Some are betting the slimy plant will make biofuels a more viable option
By BRETT CLANTON
Houston Chronicle, October 8, 2007
ANTHONY - A year ago, this dusty patch of land near the New Mexico border contained little more than dirt and the odd sprig of alfalfa. Today, it is home to a $3 million laboratory that is crackling with activity.
The hi-tech lab was built for a peculiar but possibly revolutionary purpose: to explore ways algae can be used to reduce the world's dependence on oil.
An arid stretch of West Texas might seem like a strange place to study the tiny water-borne plants, but the work is more than just a big idea.
The two companies behind it, El Paso's Valcent Products and Canadian alternative energy firm Global Green Solutions, have developed a system they claim will allow for cheap mass production of algae in just about any corner of the world.
Such a breakthrough, though still untested on a wide scale, could greatly accelerate the expansion of renewable fuels like biodiesel and ethanol because the oil extracted from algae can be used to make those fuels, said the companies who own the lab through a joint venture called Vertigro.
Today, those fuels are seen as having limited potential to curb oil consumption because they rely on oils from food crops like corn and soybeans, whose prices are rising. But algae could change the equation.
"This market is enormous," said Global Green CEO Doug Frater. "And it's waiting for us."
Yet it still may be awhile before the world is driving on algae power.
Not only are there competing ideas about the best ways to mass produce algae, but there are doubts about whether it can be done more cheaply than traditional oil. Once those questions are sorted out, it still could take years to build the infrastructure needed to make and distribute algae oil on a meaningful scale, experts said.
"Clearly, algae has potential," said John Kruse, a biofuels and agricultural analyst in Columbia, Mo., for research firm Global Insight. But other alternate feedstocks for biofuels are more likely to hit the market first, he said.
Licensing ahead? Research on algae as a potential energy source is nothing new. But it suffered a setback in 1996 when the U.S. Energy Department cut funding for an algae research program that had been in place since 1978, said Al Darzins, a group manager at the National Bioenergy Center, part of the Energy Department's National Renewable Energy Laboratory in Golden, Colo.
With energy prices so low at the time, the agency doubted algae would ever be able to compete on cost with traditional petroleum sources, he said.
Recently, however, there's been an "explosion" of new algae research in response to record crude oil prices, the rising cost of making biofuels from vegetable oils and growing global energy needs, he said.
Activity has also been bolstered by government mandates that are expected to boost biofuel demand in coming years.
In 2003, the European Union set a goal to derive 5.75 percent of total transport fuel consumption from biofuels by 2010 and up to 20 percent by 2020. The U.S. Renewable Fuel Standard Program requires that at least 7.5 billion gallons of renewable fuel be blended into vehicle fuel by 2012. Congress is considering a proposal to expand the mandate to 35 billion gallons by 2017.
In light of the current climate, the National Renewable Energy Laboratory is about to announce it has secured funding for a new algae research program though an industrial partner, Darzins said. He declined to name the partner or say how much money the program would receive.
Vertigro, however, is not waiting on Uncle Sam to act. The company is about to begin building a pilot plant behind the research lab in Anthony, and company officials say they are in talks with biodiesel producers about licensing their "closed-loop" algae-production system.
In contrast to "open pond" methods studied by the government, the system uses tall, clear plastic bags, hung in rows in a greenhouse, to breed algae.
The bags, which are pumped with carbon dioxide and exposed to the sun, help the algae speed along photosynthesis. In this setting, the tiny green organisms can reproduce up to six times every 24 hours.
"That's pretty sexy," Frater said, in his Scottish accent.
Selected strains The bags also protect the most energy-rich algae strains, which Vertigro selects in the lab. In an open pond, they would be crowded out by stronger strains with less oil, said Glen Kertz, CEO of Valcent, who developed the system.
About 20,000 bags can be hung in one square acre, yielding 100,000 gallons of algae oil per year, Kertz said. By contrast, one acre of soybeans can produce just 50 gallons of soybean oil a year and one acre of corn yields 29 gallons per year, Vertigro said.
But the biggest benefit: Algae farms can be built virtually anywhere - a point Vertigro hoped to illustrate by locating in West Texas.
To meet U.S. gasoline and diesel demands with biofuels from seed crops, all arable farmland in the nation would have to be planted three times over, said Craig Harting, Global Green's chief operating officer.
"With algae, we can do it with a fraction of 1 percent, and we don't even need arable land," he said.
Hurdles to overcome Algae farms may even be able to help offset carbon dioxide emissions, which are linked to global warming. Because algae needs a ready supply of carbon dioxide to flourish, the farms can be built next to electricity plants or other industrial polluters to capture carbon dioxide emissions before they reach the atmosphere, Vertigro said.
But the algae business may need to mature before investors are willing to throw the hundreds of millions of dollars required to take it to the next level, said Todd Alexander, a partner with New York law firm Chadbourne & Parke, who represents biofuel producers and financial firms seeking to invest in alternative energy.
"There are definitely some hurdles that have to be overcome before this becomes a commercial technology," he said, "unless it's heavily subsidized by the government."