Algae Farming as a Biofuel Source

Case study: Algae farming as a Biofuel source

Summary of the Case

Algae, grown as a source of carbohydrates or oil for biofuel stock, has many advantages as a crop to replace traditional petrochemicals. An interim step that lessens overall costs of mass infrastructure change. Algae can quickly be adopted and its production scaled up as needs evolve. Ultimately, the market will decide the value of any new product, and technical challenges remain to realize this as a cost effective alternative to fossil fuels. However, a coherent social and economic policy has a place in helping develop and position the industry.


Mankind, like all life on the planet, requires energy. Our industrialized civilization, one that spans much of the planet, requires significant amounts of freely available stored chemical energy to function. Massive populations are increasingly dependent on a steady flow of energy in the form of petrochemical fuels. It was the petrochemical fuels which helped our civilization bootstrap its way from a medieval society to a world spanning machine capable of directing the future of all life. (See my previous paper, Sustainable Development; a historical context)

Beginning with the 1973 oil crisis, a time at which Western consumers were forced to contend with the reality of monopolized and finite petrochemical reserves, the need to find an alternative source of fuel has become increasingly clear to analysts and to the population at large.

As the 20th century progressed there was increasing evidence that, amongst other impacts caused by industrial civilization; the human initiated release of massive stores of carbon into the atmosphere was contributing to a warming trend observed in the global climate. This correlation between industrial release of carbon and other GHGs (“Greenhouse gasses”) is referred to as anthropogenic (human caused) global climate change. A wide consensus has formed around the principle that if we wish to avoid further global warming, it is necessary to change human activity in order to decrease the amount of new carbon that we liberate from its geologically sequestered state.

The issue of energy dependence, and the destructive effects of reliance on fossil fuels is a worldwide concern. According to the European Commissions external relations site:

Energy security and climate security have ceased to be abstract ideas. They are two sides of the same coin. “ It has been noted that balancing energy security with climate change concerns is paramount in the ever-emerging globalized world. One report concludes that, “Security of energy supply and climate change are central concerns for policy makers and important dimensions of the long-term quest for a sustainable global energy system.

In response to these concerns, a variety of new sources of energy have been proposed and are being actively pursued. The alternative sources of energy generally focus on renewable or perpetual energy, in the form of wind, solar, tidal, and so forth. One problem, however, is the lag caused by legacy technology, technology acceptance, and the massive structural and economic costs of changing it. Legacy technology is the currently existing manufactured capital that still has economic value and thus can not easily be discarded. There is much reason to believe, in fact, that merely bringing more capital up to best-available technology would have a strong impact on overall carbon emission, (As measured by the Kyoto Protocol)

One easily-pictured example of legacy infrastructure that prevents quick utilization of new developments is the incandescent light bulb. Is it better to destroy all incandescent bulbs immediately, or replace them with more efficient bulbs only when they fail? The immediate cost of buying new compact fluorescent bulbs for every extant incandescent is high, and we may wish to allocate our immediate resources elsewhere.

The problem that shall concern us is that of replacing the entire infrastructure on national and international levels, used to refine, transport, store, and distribute our current energy source: petroleum products. A great deal of Manufactured Capital (to use the classifications developed by Robert Costanza and Herman E. Daly) exists in the form of means and methods to create distribute and utilize gasoline. The lag in adopting new energy sources which is created by this infrastructure is hard to discount. Even in the event of a hydrogen economy, the retrofitting costs on each service station approach or exceed $1 million. This doesn’t take into account the enormous costs (and opposition to) replacing the vast private fleets of vehicles which consume traditional fuels. While world-powering solar arrays may well be in our future, and intermediate solution must be found in order to hasten our weening, and consequently limit the damage from, petrochemical reserves.

From this background, it can be surmised that any intermediate solution should have the following “sustainable development characteristics”:

  1. Scalable. Proportionally small investments ought be able to produce an economically viable product.
  1. Easy Integration. The product must, with as little difficulty as possible, be useable with the current ICE (internal combustion engine), and be transported and handled in the usual ways. This reduces the harm done by “social traps”, socially reinforced non-adaptive strategies.
  1. Have a low impact on Natural Capital. (as defined by Costanza et al.) In the interests of Sustainable Development, the product should not significantly change or degrade natural ecosystems. If the development of a new and replacement energy source could avoid cutting into Natural Capital, this would register well on indexes such as the ISEW
  1. Have a low impact on other capital. As much as possible we should avoid new costly investments in Human Capital, or reallocation of other resources.
  1. Democratized. As much as possible, the energy source should be available and manufactured in as wide a geographic area, and by as many nations and individuals as possible. This reduces not only national dependence, but individual dependence on transnational corporations.
  1. Have a lower or zero carbon output. It is prudent to avoid testing the Resilience (as defined by Folks, Holling, and Perrings) of the biosphere to increased carbon dioxide until more data is available.

Attempting to address these concerns, some solutions currently being implemented focus on biofuels. These are a range of products in which gasoline (or other petroleum products) is produced from biomass. While often touted as a solution, most biofuel sources have other problems.

