Algae start-up signs contract for biodiesel

Solazyme, which wants to turn algae into transportation fuel, has signed a contract to supply oils to Imperium Renewables, a growing biodiesel refiner.

Under the deal, Solazyme will deliver algae oil to Imperium, which will then turn it into biodiesel. Imperium makes biodiesel from a number of plant oils. Solazyme is currently only delivering "pilot scale" amounts of oil, said Solazyme president Jonathan Wolfson, but the production is real.

"We will be delivering agreed upon quantities to Imperium over 2007," he said. "In addition, we are producing algal oil today and have been for some time."

Biodiesel works in regular diesel cars, but it's made of plant or animal oil, which pollutes less than the regular, fossil fuel kind. Right now, biodiesel constitutes a percent of a percent of the world's diesel supply.

Algae, say advocates, is one greasy organism. The single-celled plants produce quite a bit of oil for their size. The North Sea oil fields, some assert, were not created from the bones of dead dinosaurs or palm trees. Instead, it is the prehistoric remnant of a massive algal bloom.

Algae grows rapidly, leading to more crops in a year, and can grow in sparsely populated and unused land in the desert. A hectare pond filled with algae can produce 15,000 to 80,000 liters of vegetable oil a year. Only about 6,000 liters of palm oil can be squeezed out of a hectare a year. Corn is only good for 120 liters per hectares of oil a year, said Tony Espiga, CFO of GreenFuel Technologies earlier this year.

GreenFuel plans to capture carbon dioxide from power plants and use the gas to grow algae in bioreactors, i.e. contained ponds. It's carbon sequestration and transportation fuel all in one. GreenFuel has a demo plant and hopes to open a full-fledged power plant in Arizona this year.

It's also not a major source of food for humans.

But here's the catch. No one is making algae fuel on a massive industrial scale at the moment. Separating the water from algae to leave just oil is also not easy, says Ron Stoltz, government relations manager for Sandia National Labs.

Sandia has performed some of the pioneering work on algae fuel and is working with several start-ups, including LiveFuels, and licensing its technology. LiveFuels has said it doesn't plan to sell algae fuel feedstock until around 2010.