Algae at the Crossroads: Tackling big markets, big challenges in the new carbon economy

The make-or-break moment for algae-based and cyanobacteria fuels is nigh upon us, and it turns on the prospects for carbon capture and use.

Will policymakers enable low-cost carbon to become available for this nascent, petroleum-displacing technology set? The Digest investigates.

Next week in Washington DC, the Algae Biomass Summit is convening an opening morning session entitled “Clearing the Air: Carbon Utilization and the role of algae in creating a new carbon economy.” Amongst the many sessions at the annual ABO Summit, which has become the largest annual gathering point for the global algae industry, it promises to be the least settled issue.

Elsewhere on the program scientists will chart progress in basic R&D, yield development, harvesting & dewatering, and high-value, small-market applications in health and pharmaceuticals, and the moderate-value, high volume markets in nutrition and animal feed, and we can expect stories of substantial progress in development and applications of great interest.

When it comes to the carbon economy, as opposed to carbon niches, that’s about fuels.

The Carbon Economy, the must-haves

The Carbon Economy, like the Glucose Economy and the Hydrogen Economy that came before it, faces a diverse set of competitor threats, technical readiness and scale-up challenges, existential questions about whether there even should be a price on CO2, regulatory quandaries over point sources of carbon.

At the heart of the future of algae and cyanobacteria-based technologies — as we look at the really big markets in fuels — comes down to one factor that opens or shuts the door on the economics. That’s the availability, price, and regulatory status of waste carbon in gas form.

In the broader carbon economy there is solid, virgin carbon — typically locked up fats, sugars, cellulose, hemicellulose and lignin. And there are solid waste carbons, too — typically available via cellulosic biomass found in agricultural, forest, animal and municipal waste. There are fuel-market plays in both of these sectors.

The opportunities in waste CO2

Given that merchant gaseous carbon dioxide (sold from $60 to $120 per metric ton) contains roughly 27% carbon, the merchant sources have raw carbon costs of $220 to $440 per ton — and with a gasoline price of roughly $440 per ton in today’s market, these are non-starter economics for fuels.

But gaseous waste carbon, there’s opportunity there. In the case of carbon monoxide, it always has to be carefully handled and processed, and venting of CO2 without economic penalty will eventually become as rare as smoking in restaurants, and for many of the same reasons.  Because of processing costs and disposal issues, industrial biotechnologies have an opportunity to be part of a solution, and an alternative to carbon capture and storage.

The Chinese Brother Who Swallowed the Ocean: the futility of carbon capture and storage

We’re not exactly sure the where and why of the popularity of carbon sequestration technology, which makes as much sense as the 5th Chinese Brother Who Swallowed the Ocean, so that his accompanying young friend could retrieve all the fish and treasures of the sea.

The bottom line on carbon capture and storage is that it doesn’t pay off under any scenario of interest. Bottom line, the US Department of Energy has written off carbon capture retrofit technology as completely unfeasible, and using CCS with a conventional coal-fired power plant is in the $0.10 – $0.16 range per kilowatt-hour over the life of the plant. By contrast, utility-scale solar costs have dropped to as low as 5 cents per Kwh, based on the 25-year PPA that Austin Energy signed with Sun Edison last year. And CCS costs are heading up and solar is heading down — both, rapidly.

The reason? CCS adds 62-82 percent to the capital cost for a plant, or roughly $800-$1500 per kilowatt of installed capacity, according to this 2012 DOE review. We might add that these are highly optimized, at-scale, Nth plant costs.

Let’s look at the reality on the CCS side. The DOE’s first-of-kind FutureGen project was adding roughly $6500 per KW when it was defunded earlier this year by DOE, after $200 million in expenditure, and it never raised any of the $650 million in private funding required.

There will be better CCS projects coming along, but these are miles away from good economics. And, keep in mind, DOE thought projects like FutureGen were the potentially feasible ones — you can imagine what the economics look like on the retrofits.

By contrast, petroleum displacement fuels and waste carbon

By contrast, microbial fuels based on simply off taking the CO2 from an existing coal-fired or natgas-fired power plant has decent economics, right out of the gate. Both Joule and Algenol are talking about costs in the $1.50 per gallon range or less.

How is the carbon being sequestered? Well, it’s simple. The barrel of microbial fuel displaces the barrel of petroleum, and the petroleum is left in the ground. Cost of petroleum (carbon) sequestration? Zero.

One of the things this set of technologies needs is a name, and they ought to be known as petroleum displacement to distinguish them from algae technologies focused on, say, nutritional supplements — both microbial in technology, but that’s like saying that a Lexus is the same thing as a laptop because they are both substantially made by robots.

At the same time, they need a new breath of support from regulators — who are decidedly iffy about the indirect sequestration of carbon (e.g. via petroleum displacement). We wonder why, since the concept of efficiency is well understood on the power side and the idea of the “negawatt”, the watt you never use and thereby displace demand, is well-established and widely praised.

Bottom line, it’s incredible that in certain areas of the bioeconomy there are technology pathways that receive strong regulatory support even with marginal economics, because they have major implications for petroleum displacement and use waste resources instead of virgin carbon. For example, cellulosic fuels, or even watse-based biodiesel, the nations; most popular advanced biofuel. Those technologies deserve our support; they’re good ideas.

The petroleum displacers come to Washington

In Washington this week, we’ll see if microbial fuels can position themselves a little higher on the Federal Love Schedule. Here are a set of technologies that don’t need a hand-out, but a hand-up, through thoughtful policy that clears market access to gaseous waste carbon. Essentially, a level playing field.

In DC, Paul Woods of Algenol, Tom Jensen of Joule Unlimited, Bjorn Heijstra of LanzaTech, Mark Randall of T2Energy and David Hazlebeck of Global Algae Innovations will take on the task of making the case. 

There’s not much riding on it, excepting the future of an industry and perhaps the future of petroleum displacement. We’ll be looking keenly forward to their thoughts.