Florida Algae-preneurs - Making
Fuel from Algae
Jan 10, 2011 - Cynthia Barnett - FloridaTrend.com
VanderBrekel displays fuel derived from algae.
On 1,000 acres on the northwest shores of Lake
Apopka, Orlando businessman Nick VandenBrekel
touts a new crop
for Florida that he says can help boost the state's
economy as it provides another source of alternative
His company, Agrisys, has raised more than $25 million
from investors and plans to break ground this quarter
on ponds and a small refinery where VandenBrekel
says Agrisys will be able to grow algae, process
it into an oil, and refine the oil into jet fuel,
diesel or gasoline.
The operation, he says, will be "the world's first
large-scale, vertically integrated algae-to-biofuels
Scaled up, VandenBrekel envisions a host of 1,000-to-20,000-acre
farms across the Southeast where algal fuel is grown,
processed and used locally, from community gas stations
to diesel fleets such as school buses. Success, he
says, would create no less than a "rebirth of
Like Agrisys, a troop of other Florida companies — including
PetroAlgae of Melbourne; Algenol of Bonita Springs;
AquaFiber of Orlando; and Algae Aviation Fuel of
Sarasota — sees the same promise in algae as
a source of biofuel. Algae grows faster than any
other potential crop, reaching maturity in less than
24 hours. As it grows, it devours CO2, generating
oxygen as a byproduct. Most important for its potential
as fuel, algae produce lipids, which store energy
Turning that fat into fuel requires identifying
a species with high lipid content, growing it quickly,
harvesting it and then extracting oil from the microscopic
cells and refining it.
The Florida firms all boast unique algae strains or
proprietary processes they say can make fuel.
Agrisys, for example, has developed or licensed
technology for growing and processing its algae in
partnership with a research institute called CEHMM
and a private technology firm called ARA, both in
New Mexico. VandenBrekel says researchers there have
been able to squeeze 125 gallons of oil daily from
1,000 gallons of algae-water mix piped from five
acres of ponds.
But scientists say nearly four decades of research
haven't answered the question whether anyone can
do it at the scale the Florida companies envision — much
less at a profit.
"There is a lot of hype because all these companies
are chasing investors, so the bigger the numbers
they use, the better hope they think they have of
attracting dollars," says George Philippidis,
energy director of the Applied Research Center in
Miami, the business arm of Florida International
University. Philippidis worked at the National Renewable
Energy Lab in Colorado during early efforts to research
algal fuels and today consults with some of the algae
companies popping out of the pond.
Philippidis sees real promise in a Florida algal-fuel
industry because the state's exposure to sunlight
and warm temperatures make it an ideal place to cultivate
algae. But he estimates algal fuel is still about
a 10-year bet. The technology, he says, still faces "significant
Scientists understood the potential for extracting
oil from algae as early as the 1940s. But it wasn't
until the 1970s oil embargo that the U.S. launched
a major effort to study algal fuel. The Department
of Energy created the $25-million Aquatic Species Program
as part of the National Renewable Energy Lab. Researchers
found that under certain conditions, large quantities
of microalgae with significant amounts of lipids can
be grown in open ponds. They found strains and technologies
promising enough to have "significant impact on
U.S. petroleum consumption."
The problem was cost. The most optimistic assumptions
put algae oil production at $56 to $186 a barrel.
In 1996, with oil selling for less than $20 a barrel,
the Clinton administration abandoned the Aquatic
Species Program on economic grounds. But in recent
years, climate change and growing concerns about
U.S. dependence on imported oil have led to enormous
public and private investment in all potential biofuels,
including algae. Interest has intensified as oil
prices have risen to their present levels of more
than $80 a barrel.
A 2007 expansion of the federal Renewable Fuel Standard
requires that 36 billion gallons of renewable fuel
be blended into gasoline by 2022. Only 15 billion
can come from corn ethanol, a fuel that has required
huge financial subsidies and lots of water, even
as it generates both pollution and fears about replacing
food crops with fuel crops.