The price for basic foods in 2008 rose significantly. A problem which disproportionally impacted the lowest income earners of the world. This run on food values was created, in part, by high energy costs which translated into higher production costs for food. Thus, was exacerbated by increased investments in corn-fuel ethanol. This “Food vs. Fuel” war clearly puts most biomass sources at a disadvantage.

Using corn and other food crops, or land used for food production, also requires large investments of nutrients and perpetuates unsustainable farming. According to the CBC,

Rainforests are now being cleared to make way for palm oil plantations, a rich source of biodiesel. The (deforestation) problem is particularly serious in Malaysia where the palm oil industry began in 1917. The country hopes to apply its experience to meet the rising demand for biofuels coming from Europe and India.”

Newly developed farms for biofuel sources either encroach on natural areas, or they take land from other industries. In the first case, biofuels fail requirement 3, in the second they fail requirement 4. They do meet the other requirements. For these reasons, we need to consider other sources.

A slimy green solution

To meet this need, some innovative companies have begun using algae as a biomass source. Algae is one of the oldest known forms of life on this planet, and is specifically adapted as a highly efficient primary producer, because it produces its energy directly from sunlight. There are many different proposals and ideas for how to derive energy from algae. They all essentially rely on growing algae, and then either fermenting the carbohydrates or refining the oils to produce high energy fuels such as biodiesel or biogasoline.

What would it look like?

Most of the methods being tested consist of either growing algae in large farms, or growing it in contained tube systems called “bioreactors”. In each case, the algae need only sunlight, carbon dioxide, and water. These farms can exist in a wide variety of locations. One exciting idea has algae biodiesel plants being located close to, or in conjunction with, sewage treatment facilities. Filtering wastewater or sewage water through algae bioreactors or farms would help treat the sewage and produce a cleaner water output.

Algae farms could be placed in the deserts, allowing them to: take advantage of the abundant natural sunlight, high temperatures, and to avoid competing with traditional and necessary land use patterns established for food production. Most algae can easily accommodate brakish (salty) water, which is often prevalent in aquifers under the desert, as well as other substandard quality sources. This advantage takes a lot of pressure off of dwindling fresh water supplies in North America and around the world.

In fact, the land demands for algae farms would be quite modest in exchange for quite significant output. According to the Washington Post, citing the U.S. Department of Energy, “the aquatic organisms yield 30 times more energy per acre than land crops such as soybeans”. As a total fraction of the land surface, algae looks like a space saver. The Washington Post continues,

On the other hand, the Energy Department estimates that if algae fuel replaced all the petroleum fuel in the United States, it would require 15,000 square miles, which is a few thousand miles larger than (the state of) Maryland.” (Emphasis mine)

Corn crops in the United States alone use approximately 7 times this amount of land.

Algae is the most potentially productive of all available biofuel sources. According to one source, the following chart is a comparison of the oil production from various biofuel sources, as measured in Gallons of Oil per acre per year.

Corn 18
Soybeans 48
Safflower 83
Sunflower 102
Rapeseed 127
Oil Palm 635
Micro Algae 5000-15000

A changed world

Although it is remains difficult to speculate about the outcomes of any large changes in society or the economy, it is fair to wonder what changes a transition to an algae-sourced fuel could bring.

The algae grow by taking carbon dioxide from the atmosphere directly, then converting it into carbohydrate mass. The mostsignificant change in the world would be a draw-down on the atmospheric carbon dioxide. We predicted that the algae farms would be developed in previously unproductive areas, areas which had negligible pre-existing biomass to displace, and as a result all the biotic growth would be a net gain worldwide. As the production scaled up, more carbon would be sequestered in further algae growth to replace the used fuel. This effect would level out at the point where all or most of our fuel demands were being met with biofuels.

Looking at the sustainable development factors introduced above, we can weigh the utility of algae fuels as an alternative, interim, replacement fuel.

  1. Scalable. Although the economic factors have yet to be actualized, it is reasonable to assume than an “Economy of scale” would develop, allowing more profit and investment as the concept is proved. As the product becomes competitive with other biofuels and fossil fuel oil itself, ideally its success would build on itself and encourage further use and investment. Larger programs would be implemented, increasing market share. In addition, smaller companies could compete.This is related to #5, in which smaller players would have access to the product and the market.
  1. Easy Integration. The product can easily be used, as we have seen, to produce fuel useable in ICE engines. (There may be some engineering hurdles, as discussed below)
  1. Low Impact on Natural Capital. The land use patterns are minimally disruptive, and it may help solve instead of hinder other sustainable development issues such of water use and sewage treatment.
  1. Have a low impact on other capital. There is evidence already to suggest that the solution is profitable, at least on paper. When one considers just how heavily traditional oil is subsidized, both in direct tax breaks to oil companies and in defence spending directed to securing foreign oil, a “home grown” solution seems compelling.
  1. Democratized. Ideally, algae could be grown anywhere. Depending on price points, its conceivable that even small scale farmers could feed into the system or produce their own product, allowing personal as well as national energy independence. There are claims that at-home biodiesel production using algae is already feasible and cost effective.
  1. Carbon output. Widespread algae farming would have a significant negative carbon footprint, followed by a replacement level return.

How Close?

