John Sterlicchi, US correspondent
guardian.co.uk, Friday June 27, 2008
Forget the notion that fuel from corn or soybeans will solve the
energy crisis. That bubble is deflating as quickly as the new one,
involving the commercialisation of algae, is inflating.
Already in the US there are almost 20 venture capital funded start-
ups that see potential in algae. Many entrepreneurs believe algae
could be used commercially to produce biofuels, or burned to generate
Because its photosynthesis relies on a supply of carbon dioxide,
advocates of this nascent technology see a bright future mopping up
waste gases from power plants and turning them into "green crude" for
cars and planes.
One man cautiously welcoming the bubble is Dr Bob Metcalfe, the
inventor of Ethernet, the technology that links most computers to the
internet. He has just completed a year as chief executive of
Greenfuel Technologies, a company that is trying to grow algae on a
massive scale in a controlled environment. And as a survivor of the
dotcom bubble and bust, he is drawing parallels.
"I am an expert on the internet bubble and I am applying many of
those lessons to the energy space. I am part of this bubble and I am
inflating energy bubbles just like I inflated internet bubbles. I
think bubbles are a good thing but you have to be careful," said
Being careful, according to Metcalfe, is not making bad investments.
Just as in the heyday of internet start-ups, Metcalfe predicts that
"charlatans" will roam the alternative energy space, making
outrageous claims for unproven technologies. They will receive
millions from gullible investors and then never be heard of again.
"I don't regret the dotcom bubble, it was very useful for progress. I
am just happy that I wasn't one of the losers who made stupid
investment decisions; investing in the likes of pets.com, which was
really a bad idea," said Metcalfe.
He is determined that Greenfuel won't be tarnished with the charlatan
moniker, although he took over as chief executive when the company
realised its technology wasn't working as advertised and was burning
through its funding too quickly.
He believes Greenfuel is back on track and has reverted to his role
as board member representing Polaris Ventures, an investor in the
company. Greenfuel has just begun a huge project aiming to grow algae
at a plant somewhere in Europe. Metcalfe said he could not reveal
Greenfuel's trials have involved three-metre high glass tubes filled
with algae, which it calls bioreactors.
The algae are fed on water, sunlight and CO2, and harvested to
produce biodiesel. The waste can be sold off as high-protein animal
Algae's appetite for CO2 explains why Greenfuel is keen to team up
with deep-pocketed power companies looking to cut CO2 emissions.
If Greenfuel and other companies can grow algae on a commercial scale
it will impact not only on the fuel world but also the animal and
human food chains. It is potentially much greener than growing corn
or ethanol, as it does not use crops otherwise destined for human
consumption. Algae can also be used to produce Omega 3, which is
increasingly popular as a health supplement.
Barry Cohen, who recently founded the National Algae Association to
provide a business forum for companies interested in exploiting it,
said fuel was only one avenue to potential profits. Algae can be used
in pharmaceuticals and even green plastics and packaging.
"Feed, food and fuel," is the alliterative phrase Metcalfe likes to
Perhaps surprisingly, there are 3,000 strains of algae with some
being better suited to the production of biofuels than others. While
companies such as Greenfuel are interested in producing core algae,
others are manipulating it for use in making fuel.
The blog Earth2Tech tracked down 15 start-ups earlier this year and
that list did not include Sapphire Energy, which includes the UK's
Wellcome Trust among its investors.
Sapphire said it had created green crude from algae, a technique also
pursued by other companies such as Solazyme and Solix Biofuels. A
couple of companies are looking to come to the rescue of the airline
industry by creating an algae-based jet fuel. They are Inventure
Chemical and Aquaflow, which is working with Boeing.
IT and business consultancy Infosys estimates that once large-scale
commercialisation has been achieved, algae has the potential to
produce the feedstock for the biodiesel industry at 100 to 200 times
the rate of the current best sources of vegetable oil feedstock.
"With algae, production is continuous. With standing crops such as
corn or soy there is a harvest at once or at best twice a year," said
Richard Fortune, author of an Infosys white paper on how algae should
be the feedstock of choice for the biodiesel industry. He claims that
while an acre of soy beans can produce 150 gallons of oil a year, an
acre of algae can produce 10,000 gallons and has the potential to
produce 100,000 gallons.
Fortune says biodiesel producers can make a profit from algae-based
fuel. This can no longer happen with crop-based fuels because they
have become too expensive. These high prices explain why the US
produced only 450m gallons of biodiesel, when it had the capacity to
produce 2bn gallons.
Like Metcalfe, Fortune sees parallels between the algae bubble and
the dotcom one, but he also sees major differences. The dotcom era
threw up vaporware or technologies that were nice to have but not
essential, algae companies are developing products that are important
to the planet's survival.