Thursday, September 27, 2012

 Algae Biomass SummitUseful facts 

 September 27, 2012
Algae's renowned "Doctor No," John Benemann, leads an ABO panel looking at expansion around the globe

Jobs, global expansion, proteins vs fuels, new R&D funding – all the big issues are under debate both on and off the floor at the Algae Biomass Summit.

In Colorado, the Algae Biomass Summit, which attracted 800 people this year, four days of presentations, including multi-tracked sessions, provides a huge data stream for attendees. Plus, there’s the buzz in the hallway to consider.
Three of the themes that we heard about consistent were job creation, global expansion, and “feed vs fuel” (a lively discussion about whether the opportunities in the protein markets would drive development of algae fuels as a co-product, or the other way around).
Let’s look at some of the data stream.


Dr. John Benemann projected on stage that, today, the global algae industry directly employs 10,000 people in research, development, and deployment. South Korea’s C.G. Lee noted that the two largest projects in Korea are now employing 260 people between them, and estimated that Korean algae employment has reached 500. Muradel exec David Lewis estimated that Australia is also now employing 500 people full-time in algae research, development and deployment – noting that every one of Australia’s 39 universities now has at least one researcher working in the field.
Algenol CEO Paul Woods noted that the average salary at Algenol’s main facility in Florida is now $93,000, compared to an average household income for Lee County, FL as a whole of less than 50,000.
Sapphire Energy CEO Cynthia Warner noted that, in creating 6000 equivalent full-time jobs in the construction of their demonstration facility in Columbus, New Mexico, that 57 percent of Columbus’ population had been living below the US poverty line prior to Sapphire’s arrival. A factor in Columbus’ struggle. Saltwater intrusion into groundwater had had a devastating effect on the local agricultural industry. (Sapphire utilizes brackish water for its open-pond algae).
In her own remarks to the Summit, Sarah Bittleman, Senior Advisor to USDA Secretary Tom Vilsack, noted enthusiasm for the algae industry’s potential to be a source of jobs in rural areas, since those locations will be ideal for algae production facilities and infrastructure.

Global expansion

L. Hunter Lovins, President of Natural Capitalism Solutions urged attendees during a morning keynote address to envision the algae industry as one solution to global challenges that include food shortages, freshwater supply disruptions, ocean acidification and rising atmospheric carbon dioxide levels. Using algae to produce renewable fuels, feed and other products has the potential to address all of these problems because algae can produce enormous yields over other feedstocks, can clean wastewater as they grow, and absorb carbon dioxide.
Vitor Vieira, the chief development officer at Algafuel, itself a spin-out from Necton, gave a lightning-fast overview of a relatively startling level of expansion in Europe.
Among companies to watch, he highlighted Microohyt and Fermentalg; a 1-hectare Roquette klotze pilot utilizing chlorella; Archimede richerche; a 1-hectare pilot project from Boots, the UK-based retailer, in partnership with pml photobioreactor; a 5-acre project in Cadiz, Spain by Aurantia; France’s Activ’alg; a 600 square meter pilot from Novagreen in Germany; a small 85 m3 pilot by Algosource technologies.
He also noted that Eni has a 1 hectare project underway in Italy, Ecoduna is developing in Austria,
Phytolutions in Germany, and Algaenergy, Fitoplancton, EEM/BFS are active in Spain. In Belgium, he highlighted a 500 m2 pilot from Proviron, while noting that Ingrepro is making progress in the Netherlands.
The development of algae R&D clusters is well underway in the EU, as well. Vieira highlighted Algae clusters such as Biofat, All-gas, Intesusal, Giavap, Aquafuels, Algae parc, En algae, BBSRC, Biomara, Shamash and Algohub, as well as a cluster building up at the UK’s Cranfield University

Proteins vs fuels

On the floor at the Summit, Heliae chairman Frank Mars, looking not only at the growth of algae as a technology but looking at the global food situation as Mars & Co is seeing it, cautioned that opportunities in the fuel markets may be overwhelmed by the opportunities in protein for algae-related technologies.
Fast-rising populations are a factor – and difficulties in matching population growth to food supply growth. “The per-calorie cost of healthy food is rising fast,” he cautioned, “and the kind of weather we’re seeing this year – more intensive rains and storms, changing patterns of drought – these are going to be some of the first effects of global warming that we are going to really feel. It really puts a challenge on agriculture.”

