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Report: Algae Biofuel Requires Long-Term Investment

November 23, 2010

BERKELEY, CA - A new report from the Energy Biosciences Institute (EBI) in Berkeley, Calif., projects that development of cost-competitive algae biofuel production will require much more long-term research, development and demonstration. In the meantime, several non-fuel applications of algae could serve to advance the nascent industry.

"Even with relatively favorable and forward-looking process assumptions (from cultivation to harvesting to processing), algae oil production with microalgae cultures will be expensive and, at least in the near- to mid-term, will require additional income streams to be economically viable," write authors Nigel Quinn and Tryg Lundquist of Lawrence Berkeley National Laboratory, which is a partner in the BP-funded institute.

Their conclusions stem from a detailed techno-economic analysis of algal biofuels production. The project is one of the over 70 studies on bioenergy now being pursued by the EBI and its scientists at the University of California at Berkeley, the University of Illinois in Urbana-Champaign, and Berkeley Lab.  

The Report, "A Realistic Technology and Engineering Assessment of Algae Biofuel Production," is available here.

The algae biofuels industry is still in its early gestation stage, the new report notes. Although well over 100 companies in the U.S. and abroad are now working to produce algal biomass and oil for transportation fuels, most are small and none has yet operated a pilot plant with multiple acres of algae production systems. However, several companies recently initiated such scale-up projects, including several major oil companies such as ExxonMobil (which a year ago announced a $600 million commitment to algae biofuels technology), Shell (with a joint venture project, "Cellana," in Hawaii), and Eni (the Italian oil company, with a pre-pilot plant in Sicily).

The U.S. Department of Energy has funded several R&D consortia and pilot projects as well as one 300-acre demonstration project in New Mexico by Sapphire Energy Inc. The U.S. Department of Defense is supporting several fast-track projects. In the United Kingdom, the Carbon Trust has initiated a 10-year effort to develop algae oil production, engaging a dozen universities and research laboratories, while the European Union recently funded three 25-acre pilot projects.
Most of these projects use the raceway, open pond-based algal production technologies, which were analyzed in the EBI Report. These projects aim to show that it is possible to mass culture algae with current or near-term technology within the technical and economic constraints required for biofuel production.
Once the technologies are developed, global resource availability will be a major controller of algae production, the report states. Four key resources -- suitable climate, water, flat land and carbon dioxide -- must all be available in one location for optimal algal biomass production. The authors state that despite the need for all four resources, algal oil production technology has the potential to produce several billion gallons annually of renewable fuel in the U.S. However, achieving this goal, particularly at competitive capital and operating costs, will require further research and development.

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