Biofuels: Algae

I've mentioned biofuels before and how they've been mandated to replace 25-55% of the oil we use for transportation. Today I came across an interesting company that has an innovative way to grow biofuels from my preferred liquid fuel source of the future: algae.

Valcent has developed a closed loop vertical bioreactor (right) which grows algae extremely efficiently. It's really quite clever as it allows the algae to get access to light by funneling it through vertically hanging curtains. The system is closed and therefore conserves water as it avoids the evaporation that occurs in open pond growth systems. Here's a video.

BIOFUEL USAGE
Algae could be the future of biofuels because it's extremely efficient. As much as 50% of its body weight is a high-grade vegetable oil. Different types can also be selected to produce different carbon chains, some better for jet fuel, some better for diesel, etc. The key measure of efficiency for biofuels is gallons per acre. As you can see from the chart on the left, algae crushes the competition.

CO2 SEQUESTERING
Algae is the fastest-growing plant on earth and sequesters the most carbon dioxide as well. So what does this mean about algae's ability to slow global warming by taking CO2 out of the air? Well, it sequesters a whole bunch of CO2, but when we burn it that CO2 is released. The net effect is that it's pretty close to being a carbon-neutral fuel source (not including the fuel involved in transporting it to its destination, i.e. your fuel tank). A U.S. Department of Energy study has shown that the production and use of biodiesel, compared to petroleum diesel, resulted in a 78.5% reduction in carbon dioxide emissions.

COST TO PRODUCE
I found this quote interesting: a Feb. 2007 article on biofuels in MIT's Technology Review said that "today's higher oil prices will make it easier for algae to compete." Note: oil was trading at roughly $60/barrel at that time. Today it's around $135/barrel. Algae is coming fast.

The Energy Bill Passes - A Great Step in the Right Direction

Good news. The energy bill that included the biofuel mandate I talked about last week passed the House today, 314 to 100. This is an excellent step in the right direction, partially because of the biofuels, but also because it includes the first big boost in fuel economy in 32 years, from 25 MPG to 35 by 2020. Obviously, if your chief issue is the environment you're pretty happy about this.

But if your chief issue is the economy or homeland security, you should also be ecstatic. Here's why:
We use 9.2 million barrels of oil a day for transportation, which equals roughly 65 billion gallons of gas a year. If the average MPG is 25, that gas gets us 1.6 trillion miles. But with a MPG of 35, we can travel the same distance for only 47 billion gallons of gas, saving us $56 billion per year, not to mention the 374 billion pounds of CO2 we won't pump into the air each year.



So one way to think of this is as a $56 billion per year TAX CUT. That's a ton of money that the average Joe and Jane will cycle back into other goods in our economy, and not into the hands of governments that hate us.

The Biofuel Mandate - Offsetting 25-55% of the Oil We Use for Transportation

I haven't discussed biofuels yet, partially because I'm pretty clearly excited about electric and PHEV vehicles. But it would be a mistake to think that electric vehicles or plug-in hybrids are going to come in and gain the whole market right off the bat. Their introduction may certainly be encouraged by rising oil prices, but you could say the same thing about biofuels. So what about biofuels? What does the market look like?

Well, it looks pretty huge is what it looks like. This article discusses the pending legislation that would mandate the use of 36 billion gallons of ethanol motor fuel by 2022. 36 billion gallons at a few bucks a gallon could mean this is a $100 billion market. And since 21 billion of those gallons are supposed to come from advanced biofuels (e.g. switchgrass, cellulosic, and my favorite, algae) there's a very large market that's being invented right now. That's a space I'd bet on.

That article also claims that 36 billion gallons equals 15% of U.S. gasoline consumption. My calculations show that it's actually between 25% and 55%, depending on how many gallons you can get from a barrel of oil. I've seen 19.5 quoted a lot of places, which would mean that 36 B gallons a year replaces 5 million barrels of oil per day. Since we currently use 9.2 million barrels/day for vehicle transportation, that would mean we're replacing 55% of the oil we use for transportation.



But this article from the AP claims that our 9.2 million barrels of oil per day equals 388 million gallons. That's more like 42 gallons per barrel of oil, which means biofuels would replace 25% of the oil we use for transportation.



Either way, biofuels will be a big market, and will go a long way toward getting us off foreign oil. If electrics and PHEVs can meet them halfway, the future is looking good on the independence from foreign oil front, and pretty darn good on the greenhouse gas front.