Larry Bell in Forbes
Is there something fishy about algae? Is it the revolutionary new fuel source opportunity the Obama administration represents it to be?
Last February, in a University of Miami campaign speech intended to pacify prospective pump price-panicked patrons, the president said: “We’re making new investments in the development of gasoline and diesel and jet fuel that’s actually made from a plant-like substance, algae…You’ve got a lot of algae out there, right? If we can figure out how to make energy out of that, we’ll be doing all right. Believe it or not, we could replace up to 17% of the oil we import for transportation with this fuel we can grow right here in America.
Like all other “revolutionary” green energy schemes, there’s little that is really new in this idea. The first electric car in the U.S. was built by Thomas Davenport, a blacksmith in 1835; the first electricity-generating wind turbine was invented by Scottish academic James Blythe in 1887; Bell Labs created the photovoltaic solar cell in 1954; and the dream of producing fuels from algae dates back to the Carter administration in the late 1970s.
Remember how ethanol was going to save us from dependence on foreign oil imports? After four decades, huge mandates to force it on gasoline consumers, tens of billions of dollars in subsidies, and huge impacts upon food prices, it only represented about five percent of automotive fuel (by volume) in 2008. Biodiesel accounted for less than one percent of the diesel market that year.
But algae will be different…right? After all, doesn’t it require lots less space than all those cornfields do…just some stagnant, shallow scummy ponds where it pretty much grows all by itself?
Well, maybe not exactly.
Yes, the basic science and principles involved in making fuels from algae are pretty simple. In theory, all you need is some dirty water ponds, sunlight, nutrients, and large amounts of carbon dioxide, the EPA’s favorite pollutant. (We can burn a bunch of coal and oil to get the latter…but then again, that might defeat the whole purpose of growing the stuff.) Under the right conditions the volume of algae can double over night. But that’s only if you need to produce just a little bit, and you don’t mind the mosquitoes.
For large-scale fuel operations capable of producing consistent yields over extended time periods, it’s quite a different story. While the cheapest forms of algae production are uncovered open water systems, these present challenges associated with contamination, temperature control, CO2 utilization, evaporation and maintenance. The preferred approach uses closed systems which provide better environmental conditions for accelerated growth. These “farms” require significant capital to cover construction, maintenance and operations, including harvesting. It can also require lots and lots of water, about 350 gallons for each gallon of algal biofuel oil produced.
A study undertaken at the Pacific Northwest National Laboratory investigated some key conditions that will have to be met if biofuel algae were to replace 17% of U.S. petroleum as President Obama claimed possible. Nark Wigmosta, a hydrologist and the lead researcher for the study, stated: “Algae has been a hot topic of biofuel discussions lately, but no one has taken such a detailed look at how much America could make…and how much water and land it would require—until now.” The study looked specifically at production farms using open, outdoor fresh water ponds applying current technology, and considered such factors as suitable land use, topographical features, weather patterns and sky conditions available in the contiguous U.S. states. This information was correlated with requirements needed to produce 21 billion gallons of algal oil… which was equated to 17% of petroleum imports used for transportation fuel in 2008.
Their conclusions, published in Water Resources Research, estimated that growing that much algae will require a land area roughly the size of South Carolina, and about 25% of all U.S water currently consumed for crop irrigation just to compensate for evaporation. The locations will have to be in regions with optimum sunlight conditions and close access to carbon dioxide sources. In addition, there will need to be access to large sources of energy to keep the ponds from freezing in cold winter climate areas, and for processing the algae into fuel. This, of course, will reduce net energy benefits.
Between 1978-1996, the U.S. Department of Energy funded an “Aquatics Species Program” (ASP) aimed at producing renewable transportation biodiesel from algae nourished by carbon dioxide from nearby coal-fired plants. Over this period, while advances were made in the science of manipulating the metabolism of algae and engineering of microalgae production systems, none of the studies produced commercially scalable results. The program was shut down after oil dropped below $40 per barrel.
