The algae industry is still five to 10 years from commercialization, but it has the potential to change our lives.

I use a Britta for drinking water. About a year ago, my girlfriend noticed a neon green film growing from the bottom of the Britta jug. “Damn algae,” I thought to myself. “It grows everywhere.” But that capacity to grow really, really quickly—and practically anywhere—could be the saving grace of humanity (or the cause of more ire).

Among the fastest growing plant species in the world, certain strains of algae grow so rapidly that they can double in size every day. Similar to how humans might sweat when mustering the courage to ask someone out on a date, certain strains of algae—when stressed (either from a lack of nutrients or sunlight)—produce large amounts of lipids (oils). These oils have chemical compositions similar to petroleum molecules called hydrocarbons. Scientists have figured out how to easily transform these algae oils into “Third Generation” biofuels that mimic gasoline, diesel, and aviation fuel.

Algae are so prolific at producing oil (7,500 gallons of fuel per acre per year) that you could displace 100 percent of the petroleum that the United States consumes for transportation in a given year on a little more than 1 percent of our total landmass. Soybeans, the main source of biodiesel in the United States, produce only 50 gallons of biodiesel per acre per year—roughly 150 times less than algae.

Algae are a truly revolutionary energy source. They not only grow quickly, but also use carbon dioxide as a nutrient source. In the future we might see algae farms co-located next to coal-fired electricity plants, and instead of nasty black plumes blowing from the smokestacks, the CO2 could be piped directly into the algae. While the CO2 will be eventually released in the atmosphere when you drive your car, the process of “cycling” the CO2 could result in algae biofuels having a carbon footprint 75 percent lower than petroleum. Other significant advantages include: not requiring freshwater, the ability to grow on marginal or desert land, and the plethora of co-products that can be created from the algae corpse (bio-plastics, nutraceuticals, animal feed, etc).

Algae biofuels are being produced today, albeit on a very small scale. Although there are no technical obstacles to producing algae biofuels, there are important economic and logistical challenges about algae’s ability to scale. For example, the cost to produce a gallon of algae is estimated by the Department of Energy to be $8 to $25 per gallon. The high costs are attributed to the numerous (and disparate) steps involved in growing, harvesting, de-watering, extracting, and refining the algal oil into petroleum substitutes.

The industry is so nascent that it has yet to agree on any best practices regarding any of those steps. For example, some companies are growing algae in big open ponds. While open ponds most closely resemble nature, they are not as efficient at controlling the amount of light and nutrients that algae receive compared to a photobioreactor (PBR), an enclosed vessel that manipulates algae’s environment for maximum lipid growth. While a PBR will have much higher yields than an open pond, it is crazy expensive to build acres of plastic tubes. Another growth method is fermentation. In this process, algae are grown in dark steel drums with no access to light but consistent supplies of sugar. While it might seem counter-intuitive to deny algae access to photosynthesis, a company called Solazyme has raised almost $100 million and claims this process is The Answer. These divergent growth methods are illustrative of an industry in its infancy that will need to establish technological standards in order for costs to decline. Assuming that costs come down appreciably in the coming years (and we have evidence to suggest that they are beginning to), there are legitimate logistical issues about finding land with sufficient access to sunlight, water, CO2, and electricity.

The brightest minds within the industry estimate that algae biofuels are five to 10 years away from commercialization. And while some might believe that algae’s high costs and technological immaturity compared to First Generation biofuels (or even Second Generation cellulosic ethanol) means that we should ignore them until they are closer to commercial scale, I would argue that the opportunity to displace 100 percent of our petroleum from a biofuel that neither competes with food supplies nor uses precious cropland or freshwater—while consuming CO2 as a feedstock—warrants our immediate attention.

If you want to do something about accelerating the use of algae biofuels, the first thing you can do is educate yourself about this industry. There is currently a land-grab over federal energy subsidies and up until now, algae has received the short end of the stick. Remember that there are vested interests in Big Oil and Big Agriculture with billions to lose if the status quo is radically disrupted—and their lobbyists cling on to our politicians like a drunk grabs a streetlamp. While algae is but one technology in a mosaic of solutions that will move us to a cleaner world, it will require financial and political will to succeed. And while some will say that technologies like algae are “too expensive”, the cost of doing nothing is much higher.