Did you know?

The largest currently active next-gen algae biofuels facility in the world? According to Vitor Vieira, it’s the A4F / Secil prototype and pilot in the EU, which has a capacity of 250,000 gallons as of this year.

How big?

The DOE now has a US potential capacity of 0.5 quadrillion BTUs, or 5 billion gallons of algae-based fuel per year, as a goal that is feasible in the near-term, in terms of the US’s capacity in sunlight, water, nutrients, available sites and CO2. Note that the DOE’s capacity taregt is based on a conservative estimate of 13 grams per square meter per day of algae growth. Earlier this year, Scripps Oceanography chief described 25 grams per square meter per day as “table stakes” – while DOE acting Biomass Program chief Valerie Reed said that the next round of research was likely to target a 35 grams per square meter per day productivity.

Problems in R&D?

Several attendees noted problems in collaboration and knowledge-sharing between algae companies. Australia’s Dr. David Lewis said that collaboration was proceeding well at the academic level, but that IP concerns were causing problems in data-sharing between companies doing advanced application development.
Other attendees noted that the speed of algae-based development was simply overwhelming the time-scales for traditional peer-reviewed journal publication – noting that by the time articles made it through the peer review process, that the information was outdated. Some noted that private research efforts were getting so far ahead of academic research efforts that it was becoming difficult to find peers with sufficient knowledge of the latest developments in the arts.
At the same time, Lewis cautioned “the gold rush is over in terms of government-funded research, so we’re seeing a lot more efforts at collaborating, and we are going to need to see a lot more.”

Moving on, moving up in Karratha

One of the hotbeds of development around the world has been at Karratha, on the north-west Australian coastline, where both Muradel and Aurora Algae constructed pilots in the past couple of years.
Aurora couldn’t be more bullish about Karratha. Today, the company announced that it has consistently hit established production goals of 12-15 tonnes of algal biomass per month. The facility, consisting of six 4,000 square meter (one acre) ponds, is a prelude to a planned full-scale facility, which is set to break ground in 2014 and will consist of 250 acres of algae ponds capable of producing up to 600 metric tons of algal biomass per month. The company eventually plans to scale the site up to 1,000 acres.
At the same time, Muradel said that they would move to Whyalla, South Australia for the next phase in their evolution. An industrial center, Whyalla is on the southern coast line, roughly 250 kilometers northwest of Adelaide. The reason for the shift? It’s too hot in Karratha to maintain respiration rates that lead to optimal algae growth, Muradel found – also noting the tendency of the northwest coast of Australia to attract cyclonic activity.

New Funding Opportunity from the US DOE

Last year, the DOE issued a request for information in the algae industry, aimed at re-setting its goals in light of new advances, and new stumbling blocks. In addition to setting aggressive growth targets at the 35 grams per square meter per day level, acting Biomass Program head Valerie Reed said that, as an outcome from the industry response, the DOE is likely to target a 40 percent reduction in operating costs with a 2013 funding opportunity announcement.

New goals for the Algae Biomass Organization

ABO executive director Mary Rosenthal noted that the ABO would be making efforts to substantially increase its state-level efforts. One goal – to help members navigate the different regulations and procedures that vary widely at the state level. Also, ABO is expecting to form a 501c3 foundation, to build an endowment that will especially target education and outreach efforts.

Wednesday, September 26, 2012

The BioProcess Algae Story

 September 26, 2012

In Shenandoah, white biotechnology meets black carbon remediation, and algae production comes to the Corn Belt, as BioProcess Algae and Green Plains Renewable Energy aim for a “lowest-cost winner” in algae biofuels.

