Investment grows in making fuel from algae

Venture capitalist Khosla, however, believes that the project is a pipe dream

Last updated:
3 MIN READ
AP
AP
AP

San Francisco :  Inside an industrial warehouse in South San Francisco, California, Harrison Dillon, chief technology officer of startup Solazyme, examines a beaker filled with a brown paste made of sugar cane waste. While the smell brings to mind molasses, this goo, called bagasse, won't find its way into people-pleasing confections.

Instead, scientists will empty it into five-gallon metal flasks of algae and water. The algae will gorge on the treat — filling themselves with fatty oils as they double in size every six hours, Bloomberg Markets magazine reports in its July issue.

Down the hall, past a rainbow of algae strains arrayed in Petri dishes, Chief Executive Officer Jonathan Wolfson shows off a gallon-size bottle of slightly viscous liquid. After drying the algae, wringing out the oil and shipping it to a refinery, this is the prize: diesel fuel that Wolfson says is chemically indistinguishable from its petroleum-based equivalent and which has already powered a Jeep Liberty and a Mercedes Benz sedan.

"In the next two years, we should get the cost down to the $60 (Dh220) to $80-a-barrel range."

At that price, Solazyme's algae fuel would compete with $80-a-barrel oil.

In Japan, the UK and the US, green energy advocates and some well-heeled investors are obsessed with perfecting a way to turn the scum that coats ponds, lakes and fish tanks into a substitute for gasoline, jet fuel and diesel.

Algae can yield 30 times more oil than crops such as soy. Algal oil doesn't need much processing before it can power a car, truck or jet engine, says Matt Carr, a policy director at the Biotechnology Industry Organisation, a Washington-based advocate for biotech companies.

"The potential payoff is huge," Carr says.

Microsoft co-founder Bill Gates and Venrock Associates, the Rockefeller family's venture capital firm, along with the UK's Wellcome Trust and Chicago's Arch Venture Partners, have poured $100 million into Sapphire Energy, which is trying to produce gasoline from algae.

US President Barack Obama talked up alternative fuels during his 2008 campaign, vowing to push for the country to use 60 billion gallons of advanced biofuels such as algae and cellulosic ethanol made from wood chips or grasses by 2030. The DOE has provided more than $185 million in grants for algal biofuels.

The UK government-funded Carbon Trust, which aims to trim carbon emissions, is providing £8 million to nine universities for algae research. In Japan, Toyota, the world's largest carmaker, and oil refiner Idemitsu Kosan may join a research programme with the University of Tsukuba, northeast of Tokyo, to turn algae into fuel.

ExxonMobil threw its weight behind algae in July 2009. The oil giant is investing $600 million.

Potential is the operative word. No one has produced enough algae fuel commercially to run a family's SUV, let alone make a dent in the more than 200 billion gallons of petrol, diesel and jet fuel that the US uses every year.

Today's estimates range from $400 to $600 to produce one barrel of algae oil.

Silicon Valley pioneer Vinod Khosla is among the biggest investors in green technologies. His Khosla Ventures has bets on cellulosic ethanol company Range Fuels and LS9, which designs microbes to produce nonpolluting biofuels.

Khosla says algae fuel is a pipe dream.

"We looked at two dozen algae business plans and have not found one that was a viable plan," says Khosla, speaking from his Menlo Park, California, office.

Sign up for the Daily Briefing

Get the latest news and updates straight to your inbox

Up Next