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Algae's Entrepreneurs: A quick survey of algae start-ups serves as a handy guide to the biggest hurdles facing the industry.
To avoid issues such as light limitation and culture stability, Solazyme works on growing algal strains in the dark in large vats, converting sugars fed to them into oil or hydrocarbons.
Algenol uses an engineered strain of blue-green algae, better known as cyanobacteria, which uses photosynthesis to convert CO2 into sugars and then ferment those sugars into ethanol, which the cells then secrete. This procedure eliminates the need to harvest and dry the algae and then extract the oils.
Both Aurora and Sapphire are developing improved species of algae for open-pond cultivation, while Solix focuses on the engineering of closed photobioreactors.

Recent advances in technology, however, might soon change this rather gloomy economic picture. For example, we can now grow thousands of cultures simultaneously at the microliter scale using advanced liquid-handling devices and robotics. Instruments can isolate single oil-filled cells from their cultures based on how the cells fluoresce. With our improved understanding of flow dynamics, we can engineer ponds and bioreactors that require the least amount of energy to mix. And new polymers that are both stronger and cheaper can withstand months of punishing sunlight, enabling more affordable photobioreactors. The technical challenges should not be underestimated, but our projections suggest that in the next 10 years or so algal biofuels will be able to compete economically with crude oil costing between $75 and $100 per barrel.

What makes us most optimistic is the renewed financial support for developing this technology. The U.S. Defense Advanced Research Projects Agency was among the first to begin funding research groups to work on the cost-effective conversion of algal oils to jet fuel. The Air Force Office of Scientific Research also issued a number of grants to academic and national labs to carry out such research. And the American Recovery and Reinvestment Act is providing $50 million over three years to a consortium of national, academic, and industrial laboratories, called the National Alliance for Advanced Biofuels and Bioproducts, to develop algae-based biofuels.

Private investment is substantial, too. A few start-ups stand out in this regard. In the past year, Algenol alone has raised more than $900 million from private investors. And in the same period, Aurora Algae, Sapphire Energy, Solazyme, and Solix Biofuels have each raised in excess of $10 million. Although their products are unlikely to be able to compete with conventional fuels anytime soon, the Defense Energy Support Center recently announced that it is prepared to buy more than 2.65 million L of algal biofuels at the cost of production for use in ships and jets. This guaranteed market should provide near-term revenue for such companies, allowing them to improve their processes and reduce costs.

We are confident that we've reached a sort of tipping point and that we'll see algal fuel produced in larger quantities in the next few years. But before that happens, regulators will need to explore the environmental impact of scaling up algae production. We and others will have to evaluate the carbon footprint of these operations, as well as their water and nutrient demands. Another crucial question concerns what ecosystem changes might result from modifications to the land, the evaporation of huge amounts of water, and the disposal of leftover salty brines. Lastly, the cultivation of nonnative algal species presents an unknown risk to our aquatic environments. Government agencies will need to weigh the potential benefits of factors such as adding jobs in rural areas and energy security against any environmental consequences.

Clearly, many obstacles still stand in the way of widespread commercialization, but so far none of these issues strikes us as insurmountable. To our eyes, anyway, the future of these little green cells looks positively golden.

This article originally appeared in print as "Green Gold."

About the Author

Philip T. Pienkos, Eric Jarvis, and Al Darzins, all veterans of biotechnology start-ups, are now molecular biologists at the National Renewable Energy Laboratory, in Golden, Colo. In "Green Gold", they assess the potential of algae-based biofuels. The authors would like "to see algae biorefining follow the meat packers' principle, where everything is used except for the oink." Every molecule in an algal cell could be made into useful products, including nutritional supplements, animal feed, and fertilizers. Says Darzins, "The final chapter hasn't been written for algae."