Algae fuel producers look beyond fuel to stay afloat

[USA] Just about every start up has to face the dreaded “Valley of Death,” the time that comes after they have demonstrated their idea and before they are producing it at significant scale and generating revenue. Generally speaking, money has been borrowed, payments are due on rent, employee salaries, commercial licenses and various other expenses. If the borrowed money runs out before significant revenue starts coming in, then it’s usually game over.

Furthermore, when the product you are hoping to replace, is not only mature, with a massive infrastructure and active investment that has, despite soaring demand, brought prices down to levels not seen in years—that makes it even harder. Add to that the fact that your technology is taking quite a bit longer to reach scale than was originally expected, and you find yourself in the position of advanced biofuel producers.

By conventional logic those companies should be out of business by now, but a number of them, while perhaps not exactly thriving, are hanging in there, thanks to some nimble maneuvering, a versatile product platform, and what you might call “out of the barrel” thinking.

Take Solazyme, for example. As they work their way through regulatory delays and wait for oil prices to start moving upwards, they have found other outlets for their algae-based oils. The versatility of algae, has allowed them to produce ingredients for both food and cosmetics. They recently launched a new algae-based cooking oil called Thrive, to rave reviews. While at the same time, the role of biofuels, despite their considerable contribution, was barely mentioned at the high level climate talks in Paris.

Says CEO Jonathan Wolfman, “Take a lack of forward progress and long-term energy policy in Washington and add $40-a-barrel oil to that, and the result is that we’re just breaking even in specialized areas of fuels. We still believe in the long-term potential for fuel, but it’s just really hard right there now.”

Clearly, this is one area where a price on carbon would make a big difference. While most of the solutions that people are talking about, such as solar and wind, help offset carbon in the production of electricity, little is being done in the transportation sector beyond the gradual introduction of electrified vehicles. While that could very well become predominant in the future, both the higher energy density of liquid fuels compared to batteries and the extensive infrastructure in place to deliver those fuels, not to mention how long people hold on to their vehicles, all argue for continued prevalence of liquid fuel, combustion engine vehicles, for some years to come.

That needn’t come at the expense of carbon reduction, by the way. A number of advanced biofuels, include those produced from algae, have near-zero or even negative carbon footprints. Why? Not only do these fuels displace the use of conventional fossil fuels, as a blending agent, but they also consume carbon dioxide in their production. It’s what algae have for lunch. While it is true, that today’s engines cannot run on pure biofuel (ethanol being the most common), Flex-fuel vehicles can run on up to 85% blends, and engines built to run on pure ethanol are not only possible, they are used routinely by Formula 1 racing cars.

Like Solazyme, Amyris, Inc, which makes oils from yeast rather than algae, that can produce both diesel and jet fuel, also has extracted some 400 oils that are sold as fragrances and cosmetics.

Both of these companies, as well as Sapphire Energy, which now makes nutritional supplements, used Department of Energy funding to establish their processes, but have detoured, for the time being, while the market situation clarifies.


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