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Robert Rapier

Robert Rapier

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The Death Of Algal Biofuel

During the advanced biofuel craze of the past decade, many companies made claims that weren’t remotely credible. A long list of companies claimed they could economically convert biomass like straw or wood chips into fuel for around a dollar a gallon.

Investors and taxpayers funded many ventures that were destined to fail. Technologies that were abandoned decades ago because the economics weren’t viable were revived and received government funding to once again prove that the economics aren’t viable.

Cellulosic ethanol was probably the biggest offender. It isn’t cheap to convert straw into ethanol, but companies continue to try. In fact, “commercial” cellulosic ethanol is now being sold into the fuel supply, albeit it is heavily subsidized via the Renewable Fuel Standard and being produced at only a tiny fraction of the projected amounts.

But right behind cellulosic ethanol in hype was biofuel produced from algae.

It is true that some species of algae produce oils that can be converted into fuel. It is also true that crude oil originated from algae and plankton that lived millions of years ago, died, sunk to the bottom of the ocean, and were ultimately converted into oil.

So the notion of converting algae into fuel isn’t far-fetched. However, executing this process in real time is quite expensive.

Here is an analogy that I have used to explain the problem. Shred up a newspaper and then put that into a bucket of water. The newspaper represents fuel. Obviously, it’s useless as it is, so all the water has to be removed it and the newspaper must be dried.

If you had to do this on a continuous basis at a large scale, the reason for the high costs becomes obvious. Just the act of removing the water is energy-intensive, but then the oil must be removed from the algae, and it must be converted into fuel.

But that didn’t stop companies from claiming they could do it economically and seeking (and receiving) government funds to do so. One by one these companies went out of business. Last year, Greentech Media published an extensive list of these companies, some of which claimed “an acre of algae could yield 5,000 to 10,000 gallons of oil a year.”

The Greentech Media story provided a pretty good overview of all the things that had gone wrong. But then last week I received a damning email from The National Algae Association (NAA) that highlighted the waste of taxpayer dollars.

Quoting from the email:

On information and belief, many of these hyped technologies have not been able to be proven outside the lab in demo and pilot scale projects, and it is known that others won’t scale.

Related: Oil Holds Steady As Rig Count Stagnates

In private industry, you do not have the benefit of researching anything for 75 years at a cost of $2.5 billion but the DOE has allowed this to happen and to use US taxpayer funds to foot the bill.

Opinions from everyone except grant recipients are that the program has been a waste of time and taxpayer money and that there was a decade or more of pay-to-play.”

The email provided specific examples, such as:

After a $50 million award was made, a company approached the USDA, requesting another $40 million to research the contamination issues they were experiencing from the raceway ponds that the entire industry knew experienced contamination. The USDA declined the company’s request because it felt the company should have addressed their contamination issues prior to accepting the $50 million funding from the DOE, and that the DOE knew that contamination was an inherent problem with raceway ponds. The USDA was not going to help fix a problem that the DOE knew about when it made the $50 million award. That company is no longer in existence, its assets were either liquidated or buried, and their officers were not held accountable for anything.”

The email finally highlighted what I think was the biggest reason for the failures:

The huge learning curve between what takes place in a lab and commercial production is something with which researchers have no experience.”

That’s only half of the problem, though. Naive researchers asked for money for technologies that will never be commercially viable. But then someone within the government should have done a better job of due diligence before dispensing tax dollars for these technologies.

By Robert Rapier

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