated full-scale production for GreenFuel, he added. If its successful at that size, it plans to simply duplicate the farm to grow its capacity.

"I think we can make multiples of the hundred hectares fairly easily; it's a big enough scale that you would just duplicate that," he said. "But the first thing we have to do is prove it at this scale. Then we can go from there and roll out many multiples of these things."