In Europe they call “white biotechnology” what is elsewhere known as “industrial biotechnology”, or around the Corn belt as “the technology behind corn starch fermentation”, or in Shenandoah, Iowa (to many) as “the place where Dad (or Mom) works” or “the ethanol plant we sell our corn too.”
It’s been a tough enough season in Iowa this year for growers, fighting a persistent and gut-wrenching drought, but on the whole they’ve had a prosperous decade thanks to corn starch fermentation and the ethanol boom. It’s built a floor under corn prices and given growers in Page County a short delivery run. They’ve helped make, in turn, the 100 million gallon Green Plains Renewable Energy plant in Shenandoah the most efficient and profitable in the GPRE fleet.
But carbon dioxide emissions remain. In fact, large corn ethanol plants are considered “major emitters” under EPA rules because one-third of the corn kernel, by weight, is released as carbon dioxide during fermentation. About 19 pounds of it per bushel.
To the EPA, an emission. To Green Plains Renewable Energy, an opportunity. Why not capture the emissions, feed CO2 to algae, and turn a problem into a profit center?
Thus was a partnership born with BioProcess Algae. Ebony and ivory – white biotechnology and carbon remediation – working together in harmony. It’s a powerful vision.
In the Digest’s Biorefinery Project of the Future series we wrote about why corn ethanol plants were great places to begin developing an advanced biofuels. We noted that “existing first-generation fermentation biofuels require no re-invention of feedstock systems, no exotic first-of-kind processing technology, no fuel certification or from-scratch market development. They are financeable.”
This summer, that vision has taken a major series of steps forward as the BioProcess Algae project advances from a small pilot system to a 5-acre demonstration including all components systems that lead from CO2 capture through algae growth, harvest, and extraction.
The BioProcess Algae projects builds out to five-acre scale in Shenandoah, Iowa
Earlier this summer, in a brief review of BioProcess Algae, we wrote:
“Three things are especially notable about the project.
First, it has proven that it can successfully utilize excess CO2 and process heat from the Shenandoah ethanol plant to produce microalgae.
Second, it has proven (at pilot scale) that its unique growth media can work – and this is an important breakthrough, because the company is growing microalgae out of solution, using a biofilm. The thesis is that this approach will offer a high surface area to enhance light penetration, productivity, harvest density and gas transfer. Once the algae have reached critical density, they are sprayed off the biofilm into a shallow bed of water, 2-3 inches deep, hugely reducing the amount of water that has to be moved in order to harvest algae.
Third, Green Plains is still supporting the project. Even in the “a penny really matters” world of corn ethanol, GPRE is well-known for a relentless focus on viability and profitability – and they have been adamant that the BioProcess Algae project is not a science project – but a focused exploration of value-add opportunities for their ethanol fleet – and that as soon as the project shows that it is not meeting GPRE’s tough success criteria, it will be shut down. Well, its not shut down.
And, as BioProcess Alage CEO Tim Burns notes, “you have to aim for the lowest cost production. That’s the winner.”
Meanwhile, the company is already taking orders. In June, BioProcess Algae and KD-Pharma Bexbach announced that they have entered a commercial supply agreement for the production of EPA-rich Omega-3 oils for use in concentrated EPA products for nutritional and/or pharmaceutical applications. Under the agreement, BioProcess Algae will supply microalgal oils which will be refined by KD-Pharma’s proprietary Supercritical Fluid Technology to produce highly-concentrated vegetable sourced EPA oils.
We would add a fourth notable feature to our short review from this summer. It’s hybrid design – a semi-closed system, using some elements of greenhouse design to protect and warm the algae, but using the some of the best, low-cost aspects of raceway-style, open pond design. That gives it a cost structure and a system that works in the temperate climates where staple grains generally grow — makes it possible to put the plant next to the CO2 source and share inrastructure.

Next steps for BioProcess Algae and Green Plains

Next steps? Following completion of the 5-acre demonstration, the company will proceed to full-commercial scale. And that can be substantial. A 100 million gallon corn ethanol plant produces enough CO2 to support 140,000 tons of algae production. Even at 60 tons per acre per year (as Cellana has generated at its 6-acre facility), that’s up to 2300 acres of algae production from a single site – almost 4 square miles. Possible? Depends entirely on site characteristics. But you get the idea.

What’s the real impact of the marriage of algae and corn ethanol?

