Future Shock: A New Paradigm In Advanced Biofuels Technologies

By Will Thurmond, Biofuels Digest Columnist and CEO, Emerging Markets Online

In 1973 the world experienced the first major supply shock from OPEC, leading to petrol shortages, and a sustained period of economic stagnation, and rampant inflation. As a response, US President Carter established the National Renewable Energy Laboratory (NREL) in an endeavor to explore pathways to energy independence via solar power and  biofuels. In the early 1980s, NREL established the Aquatic Species Program (ASP), where algae was studied in depth as a source for biodiesel for nearly two decades. By the late 1990s, the ill effects of the OPEC supply shock were offset by the return of cheap oil, and complacency among short-sighted politicians to continue the program. The ASP program was closed.

Supply Shock: Disruptive Petroleum Prices
Fast forward to October 2007, when the price of crude oil rose from $50 US per barrel earlier in the year to $85 per barrel. At the end of 2007, many people asked: what would happen if oil went over $100 per barrel? Anticipating rising vegetable oil prices for biodiesel, and crude petroleum oil prices, the US Congress passed the Energy Independence and Security Act in December of 2007, and raised the Renewable Fuels Standard from a previous target of 7 billion gallons of transport fuels by 2012 by five fold to 36 billion gallons of transport fuels by 2022 in a revised program.

In a short period of time, the arrival of $148 petroleum crude in summer 2008 hastened the need to develop advanced biofuels from 3^rd generation, non-food based biofuels.  By March 2009, the Obama Adminstration had committed nearly $600 million to advanced biofuels projects.

Leap Frog Technologies – Micro Refineries
In response to new sustainability criteria emerging in the US and the EU, a new wave of investment in advanced biofuels from next generation feedstocks and technologies emerged. UOP, NesteOil, LiveFuels, and Sapphire Energy, were among the first to introduce “green crude” or biocrude from algae as a petroleum substitute. The second half of 2008 witnessed an increasing number of companies utilizing synthetic biology by employing microbes such as bacteria and algae to produce advanced biofuels. One of the first companies in the field Amerys focused on utilizing bacteria as a micro-refinery by feeding the bacteria sugar cane and then ‘milking the microbe’ to secrete synthetic diesel.  The microbe (algae, bacteria) had now become the mini-processor of biomass feedstock directly into fuels.

By the middle of 2009, the emergence of synthetic biology in the biofuels arena represented a fundamental shift in thinking for producing and refining fuels from biomass.  Instead of delivering biocrude to refineries, several companies and university research labs started focusing on using microbes (algae, bacteria and cyanobacteria) as mini as ‘micro refineries’ of biomass directly to biodiesel, ethanol, renewable diesel, renewable gasoline, and advanced aviation biofuels. The advent of synthetic biology in the biofuels industry presented several new opportunities to ‘leap frog’ the construction of capital-intensive biodiesel, ethanol, cellulosic, and petroleum refineries.

Brother, Can You Paradigm?
From mid 2008 through 2009, as these microbial-milking mini micro-refinery technologies evolved, several scientists presented a new challenge by asking the question: ‘why grow terrestrial crops’ to feed the microbes?’ Terrestrial crops require the use of petroleum for tractors, fertilizer and increased land use. Instead, these companies proposed to utilize waste streams as feedstocks such as CO2 from power plants to bypass terrestrial crops (feedstocks) and petroleum refineries (processes) all together. It would also eliminate the costly need to transport thousands of tons of biomass to biorefineries, and then to transport the biocrude to petroleum refineries.

Within the domain of synthetic biofuels, these next generation of technologies arrived in a short span of time. This spawned a new era of investment into waste-to-energy projects.  Aurora Biofuels received $20 million in funding due to this next-generation model by using CO2 waste from power generation as the feedstock to milk the microbe (algae) to produce biodiesel. Sapphire Energy received $100 million in funding to produce renewable gasoline from algae by employing synthetic biology. For many of these reasons, Exxon-Mobil entered a $600 million R&D agreement with Synthetic Genomics, while Dow Chemical has selected a pilot with Algenol’s cyanobateria technology to produce advanced biofuels and bio-chemicals/polymers.

Arizona State University (ASU) has engineered cyanobacteria to utilize CO2 from smokestacks as the feedstock. ASU’s blue-green algae serves as micro-processors to secrete a fuel with very similar properties to kerosene and aviation fuel. This was of particular interest to the defense aviation industries for energy independence initiatives, and to US commercial aviation industries facing imminent carbon reduction penalties in 2012.

US-based Algenol, a company with 12+ years of experience in algal biofuels, has modified blue-green algae cyanobacteria to produce ethanol. Algenol also uses CO2 from smokestacks as the feedstock for these microbial mini-refineries, and seawater (instead of fresh water). Algenol utilizes a fermentation process within photobioreactors where the ethanol is secreted from the algae, evaporates from the water as a gas within the tubes, and is then condensed back into liquid ethanol. The organization has chosen non-harmful strains of algae to accelerate acceptance and commercialization of their technologies. Algenol, in a $850 million agreement with Biofields of Mexico, is also transforming sea water into drinking water, another commodity like petroleum, corn, and oilseeds that is already in short supply and in increasing demand over the long-term.

Back to The Future
Can the world afford to wait for next petroleum shock to arrive? Will we be ready this time?
As we enter a new decade in 2010, how will the world meet the increasing demands of the Emerging Markets of China, India, Brazil and the US for biomass-petroleum integration for advanced biofuels, biochems, and biopolymers?

The recent memory of $148 per barrel oil, and imminent biofuels sustainability and land use criteria in the US and the EU reminds us all that continuous change and innovation are the only things we can count on to bring the biofuels industry to the next level.  Most investors, inventors and futurists will tell you that real, long-term change comes from disruptive, transformative technologies that challenge our existing systems with more efficient and productive models.

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This article is an excerpt from the study Algae 2020 written by Will Thurmond, CEO of market research publishing and consulting firm Emerging Markets Online, author of the forthcoming study Advanced Biofuels 2020, Vol 1: Advanced Drop-In Fuels and Energy Crops Insight, and   Biodiesel 2020: A Global Market Survey www.emerging-markets.com