Guest writer Joshua Kagan is an analyst with Atlas Capital, a fellow with the Prometheus Institute for Sustainable Technologies, and an all-around expert in the world of clean technology. This is the fourth in a four-part series exploring a possible transition from fossil fuels to biofuels, and how algae might supplant oil as the dominant energy currency.

From Petroleum to Algae illustrations by Jennifer Daniel.

In the first two editions of this series, we’ve talked about the shortcomings of petroleum as a transportation energy source, as well as the limitations of first generation biofuels, like ethanol and biodiesel, which suffer from the inescapable flaw of directly competing with our food supplies.

Although I believe that neither corn ethanol nor biodiesel have the capacity to ever wean us off our crack-like addiction to petroleum, credit should be given when credit is due. In the same way that we could not have Radiohead without Pink Floyd, we could never have an advanced biofuel industry without the lessons learned from first generation biofuels. Although corn ethanol is an easy target—it has been much maligned by others in the recent past—I chose to write about it to explain to you, the reader, that while first generation biofuels have significant shortcomings, there are also some extremely exciting new alternative biofuels on the brink of commercialization whose future success will come, in some ways, as a result of earlier biofuels’ failures.

Known as second generation technology, these biofuels do not rely on food or cropland as sources, which makes them a marked improvement on first generation fuels (though, as you’ll see below, they don’t get us all the way there). Scientists and entrepreneurs have figured out how to literally turn the weeds growing in your backyard and the garbage destined for a landfill into fuel. Each form of biomass contains a percentage of carbohydrates called polysaccharides. These complex sugars can be broken down into simple sugars via “bio-chemical” or “thermo-chemical” processes and fermented into ethanol (some processes use catalysts). Note that while there are some companies creating “cellulosic diesel,” the majority of the billions of dollars in government and venture capital money for second generation biofuels has gone to cellulosic ethanol.

Cellulosic ethanol is a wonderful upgrade to corn-based ethanol. Picture the stem or bark of a plant. That material is called lignin and it contains lots of energy. You can burn the lignin as fuel for the production process—eliminating the need for an external electricity source and reducing lifecycle greenhouse gases up to 80 percent compared to petroleum gasoline (on a BTU basis). Yay for cellulosic ethanol!

Not so fast. There are significant logistical questions about how to grow, harvest, store, transport, and transform various forms, shapes, and sizes of biomass into fuel on a massive scale. The investment bank Thomas Wiesel Partners estimates that a 50-million gallon ethanol plant would require a delivery of cellulosic biomass every six minutes, 24 hours per day, 365 days per year. Putting aside the fact that the Environmental Protection Agency’s mandate for 16 billion gallons of cellulosic biofuel by 2022 will require the retooling of modern agriculture as we know it—the biggest problem with cellulosic ethanol is that … it is ethanol. And even under the aggressive and optimistic scenarios devised by the USDA for biomass availability, cellulosic ethanol would only displace a fraction of our entire gasoline demand, to say nothing of aviation and diesel fuel.

Wouldn’t it be awesome if we could create a fuel that actually worked with our pre-existing infrastructure? Where you could use it regardless of whether you had a diesel tractor, private jet, speedboat, or 1967 Impala? Where it could be transported via traditional petroleum pipelines and used in current petrol stations in high blends? This is the Holy Grail of biofuels.

But hope is not lost. Human ingenuity has found a way to create a fuel that can work with any transportation engine from the most unlikely of places: the bottom of your swimming pool. It is nasty, it is algae, and it might just be fuel from the gods.

Although history will probably remember Bill Clinton for Monika Lewinsky, “don’t ask, don’t tell,” and eight years of economic prosperity, I will remember him for his administration’s decision to eliminate the “Aquatic Species Program.”

What is the ASP and why do I still harbor a grudge for Slick Willy? The Aquatic Species Program began in 1978 by Jimmy Carter to explore revolutionary new types of energy. Originally concocted to produce hydrogen from algae, the program identified specific strains of algae that—when stressed—produced prolific amounts of oils that could be refined into a variety of petroleum-like fuels. The researchers found that algae could live on marginal land using sewage or salt water while consuming CO2 as a nutrient source. The program was killed in 1996 when oil prices were less than $20 per barrel and the estimated costs of producing a barrel of algae oil was estimated to be $40. The Department of Energy made the strategic decision to focus on bioethanol. As a result, algae investment and research went largely dormant for the ensuing 10 years.

