Economical Analysis of Algal Biofuels

Essay, 2015

8 Pages

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Executive Summary


Discussion of the Issue

Future Prediction


Executive Summary

The world is in need of a new fuel source to take the place of gasoline and petroleum based fuels. These fuels are taking up too many fossil fuel resources and at the same time wasting energy on production of the fuel and emitting ultra-high levels of greenhouse gasses. The solution to this problem is algal biofuels. Algae which is created with nothing but water, CO2, light and miniscule amounts of nutrients is able to be processed into an extremely efficient biofuel. Algal biofuel has the potential to create “oil yields of 100 tonnes per hectare (ha) per year”(1). These biofuels are also efficient in the fact that they can be grown in environments not suitable for any other crop. They can be grown in ponds located all over the world ranging from run off streams to manmade ponds in the deserts.

With the United States Department of Energy pushing over $18 million into the advancement of these fuels (1) there is serious potential of growth in the algal biofuel sector. The focuses now are on bioprospecting, which is researching and determine the best strains of algae based on a specific list of determinants. Bioprospecting looks at the efficiency of each strain of algae based on where the algae is grown and how much proteins, carbohydrates, etc, the algae produces. This is an integral part of making algal biofuels a competitor to gasoline on the mainstream market.

Within the next twenty years algal biofuels will become a major player in the world of biofuels. It has serious growth potential and investment opportunities. With hundreds of research centers and the never ending possibilities of strains to be grown and manipulated, algae is a biofuel to be praised. While gasoline remains the top source of liquid fuel we will see a change as algal biofuels become more commercialized and develop into a top proponent of energy.


With the fluctuation in oil prices and the ever increasing amounts of greenhouse gasses being released into the atmosphere there is a need to find cleaner and more efficient alternatives to fossil fuels. One such alternative is algae biofuels, which is fuel made from the oil lipids found in algae. These oil lipids are able to be turned into fuel by process of extraction like an oil press which squeezes the oil out of the algae and a chemical, like hexane, is mixed with the leftover algae and then filtered so the oil is the only thing remaining. Another method involves carbon dioxide being mixed with the algae which in turn transforms the algae completely into oil. This oil is then refined using transesterification which creates biodiesel congaing glycerol that is then refined and removed. The end product of all of this work is biodiesel. This idea to use algae as biofuel has been around since 1950 and started to really expand when the “United States Department of Energy enacted the Aquatic Species Program with the goal of producing oil from microalgae.”(2) The government was invested in algae because of the fact that algae only needs sunlight, water, carbon dioxide, and few nutrients to grow. This makes algae have an almost unlimited supply source since we can easily create it. Algae also differs greatly in the amount of oil it produces by the strain of algae being created. Finding the most efficient strain was another focus of the Aquatic Specifies Program, the government wanted to find the best strain of algae that could produce the most amount of oil in the smallest quantity. The processes of harvesting and growing algae is another thing that was and is still being researched by the government and private companies. Overall algae is beginning to be a major player in renewable fuel and will certainly be prominent in the near future.

Discussion of the Issue

The main question when it comes to algae based biofuel is whether or not it’s economical to produce or a logistically viable alternative to gasoline. There are many different types of biofuels on the market that are made from a plethora of different resources. However, algae is a fuel source that can be quickly created and harvested while also needing only very limited recourses to create.

Unlike wood or corn, algae is able to grow quicker and more efficiently in the space it occupies some species “can double in as few as 6h, and many exhibiting two doublings per day” (5). Algae biofuel researchers “predict oil yields of 100 tonnes per hectare (ha) per year” (1) from full scale commercial algae production farms. This is an extremely large amount of oil to be extracted and is a major selling point in the further research and investment into algae biofuel.

The US Energy Department has put down more than $18 million since last year on funding algae biofuel projects (1). The government even wants to assure that the cost of algae fuel is $3 cheaper than gasoline by 2030. This goal that the US Energy Department has f could potentially be a reality when looking at the logistics of algae biofuel. The first step of reaching the goal is finding the process and strain of algae that creates the most lipids which in turn create the highest yield per hectare. Right now there are currently hundreds of research facilities In the United States trying to discover the best strain and best way to harvest algae. These facilities include labs at the University of Texas, Aquafuel, Inventure, Xtrudx, Old Dominion University, and Solvent Rescue Limited (5). What these facilities and researchers look for in strains of algae is very particular. They strains are graded on Photosynthetic efficiency, quality of final products (in terms of caloric value of the biomass and percentage of lipids, proteins, and starches), robustness, harvestability, and processability (1).

The goal in mind is to lower the price of algae based biofuel while maintaining a healthy return in energy yield from the harvest. Since 2014 algal biofuel has been sitting at over $5 a gallon. The $18 million the government has thrown into research will be used to lower the price below $5 by 2019 (2). By finding the top strains and lowering the price of algae it will be very close to beating out gasoline as the number one liquid fuel product. One company that has been utilizing algae biofuel as a mix with other fuels is Algenol. Algenol patented a technology that “enables the production of the four most important fuels (ethanol, gasoline, diesel, and jet fuel) for around $1.30 per gallon each using proprietary algae, sunlight, carbon dioxide and saltwater at production levels of 8,000 total gallons of liquid fuel per acre per year. “(1) If this type of process was utilized by other major companies like Shell or other gasoline distributers, then not only would it be incredibly cost effective it would also be reducing the amount of greenhouse gasses.

