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Algae. Photograph: Jianan Yu/Reuters
Photograph: Jianan Yu/Reuters
Photograph: Jianan Yu/Reuters

Microbe economics

This article is more than 15 years old

Forget the notion that fuel from corn or soybeans will solve the energy crisis. That bubble is deflating as quickly as the new one, involving the commercialisation of algae, is inflating.

Already in the US there are almost 20 venture capital funded start-ups that see potential in algae. Many entrepreneurs believe algae could be used commercially to produce biofuels, or burned to generate energy.

Because its photosynthesis relies on a supply of carbon dioxide, advocates of this nascent technology see a bright future mopping up waste gases from power plants and turning them into "green crude" for cars and planes.

One man cautiously welcoming the bubble is Dr Bob Metcalfe, the inventor of Ethernet, the technology that links most computers to the internet. He has just completed a year as chief executive of Greenfuel Technologies, a company that is trying to grow algae on a massive scale in a controlled environment. And as a survivor of the dotcom bubble and bust, he is drawing parallels.

"I am an expert on the internet bubble and I am applying many of those lessons to the energy space. I am part of this bubble and I am inflating energy bubbles just like I inflated internet bubbles. I think bubbles are a good thing but you have to be careful," said Metcalfe.

Being careful, according to Metcalfe, is not making bad investments. Just as in the heyday of internet start-ups, Metcalfe predicts that "charlatans" will roam the alternative energy space, making outrageous claims for unproven technologies. They will receive millions from gullible investors and then never be heard of again.

"I don't regret the dotcom bubble, it was very useful for progress. I am just happy that I wasn't one of the losers who made stupid investment decisions; investing in the likes of pets.com, which was really a bad idea," said Metcalfe.

He is determined that Greenfuel won't be tarnished with the charlatan moniker, although he took over as chief executive when the company realised its technology wasn't working as advertised and was burning through its funding too quickly.

He believes Greenfuel is back on track and has reverted to his role as board member representing Polaris Ventures, an investor in the company. Greenfuel has just begun a huge project aiming to grow algae at a plant somewhere in Europe. Metcalfe said he could not reveal more details.
Greenfuel's trials have involved three-metre high glass tubes filled with algae, which it calls bioreactors.

The algae are fed on water, sunlight and CO2, and harvested to produce biodiesel. The waste can be sold off as high-protein animal feed.

Algae's appetite for CO2 explains why Greenfuel is keen to team up with deep-pocketed power companies looking to cut CO2 emissions.

If Greenfuel and other companies can grow algae on a commercial scale it will impact not only on the fuel world but also the animal and human food chains. It is potentially much greener than growing corn or ethanol, as it does not use crops otherwise destined for human consumption. Algae can also be used to produce Omega 3, which is increasingly popular as a health supplement.

Barry Cohen, who recently founded the National Algae Association to provide a business forum for companies interested in exploiting it, said fuel was only one avenue to potential profits. Algae can be used in pharmaceuticals and even green plastics and packaging.

"Feed, food and fuel," is the alliterative phrase Metcalfe likes to use.

Perhaps surprisingly, there are 3,000 strains of algae with some being better suited to the production of biofuels than others. While companies such as Greenfuel are interested in producing core algae, others are manipulating it for use in making fuel.

The blog Earth2Tech tracked down 15 start-ups earlier this year and that list did not include Sapphire Energy, which includes the UK's Wellcome Trust among its investors.

Sapphire said it had created green crude from algae, a technique also pursued by other companies such as Solazyme and Solix Biofuels. A couple of companies are looking to come to the rescue of the airline industry by creating an algae-based jet fuel. They are Inventure Chemical and Aquaflow, which is working with Boeing.

IT and business consultancy Infosys estimates that once large-scale commercialisation has been achieved, algae has the potential to produce the feedstock for the biodiesel industry at 100 to 200 times the rate of the current best sources of vegetable oil feedstock.

"With algae, production is continuous. With standing crops such as corn or soy there is a harvest at once or at best twice a year," said Richard Fortune, author of an Infosys white paper on how algae should be the feedstock of choice for the biodiesel industry. He claims that while an acre of soy beans can produce 150 gallons of oil a year, an acre of algae can produce 10,000 gallons and has the potential to produce 100,000 gallons.

Fortune says biodiesel producers can make a profit from algae-based fuel. This can no longer happen with crop-based fuels because they have become too expensive. These high prices explain why the US produced only 450m gallons of biodiesel, when it had the capacity to produce 2bn gallons.

Like Metcalfe, Fortune sees parallels between the algae bubble and the dotcom one, but he also sees major differences. The dotcom era threw up vaporware or technologies that were nice to have but not essential, algae companies are developing products that are important to the planet's survival.

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