Can 3rd Generation biofuels like algae catch up and leapfrog cellulosic ethanol? Are algae really the savior or one of those technologies that are always “20 years away” from commercialization? Why was Kermit the Frog right when we prophetically claimed “its not easy being green?” These questions will be explored in our last segment of this series, “Fuel from the Gods.”

Guest writer Joshua Kagan is an analyst with Atlas Capital, a fellow with the Prometheus Institute for Sustainable Technologies, and an all-around expert in the world of clean technology. This is the third in a four-part series exploring a possible transition from fossil fuels to biofuels, and how algae might supplant oil as the dominant energy currency.

From Petroleum to Algae illustrations by Jennifer Daniel.

We have two main “solutions” for curbing the unintended consequences of our use of fossil fuels: first generation biofuels (ethanol and biodiesel) and electric vehicles. I am unapologetic in my belief that both are very flawed solutions. At best, they make only a marginally positive contribution; at worst, they represent a situation where the patient’s medicine can actually make him sicker.

It may seem like heresy for a self-righteous Prius-driving vegetarian environmentalist to claim that electric vehicles and first generation biofuels are almost as evil as oil, but they are. Let me preface by saying that I love the idea of “zero emission” vehicles. However, we also need to ask ourselves a fundamental question: What will be the source of the electricity that fuels these vehicles? According to the Department of Energy, 50 percent of all electricity generated in the United States comes from coal, while only 10 percent is derived from renewable sources (solar, biomass, geothermal, hydroelectric, wind, etc). Thus, if we think we are actually making a meaningful impact on reducing GHG emissions from switching our transportation energy source from oil to coal, then we have read Don Quixote one too many times and absorbed his delusions of grandeur. Electric vehicles also have such arcane battery technology (the $100,000 Tesla Roadster uses laptop batteries after all) that you are more likely to see a “Back to the Future” hovercraft in your lifetime than fly to Bratislava in an EasyJet electric airplane.

Our other current “solution” to displace petroleum is first generation biofuels. In other words: ethanol and biodiesel.  Ethanol is a gasoline alternative made from the starch or sugars of plants like corn or sugarcane.  About 80 percent of the world’s biofuels are ethanol and the United States is the largest market (9 billion gallons produced in 2008) followed by Brazil (7 billion gallons).  Biodiesel comprises the remaining 20 percent of biofuels. It is made from feedstocks like canola, soybeans, and palm plants. The European Union—due to its preference for diesel over gasoline engines—accounts for half of the world’s biodiesel production, though the United States, Argentina, Malaysia, and Indonesia also produce significant quantities.

Now let’s get to the meat and potatoes. Or in this case corn. Ethanol is an alcohol-based fuel that has been used as a fuel source since Henry Ford’s Model T.  Currently, ethanol is blended into up to 10 percent of the U.S. gasoline supply, but higher percentages of ethanol—without engine modification—will cause your car to die a painful death. On a per gallon comparison to oil, ethanol carries two-thirds the amount of energy. It also cannot be transferred via pre-existing petroleum pipelines.

There are many other problems I have with corn ethanol but for the sake of brevity, I will only touch on the big one. According to the USDA, the United States will produce 12.8 billion bushels of corn in 2009, 4.2 billion of which will be used to produce corn ethanol production. That’s one-third of our corn supply to produce a fuel that will displace only 5 percent of our gasoline?  All the while, according to the United Nations, 1 billion people will go to bed hungry tonight.  As long as there are people starving on this planet, fuel sources that directly compete with food supplies are morally flawed.

According to Greentech Media, 76 percent of all federal renewable energy subsidies went to corn ethanol in 2007. Under mandates directed under the Energy Independence and Security Act, 15 billion gallons of corn ethanol is required to be blended into the U.S. gasoline supply by 2015.  Assuming similar corn yield levels, we will soon be dedicating almost 50 percent of our corn crop to produce a fuel with debatable energy and carbon savings.

