Aurora's algae payoff: $50 a barrel, plus a price on carbon

Aurora Biofuels on Wednesday said that it has completed a successful trial of growing algae for biofuels and named former Royal Dutch Shell executive Robert Walsh CEO.

The company has been running a test at growing algae in two outdoor ponds--each about as big as an Olympic-size swimming pool--in Florida for the past year and a half.

Based on the results of that test, the company expects it can create a larger-scale demonstration facility that's 50 acres in size late next year, said Walsh who joined Aurora Biofuels from biofuel company LS9. The company raised $20 million last July to build that planned plant.

The biofuels industry has been hit particularly hard by the financial markets meltdown and recession. Several new technology companies are developing techniques for turning algae into fuel because it isn't food and can grow in a wide range of conditions.

(Credit: PetroAlgae)

The challenge, though, is making and harvesting algae at large scale at a price that's competitive with other feedstocks, such as palm oil or soybeans.

Aurora Biofuels is using a combination of biotechnology and engineering techniques to bring the cost down, said Walsh.

Although it is not genetically modifying algae, it is breeding salt water algae strains optimized for yielding large amounts of oil. It has also developed a method, derived from the waste water treatment industry, for harvesting the algae without having to fully dry it out, a method that is more energy efficient, Walsh said.

The drop in oil prices--now below $50 a barrel--has also made it more difficult for biofuels. Walsh said that the company expects that it can produce a commercially viable product with the price of oil at $50 a barrel and some regulations that put a price on carbon dioxide pollution.

"People will start putting a value on sequestering carbon dioxide and this will be a low-cost way to do that," he said. "It'll be cheaper and more environmentally friendly than compressing CO2 gas to 3,000 pounds (per square inch) and injecting it into old salt caverns."

The company expects to build and operate algae farms at the site of a large polluters, such as a utility or cement factory. The CO2 will be piped into the ponds to stimulate growth. Walsh projects that oil will be in the $60 to $100 per barrel range in the next five years once economies turn around.

[texaslabrat]

"People will start putting a value on sequestering carbon dioxide and this will be a low-cost way to do that," he said. "It'll be cheaper and more environmentally friendly than compressing CO2 gas to 3,000 pounds (per square inch) and injecting it into old salt caverns."

I don't think they understand the concept of "sequestering". CO2 pumped into a salt cavern, or the ocean, or whatever is removed from circulation for x number of years. CO2 used to accelerate algae growth is released soon after by the burning of the resulting oil. They may get some carbon credits for "offsetting CO2 production" by cement plants or whatever, but they will be nearly immediately counterbalanced by whoever burns the oil. At best, it's a break-even from the CO2 angle. Now, the good news is that they aren't producing *additional* CO2 like burning a fossil fuel would..but that's not the same thing as sequestering as that term implies a negative rate of CO2 accumulation in the atmosphere due to the process.

[raed_12345]

I see your point. However, you are forgetting that a lot of the absorbed carbon dioxide by algae will be used for their body growth, which would eventually become solid "waste" that is easier to remove from the cycle. I am sure they wish they could convert all the pumped CO2 to oil, but that is just ridiculous.

[texaslabrat]

Exactly. And the fact that 100% of the CO2 isn't converted to oil means that it falls short of the "at best, break even" I mentioned only a fraction of the CO2 in the growing environment will actually be absorbed at all..the rest vents to the atmosphere. The remaining portion that winds up in the "body structure" of the algae hangs out until bacteria break it down releasing....are you ready for it? ... CO2.

Green energy yes (insofar that the algae doesn't release more CO2 in and of itself), sequestration...not so much.

[sixit]

You contradict organic chemistry. Algae releases oxygen by stripping the carbon atom from the molecule. That is the carbon that makes it a viable fuel source. Unspent carbon in the combustion attaches to single and double oxygen atoms to create carbon monoxide and carbon dioxide, respectively. Unfortunately, until we have a 100% efficient combustion system, we are going to have exhaust gases.