Algae and other non-food crops, such as the fast-growing
jatropha being planted en masse in south Florida these
days, are seen as the "next-generation" of
biofuels. As part of the 2009 economic stimulus bill,
the federal government poured $800 million into next-generation
fuels. That cash is buoying Algenol, which received
a $25-million grant from the Department of Energy to
build a pilot-scale algal-fuel biorefinery with partner
Dow Chemical in Texas. After Lee County commissioners
$10 million to help Algenol build its biology and
engineering labs in job-hungry Fort Myers, the company
agreed to build its full-scale biorefinery in southwest
Rather than grow algae in ponds like most of its
competitors, Algenol cooks algae, sunlight, CO2 and
seawater in 50-foot-long, soda-bottle-shaped bioreactors
to produce ethanol. CEO Paul Woods says his company "will
be the largest consumer of CO2 on the planet."
Scalability is the key. While more than 100 companies
nationwide have now jumped into the algae-to-fuel
business, all of their testing to date has been so
small-scale that "the state-of-the-art in this
field is wanting in almost all respects, from the
ability to achieve long-term culture stability to
high productivities to low-cost harvesting to extraction
and processing of the oil," according to a recent
national analysis of the industry by a team of researchers
at Cal Poly State University and Lawrence Berkeley
National Laboratory in California.
According to the Cal Poly report, as of mid-2010,
not one pilot algae plant of 10 acres or more was
operating anywhere in the world. Only two small-scale, "pre-pilot" plants
had progressed for more than two years, one in Israel
and one along Florida's east coast, at the Florida
Institute of Technology's Institute for Marine Research.
Professor Junda Lin, director of FIT's marine institute,
was principal investigator on that project, funded
by Aurora Algae, an Alameda, Calif.-based company.
For the past four years, Aurora and FIT scientists
have tested different algae species in myriad conditions
at a four-acre site adjacent to the ocean at Vero
Beach. Lin says the project, now coming to a close,
was successful enough that Aurora executives believe
they have the technology they need to commercialize
production. Last fall, they announced they'll build
the company's first large-scale facility in northwestern
Australia, which they say has "the combination
of a perfect climate and the right blend of resources — including
abundant seawater, industrial CO2 and skilled labor."
Still, the economics of algae are problematic enough
that Aurora last year repositioned itself to also
produce pharmaceuticals, protein bars, oils and fishmeal.
In addition to oil that can be refined into fuel,
algae can yield omega-3 fatty acids, proteins and
other oils at more profitable margins than other
methods of production. "Food or pharmaceuticals
give us the possibility to be profitable from day
one," says Aurora CEO Greg Bafalis.
The omega-3, "fish-oil" strategy is a
linchpin of VandenBrekel's business plan as well.
His profit margin from turning algae into biofuel,
he says, is too small to justify investing only for
that reason. The economics for omega-3 oils — a
byproduct of his process — work a lot better. "Omegas
have a wonderful market price," he says. "On
the fuel side, we show Americans that we can reduce
our dependence on fossil fuels. On the fish-oil side,
we have a business."
VandenBrekel criticizes the level of government
support subsidizing his competitors. Yet the New
Mexico non-profit from which his technology is licensed
relied on years of government funding to achieve
its results. VandenBrekel has funded the company's
proprietary distillation and other techniques.
In any event, the industry burns through cash faster
than algae eat CO2. Take Florida's PetroAlgae. The
company has been growing specially bred species of
algae in its series of sun-lit tubes and checkerboard
test ponds west of Fellsmere in Indian River County
since 2006. PetroAlgae's executives say its bioreactors
are generating more than 10 times the fuel yields
typical in the industry. But in three years of operation
the company hasn't generated any revenue and has
burned through $80 million. It's now trying to raise
$200 million in an IPO.
FIT's Lin says in addition to pharmaceuticals, proteins
and pigments, algae companies may find profitability
in another natural byproduct: Clean water. The primary
work of Orlando's AquaFiber is to restore surface
waters impaired by high nutrient loads or pollution.
CEO Tom Bland says the realization that the process
generates biomass came later, and "it's potentially
earth-changing." AquaFiber's dried algae has
been made into both algal oil and jet fuel. Sarasota's
Algae Aviation Fuel also dries algae into a powder
its developers say can be used to fuel jet engines.
But so far, it's all just enough to fill a beaker
rather than a barrel.
"We need to adjust our expectations," says
Lin, who agrees with Philippidis and many top national
scientists in the field that algal-fuel technology
needs about another decade of R&D.
"On the other hand, we've got to realize that
this is important, that it is worth our investment," Lin
says. "One of these days, there's going to be
a crisis. If we have to face it without alternative
energy sources — we're going to be in trouble."