According to Tom Pate of the Sandia National Laboratory, and technical consultant for the Biomass Office of the Department of Energy’s Office of Renewable Energy and Energy Efficiency (EERE), claims

People who are more realistic think this will take at least 10 years for research and investments to get it to the point where [algal fuels]  has commercial viability. I think the jury’s still out, but we’ll likely see an impact in the next decade.”

Bloomberg has reported on massive investments from important economic sources.

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

Other reports indicate that Oil companies are seriously interested in the potential of algae biofuels.

Oil giants such as Shell and ExxonMobil are pouring millions of research funding into algae in the hope that the technology can solve environmental problems associated with intensive crop cultivation for biofuels.

A wide variety of claims exist, as can be seen with any simple web search, but many Industry sources seem to take the idea quite seriously. According to one journal: “Some companies are reporting that they can produce up to 6000 gallons of fuel per acre per year (gal/ac/yr) from algae, even though they’re not yet operating on a large scale.”

However, according to others, there may be some challenges.

The problem is again one of needing to surmount multiple technical hurdles, and the close-out report states that reality… if you want to separate the reality from the hype, just try to secure a contract with someone to supply you with algal fuel.

Most industry news, however, looks promising. The “critical success factors” for this case seem to be purely financial: Can the product be delivered to the consumer for a cost that makes it competitive? Can the start-up cost be reduced to the point that allows smaller investors or private citizens to start producing?

In this briefest of introductions to algae as a biofuel source, we have largely ignored the technical aspects in favor of giving a broader picture of its potential. However, there are still technical hurdles to be overcome.

Critical Success Factors

As we have seen, there are several factors which will ultimately determine the success of algae sourced biofuels. These are:

      1. Profitability. The product must be price competitive with Oil. If the combined investment and utilization do not meet this, adoption will be limited.
      2. Substitution. The product must have few real or perceived drawbacks as compared to traditionally sourced fuels.
      3. Hype. In order to build a share of the market, even if profitable, there must be awareness of the product, and consumer demand.
      4. Government backing. The development of the oil industry, and now the corn for ethanol industry, has largely relied on government assistance, allowance, and subsidy. In order to develop a more sane energy substitute, the government has a necessary role.

Lessons to be learned

Any economic system is a series of compromises between the players involved. Economics itself is definable as response to the problem of scarcity and as such is necessarily limited by its inputs and its technological context. Each technology has its own economic logic that it necessarily imposes on the society. In this case, we are dealing with the technological hangover and restrictions on the future imposed by our reliance on an Oil economy. It is widely accepted that we must transition away from the oil based economy, but many alternatives are offered. As we can see by studying the corn-ethanol debate, merely being AN alternative does not make it a GOOD alternative.

To help truly define a sustainable future, it is necessary that we clearly articulate the way we move into the future rather than blindly groping after each step. As we make compromises, we must bear in mind the future costs rather than let ourselves be led into economic traps. Ultimately, any solution must make economic sense, and the transition to a sustainable future is a process, not a destination. Algae as a biofuel source may well be one step in that process.

Environmentally Compatible Energy Strategies (ECS), International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361, Laxenburg, Austria

Bagozzi, Richard P. (2007) “The Legacy of the Technology Acceptance Model and a Proposal for a Paradigm Shift.,” Journal of the Association for Information Systems: Vol. 8: Iss. 4, Article 12

[Swan, T.W., 1956. Economic Growth and Capital Accumulation. Economic Record 32(2), 334–361.] and Solow [Solow, R.M., 1960. Investment and Technology Progress, Stanford Symposium of Mathematical Methods in the Social Sciences,] eds. Kenneth J. Arrow, Samuel Karlin, and Patrick Suppes, Stanford University Press.]

Development of Next-Generation U.S. Infrastructure Systems: A Framework for National…
Public Works Management Policy.2008; 12: 479-482

Costanza, R. & Daly, H. (1992). Natural capital and sustainable development. Conservation Biology, 6 (1), 37-46. Retrieved April 8, 2010.

Folke, C., C. S. Holling, and C. Perrings. (1996). Biological diversity, ecosystems, and the human scale. Ecological Applications 6 (4), 1018-1024. Retrieved December 8, 2009. Retrieved June 20/ 2010 Retrieved June 24 / 2010

Amanda Leigh Mascarelli Environ. Sci. Technol., 2009, 43 (19), pp 7160–7161 Retrieved June 26/ 2010

Economic Scarcity. (2010). ISCID Encyclopedia of Science and Philosophy. Retrieved June 27, 2010 from

1 Comment

  1. Carbon capturing Algae Oil 101 said,

    I just want to tell you your post was informative and well thought out. Very well done 🙂 My comment is in response to .

    “One problem, however, is the lag caused by legacy technology, technology acceptance, and the massive structural and economic costs of changing it.”

    I have been recently writing articles that pertain to this comment, which I agree is crucial to utilizing any from of alternative energy. Two companies I have been researching that has realized this problem and have teamed up to solve it are Origin Oil and MBD Energy. They have integrated their Technologies at James Cook University, Australia and are now front runners in the global race to capture carbon and turn it into a viable fuel source.

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