Just since the 2008 elections, the federal government has pumped about $2 billion into R&D for plant-based fuels, not including subsidies and loan guarantees for ethanol. Of this amount, the DOE has already spent $85 million on algae-based biofuels, and now plans to spend $30 million more. Selected projects will receive up to $14.3 million in fiscal year 2012 funds, with an additional $6.7 million available in fiscal year 2014 funding, subject to Congressional approval. President Obama also wants to begin construction on at least four new commercial-scale biofuel refineries by 2013.
So far, 30 to 40 mostly small companies now developing algae fuels have produced thousands of barrels… a long way from the 7 billion barrels of oil Americans consume each year. One is Solazyme, a San Francisco-based algae fuel-producing firm with ties to the White House that received more than $21 million in federal stimulus grants and contracts. Their board member and “strategic advisor”, T.J. Glauthier, previously served as deputy secretary in the Clinton administration Department of Energy. He also served on the Obama White House transition team where his efforts “focused primarily on the energy section of the economic stimulus bill.”
Former White House economic advisor Larry Summers wrote in a 2009 memo: “The short-run economic imperative was to identify as many campaign promises or high priority items that would spend out quickly and be inherently temporary. The stimulus package is a key tool for advancing clean energy goals and fulfilling a number of campaign commitments.”
And might he possibly have been referring to campaign debts as well? In 2007, Glauthier donated $8,000 to Democratic lawmakers and committees, including $2,500 to Obama, while other of Solazyme’s board members and top executives have given much more. Of at least $360,000 given to Democrats since 2007, board member Jerry Fiddler contributed $226,650; board member Daniel Miller more than $36,000; and Vice President of Technology Peter Licari, more than $100,000.
In addition to Solazyme, Glauthier serves on the board of EnerNOC, Inc., a company that won a $10 million contract with the Department of Energy in 2010 despite reportedly being underbid by competitors. He’s also on the board of SunRun, a solar financing company that received a $6.7 million federal grant that same year.
By far the largest algae biofuel deal to date is a $12 million commitment from our Navy to purchase 450,000 gallons, which calculates out at about $26.67 per gallon. Although Navy Secretary Ray Maybus has said they will really pay about $15 per gallon, this is hardly a bargain, since it will perform the same as standard JP-5 aircraft jet fuel that costs less than $3 per gallon. The good news is that the total fuel price will be only about five times more (rather than 9 times) after it is mixed with the standard stuff.
In fact the actual cost to American taxpayers is more than that. The biofuel is being produced through a contract with Dynamic Fuels, a partnership of three firms including Solazyme which previously received $27.7 million from the American Recovery and Reinvestment Act (stimulus money) to build its biorefinery.
Since the Navy contract is being promoted as a demonstration program, you might imagine that they could prove that it works by simply testing it on a few aircraft. But then, of course, they would miss out on a terrifyingly comical public relations opportunity. It will be consumed in naval air exercises near Hawaii next summer by their politically-correct “Great Green Fleet Carrier Strike Force”. Apparently this must be the flagship strategy for a kinder, gentler liberal campaign to defeat malevolent oil-exporting Middle Eastern adversaries…provoking them to die of laughter.
It seems that the algal oil military image makeover applies to Solazyme’s human cosmetic customers as well. After the company raised $227 million in an IPO just last May, only to see its stock price plunge from nearly $28 in late July to $7.68 by mid-October, it went on to pursue even greener cash markets. As their CEO Jonathan Wolfson explained: “We were trying to use the power of biotechnology to solve environmental problems, and make money. “ But when revenues stagnated, they began to seek greener pasture ponds.
One of their food chemists discovered that microalgae can be used to protect skin against sunlight or lack of moisture plus produce ingredients low in saturated fats that can be used in cookies, snacks and other foods. So the company has now redirected business priorities to an anti-aging skincare line in partnership with Sephora… and also to a joint venture with a French firm, Roquette Freres that produces dietary supplements. As Pavel Molchanev, a Houston-based energy analyst at Raymond James observes, “Solazyme isn’t likely to become in the foreseeable future a fuel-centered business.”
Oh well, so what if we can’t really replace 17% of our transportation oil with algae secretions? Isn’t it comforting to just to know that our tax money is going for something we can always wear or eat if that doesn’t work out?