Looking at the emission efficiency of algae biofuel we know that algae can reduce life cycle CO2 by 50 to 70 percent (3). Algae is also “approaching a similar Energy Return on Investment (EROI ) as conventional petroleum according to a new peer-reviewed paper published in Bio resource Technology.”(3) A main reason for this switch to biofuels is because we want to lower the emissions our fuels give off. With this CO2 reduction being so great it is yet another highlight of algae based biofuels. On the topic of the Energy Return on Investment, since algae biofuel is close to petroleum in relation to EROI it will be easier to transition away from petroleum. This is because there will be less of a disturbance between price of energy when switching between the two.

Another advantage to algal biofuels is the fact that they can be grown on land that other traditional agriculture could not be produced on like corn or soy. This allows algae production ponds to take over otherwise useless areas and produce in them. Some of these areas include waste streams and ponds. The advantage of algae ponds that is most interesting Is that they can be designed to fit their specific location. Unlike corn and other grown fuels, algae can be grown anywhere it wants as long as there is a water source and the strain is correct for that temperature or location. The algae can also grow inside waste areas which are potential run offs of other factories, and get rid of the nitrates an phosphates in the waste while also taking in the CO2 from the area (3). This is the epitome of a win-win scenario when it comes to alleviating waste.

With these advantages there are also disadvantages that come along with commercializing algal biofuels. The main issue facing algal biofuels is the bioprospecting, or finding the right strain to produce in each area to maximize output. There are an incredibly high number of strains and types of algae and all differ in some way from the next. The challenge is finding out which strains to use in what areas. Since algae is very picky on where it will grow, scientist need to research what temptress and amounts of nutrients work best with each strain to give it maximum growth potential. When these strains are finally determined the next step is to find out the most economical way to harvest them and process them into oil. With processing comes intense research in the amount of oils lost or unused after the final product is formed. Algal biofuels would have to be 99% in processing efficiency for them to stand a chance at replacing gasoline.

Future Prediction

My prediction for the future of algal biofuels is that they will become increasingly popular within the next twenty or so years. This is because they have so many benefits that other biofuels do not. The fact that they need only water, sunlight, CO2 and sparse nutrients is very appealing to investors and environmentalist. It would be surprising to me that in the near future the process of using algal biofuels would not be common knowledge. It is simple to understand and an incredible scientific discovery.

I also believe that within the next few years the research in algae will intensify as the need to reduce greenhouse gases increases. This prediction is based on the fact that algae needs CO2 to produce. Algae can take the CO2 from other processing plants or facilities and reduce their emissions while feeding itself. So with the increase in government spending on any type of process that eliminates greenhouse gases, algae will have no problem earning grants or subsidies to increase production.

One of the major roadblocks I see facing the production of algal biofuels is the fact that fuel prices are already low so people have started to forget about biofuels. It’s getting to the point that people do not care about the greenhouse gases petroleum produces because it’s so cheap. People do not want to spend more money on something that is better for the environment when they don’t have to. Algae right now is too expensive compared to petroleum and that makes it a hard sell. The government needs to keep up its practice of putting money into biofuel research or else things like algal biofuel will suffer.

Overall I see algal biofuel as being a major player in the switch from petroleum to biofuels. It has way too many pros to ignore and is just an incredible idea which is still improving every day as scientists find new strains and make it more efficient. Algal biofuel is indeed the fuel of the future.


1. "2 Overview of Algal Biofuel Supply Chain." National Research Council. Sustainable Development of Algal Biofuels in the United States. Washington, DC: The National Academies Press, 2012.

2. "Algae Basics - History of Algae as Fuel." Algae Basics - History of Algae as Fuel. Algae Biomass Organization, n.d. Web. 16 Apr. 2016.

3. "Algae Biofuel Can Cut CO2 Emissions by up to 68 Percent Compared to Petroleum Fuels Finds New Peer Reviewed Study." ABO. Algae Biomass Organization, 19 Sept. 2013. Web. 5 Apr. 2016.

4. Casey, Tina. "$18 Million Algae Biofuel Blast From US Energy Department." CleanTechnica. Sustainable Enterprises, 10 July 2015. Web. 20 Apr. 2016.

5. Hannon, Michael, Javier Gimpel, Miller Tran, Beth Rasala, and Stephen Mayfield. "Biofuels from Algae: Challenges and Potential." Biofuels. U.S. National Library of Medicine, 10 Sept. 2010. Web. 6 Apr. 2016.

6. Lane, Jim. “What’s Up with the Algae Biofuels Industry?” Renewable Energy World. 13 Jul. 2015. Web. 20 Apr. 2016

8 of 8 pages


Economical Analysis of Algal Biofuels
University of Minnesota - Twin Cities
BBE 2201
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ISBN (eBook)
ISBN (Book)
File size
455 KB
biofuel, economics, algae
Quote paper
Alex Osborn (Author), 2015, Economical Analysis of Algal Biofuels, Munich, GRIN Verlag,


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