In the application of putting the ponds on the site of polluters, the algae is acting as CO2 scrubber. The algae company gets to charge the polluter for the scrubber. Roughly akin to a recycling company charging you to pick up your recyclables and then selling those recyclables to manufacturers, the company then converts the "waste" to a biofuel. As you noted, the bacteria breaking down the algae to oil, assuming this is how they are converting it, the gases released can be put back though the scrubbing system, further reducing the emissions.

In short, there is far better than "break-even" in the removal of CO2 with the algae.

[texaslabrat]

No, I don't "contradict" organic chemistry. You ignore the complete cycle of this process. Yes, the algae converts some CO2 in its environment to O2 via photosynthesis. The end products, this case, are oil (extracted for fuel purposes) and the remaining structures of algae which are disposed of in various ways. The carbon is then re-released (and O2 consumed) upon the combustion of the oil. The other carbon is likewise released (and O2 consumed) when bacteria ultimately break down the remaning parts of the algae through the decay process. In the end, all of the CO2 that was released from these cement plants and utilities is still ultimately released to the atmosphere...with only a very short time delay depending on how long from production to combustion of the oil. Once again, this is not sequestration. It *is* "clean energy" because it does not release *additional* CO2 that wasn't already present in the environment...it simply "recycles" it (just as cellulosic ethanol, and really any biofuel, does) as sort of a "binding agent" for solar energy. Sequestration, on the other hand...takes the CO2 (either from the free atmosphere or from exhaust of things like power plants) and locks it away for a "long" time (hundreds or thousands of years, depending on the method) resulting in the de-facto removal from the environment.

Now, mathematically you could claim that the oil produced from the algae displaces petroleum-based fuels, thus preventing CO2 production by burning those fossil-fuels..so it's effectively the same as sequestration. For the carbon content of the algae oil itself (scaled on a BTU basis in relation to petroleum fuels), I would agree..but that is a VERY small fraction of the overall CO2 being piped into these algae farms from the cement plants/utilities and a LONG way from a "break even" proposition overall.

[PetePjc]

Here is the reasoning under which a carbon price would positively impact this company.

--> Oil retails at $50 a barrel *before* any carbon price is applied.
--> A carbon price is applied to oil that is drilled in the traditional way. This effectively makes the price of such oil $60 a barrel.
--> Oil from algae is very nearly carbon neutral, since it uses CO2 that would have been emitted from a power plant or cement plant re:less. Thus, only a small fraction of the carbon price applies to algae oil, and it's effective price is more like $52 a barrel or something.

Another way to think about it is this. Perhaps all oil (algae based or drilled) pays a carbon price when it is sold to distributors. But algae oil can also sell a carbon credit to the power plant, since it is absorbing some fraction of its pollution. Thus, algae oil gets a cost benefit.

A final way to think about it is this. Suppose algae-oil plants are set up at all current cement and power plants. Suppose the amount of oil produced was so vast that it fully replaced oil that was being drilled. Under such a scenario, the total amount of CO2 emitted would go down. It would not go to zero, but there would be a real reduction. This sort of reduction is what cap-and-trade (or a carbon tax) is meant to achieve. Not full carbon neutrality (not immediately, anyway) but significant steps in the right direction.

[hador_nyc]

Carbon Dioxide is NOT a pollutant. It is an essential trace gas. Regardless as to whether or not you want to regulate it's production from industry, it is NOT a pollutant. It will not poison anything that lives in the air until it reaches increasable levels.
What do I mean by that, well Navy subs keep it regulated to 8000 PPM, versus the 380 or so that is in the atmosphere. Geologically speaking, the ice cores prove the average for Earth's history is 1000 PPM, so say it's a pollutant. Regulate it if you want, it's obvious where I stand on the issue, but do not call it what it isn't. It's like calling trees from a tree farm virgin wood. That it ain't. Virgin wood is from a forest that has not been cleared by humans in a few hundred years.

[Walt French]

My dictionary defines "pollutant" as a "...harmful or poisonous substance." The EPA has determined it's a pollutant.