But hope is not lost. There are non-food crops that can be used for biofuel. The federal government has awoken to this and is heavily promoting “second generation” cellulosic biofuels. Cellulosic refers to the “non-food” component of a plant or tree—like the husk of the corn or tree trimmings—that contain lots of energy in the form of carbohydrates called polysaccharides that can, in turn, be processed into biofuels. The next installment in this series discusses what is cellulosic ethanol, why you need to know about it, why you are not wrong if you find it ironic that cutting down trees is a carbon mitigation strategy, and how algae is really the future of biofuels.

Guest writer Joshua Kagan is an analyst with Atlas Capital, a fellow with the Prometheus Institute for Sustainable Technologies, and an all-around expert in the world of clean technology. This is the second in a four-part series exploring a possible transition from fossil fuels to biofuels, and how algae might supplant oil as the dominant energy currency.

From Petroleum to Algae illustrations by Jennifer Daniel.

It is said that “the road to hell is paved with good intentions.” I don’t know the author of this saying, but it is apt, as the law of unintended consequences is both harsh and universal. Revolutionaries breed counter-revolutionaries. Drug prohibition finances billionaire drug lords. But what does any of this have to do with an article on the future of biofuels and the prospects for algae to replace petroleum?

To answer that, we need to jump to the year 1859. In a town in the middle of nowhere called Titusville, Pennsylvania, a man named Edwin Drake struck oil 70 feet below the ground, creating the world’s first oil well. Combined with the discovery of coal for electricity generation, oil would be the primary fuel for global transportation and one of the key facilitators of an acceleration of globalization (combined with advances in media technology). Simply put, the unparalleled rise in economic prosperity that the West has experienced over the last 150 years is directly related to our ability to consume cheap and plentiful energy sources—of which oil is a main source. Yay for oil!

However, as you’re well aware, the law of unintended consequences has, in the form of climate change, begun to rear its ugly head. We now find ourselves at a precipice, and the faster we can put down the pump, the more resiliently we can respond to the many ill affects of petroleum.

Today, the United States is the third largest oil producer in the world. We produce more than Venezuela, Kuwait, and Nigeria combined. We also are the largest importer of oil. The United States accounts for approximately 25 percent of the 84 million barrels of oil consumed globally per day. A little more than half of each barrel of oil (52 percent) is refined into transportation fuels like gasoline, diesel, and jet fuel. Global transportation fuel consumption is about 700 billion gallons per year. The rest of a barrel of oil is used in a variety of chemical and plastics that are in almost every single consumer product that we use today.

The national security and economic implications of annually sending hundreds of billions of petrodollars to countries with questionable commitments to human rights (i.e. Saudi Arabia, Iran, Nigeria, Russia, etc.) are rather obvious and do not need to be addressed here. If you believe—as I do—that the low-hanging sources of easily accessible and cheap oil have been exhausted and combine it with the 2.5 billion people in “Chindia” undergoing their industrial revolutions and becoming middle class consumers and global jetsetters—then, folks, we might have a big supply-and-demand problem in the coming years which could result in dramatically higher oil prices. Add in climate change and you can see why we need to find alternatives to petroleum as soon as possible.

At present, the only commercial and widely distributed petroleum alternatives are biofuels. You have probably heard of ethanol and biodiesel. These are referred to as “first generation” biofuels. What you might not realize is that 5 percent of U.S. gasoline consumption will be displaced by ethanol in 2009. At the same time, the United States will also dedicate one third of its entire domestic corn crop to producing ethanol, resulting in problems both philosophical (land use debates) and tangible (higher food prices).

Looming in the (what I hope to be) not-too-distant future is a biofuel that is non-food based, can live in salt or sewage water, and does not require cropland (e.g. can thrive in a desert). What I am talking about is algae. Algae is so productive—compared to any other known biofuel—that you could use just 1 percent of the U.S. landmass to grow enough algae to create enough fuel to displace 100 percent of U.S. petroleum needs.

Future articles in this series will explain what biofuels are, why we need biofuels but not ethanol or biodiesel, and how pond scum might create a bunch of unintended consequences or actually save the world.

From Petroleum to Algae illustrations by Jennifer Daniel.