You may not like it, but even an essential chemical like water can be harmful in excess quantity, and could be deemed a pollutant if it were out of control, as many scientists say CO2 is.

[zyxxy]

The word he used was production, not pollution. When he talked of siting the ponds near large polluters, he was talking quite literally about large polluters, who also happen to be large emitters of CO2. No one called the CO2 a pollutant, they called it a 'green house' gas, which it is. Yes it is obvious where you stand on the issue. Yes, the average for Earth's history is higher, but for most of Earth's history, you would not have wanted to live here. Hence mammals only showed up in the last 65 to 100 million years ago. Also, the ocean levels were much higher in the past when the Earth was warmer.

By the way, if the oceans come back up, the Earth really won't care. It cracks me up that people keep screaming that we need to 'save the Earth'. The Earth really doesn't care if the ocean comes up 30 or 40 feet. Or even if it comes up 80 feet. People care. But the earth? I don't think so. The only thing that global warming puts at risk is people and their money. By the way, if you think it won't affect you financially, you are wrong. Unless you live in the highland region of the third world. In all developed countries, the most valuable property is near the ocean. And the governments of all developed countries are going to spend countless billions to protect the larger cities. And that money is going to come out of the national budget. You don't believe it? You don't think it will pass? Guess again. Your tax dollar is going to build a **** around London. Your tax dollar is going to build a **** around New York City. Your tax dollar is going to build a **** around Sydney. Get over it, that is the reality of life.

Trust me, the bacteria and fungi are going to have a party. And in three or four hundred thousand years, none of it will matter. The Earth will keep spinning the whole time. The moon will go around. The sun will rise and set every day. Even in 400 million years when the magnetosphere collapses and the sun starts to boil away the atmosphere and the oceans, the Earth won't care. Even the flora and fauna that populates the Earth won't care. The process will take a few million years, and life will slowly grind down until the Earth is just a dessicated lump of rock littered with organic detritus. And it still won't care.

[zyxxy]

Hey, that cracks me up! The starred out the word Dee Eye Kay Eee. You know, the short word for levee. The famous walls around Holland. I did not spell it Dee Why Kay Eee. I could understand that. But the short word for levee that starts with 'd'? ****? Or should I spell d i k e ? How odd. And how amusing.

[sixit]

What's funny to me is that I thought the starred-out word was a common misspelling for 'dam'. ;c)

[texaslabrat]

No, I don't "contradict" organic chemistry. You ignore the complete cycle of this process. Yes, the algae converts some CO2 in its environment to O2 via photosynthesis. The end products, this case, are oil (extracted for fuel purposes) and the remaining structures of algae which are disposed of in various ways. The carbon is then re-released (and O2 consumed) upon the combustion of the oil. The other carbon is likewise released (and O2 consumed) when bacteria ultimately break down the remaning parts of the algae through the decay process. In the end, all of the CO2 that was released from these cement plants and utilities is still ultimately released to the atmosphere...with only a very short time delay depending on how long from production to combustion of the oil. Once again, this is not sequestration. It *is* "clean energy" because it does not release *additional* CO2 that wasn't already present in the environment...it simply "recycles" it (just as cellulosic ethanol, and really any biofuel, does) as sort of a "binding agent" for solar energy. Sequestration, on the other hand...takes the CO2 (either from the free atmosphere or from exhaust of things like power plants) and locks it away for a "long" time (hundreds or thousands of years, depending on the method) resulting in the de-facto removal from the environment.

Now, mathematically you could claim that the oil produced from the algae displaces petroleum-based fuels, thus preventing CO2 production by burning those fossil-fuels..so it's effectively the same as sequestration. For the carbon content of the algae oil itself (scaled on a BTU basis in relation to petroleum fuels), I would agree..but that is a VERY small fraction of the overall CO2 being piped into these algae farms from the cement plants/utilities and a LONG way from a "break even" proposition overall.

[texaslabrat]

bah clicked on the wrong "reply" link.