Irrespective of technology, these are projects that monetize CO2. That’s their fundamental magic, liberating value from a waste stream. It’s an elegant expression of a foundational value proposition of advanced biofuels: “Less is more. Use what is there to the extent possible.”
The value proposition, in terms of capturing and liberating value, is substantial. As we do in Digestville, let’s look at the hard data.
In the United States, there is 14 billion gallons of corn ethanol capacity, which in turn represents the processing of around 4.8 billion bushels of corn (at 2.9 bushels per gallon), and generates 43.2 million tons of CO2 (at 18 pounds per bushel).
How much value? Australia has priced carbon at $A 23 per tonne; US advanced biotechnology developers like Algenol have modeled their CO2 acquisition at $30 per ton. Let’s use $25 as a mid-point. That’s $1.08 billion in value, and enough CO2 to produce 21 million tons of algae.
Now, it is highly tempting to do math and figure that, at a 30 percent lipid content, you could get around 1.6 billion gallons of renewable diesel by souring some added hydrogen, or the same volume of biodiesel. Or an awful lot of Omega-3s, and high value protein for animal feed. And the financial math in converting a $25 ton of CO2 into a $1000 ton of high-value feed is pretty compelling.
But not every process requires harvesting and extracting value from algae. The Shenandoah Project certainly does – but we may see more projects in the future like Joule Unlimited or Algenol that feature no-kill biofuels production – where the microorganisms are milked rather than harvested – and the yields may well go 50-150 percent higher, in terms of yields per pound of CO2.

The bottom line

There’s a long ways to go on the Shenandoah project – 5 acres is a long ways from full commercial scale. Lessons remain to be learned, risks remain. But it’s a long, long ways from bench scale, too. Much risk remediation has already occurred.
To date, Page County has been best-known nationally as the birthplace of the 4-H Clubs, where the long-time mottos are “to make the best, better” and to ” learn to do by doing”. Their pledge is one every bioenergy pioneer might note: “I pledge my head to clearer thinking, my heart to greater loyalty, my hands to larger service, and my health to better living, for my club, my community, my country, and my world!”
It may well be that, in the future, we’ll look back at projects like the Shenandoah ethanol plant and see in them a pretty good conversion of pledging into action, and at industrial scale.

Monday, September 24, 2012

As the Algae Biomass Summit opens, we look at a global trend in transferring “All power to the Feedstocks!” – the advantages, options, and the potential for consequences.

The Age of Upstream

 September 24, 2012
Not everyone is a winner when the dominant forces lie upstream.

What is the ideal relationship between feedstock producers and refiners? Has the balance tipped too far towards the upstream?

You see it everywhere. Oil producers are happy, refiners are squeezed. Corn, soy and sugar prices are at historic highs, ethanol and biodiesel producers are squeezed. Iron prices are high, steel producers are challenged. Utilities are doing well, manufacturers dependent on electricity are in the tank.
We’ve heard about the Information Revolution and Global Warming, and the Green Revolution too -  but really what we are entering, if someone doesn’t do something about it soon, is the Age of Upstream.

How companies are faring upstream and midstream

Look, for example, at the performance of upstream companies like Syngenta, compared to midstream biofuels refiners like Pacific Ethanol.
Syngenta's two-year stock performance
Pacific Ethanol's two-year stock performance
What is causing the havoc for ethanol producers in the midstream? Prices for commodity feedstocks that rise faster than prices for commodity fuels.
We saw it in the price of fryer oil grease. At one time, waste oils could be had for negative cost. Restaurants were paying companies to dispose of it. Then it was available for free. Now it runs north of 30 cents per pound, or nearly $2.50 per gallon to the biodiesel producer.
Or, here, look at how corn processor Archer Daniels Midland has performed as a stock, compared to upstream-focused seed companies like Monsanto.
Monsanto's two-year stock performance

What is to be done with all that natural gas?

We see the debate between upstream and midstream taking place in the natural gas sector, where fracking technologies (for better or worse) have unleashed an abundance of supply.
The upstream view? US policy should be to unlock as much natural gas as possible and tap foreign markets via creating pipelines and export markets wherever possible, to turn a pile-up at the Henry Hub and $2.50 per MMBTU gas into a levelized global price of around $6 per MMBTU.
The midstream view?  Keep low-cost natural gas piling up in the United States, distribute it through the grid in the form of low-cost power that replaces coal, and leverage that cleaner, cheaper energy  into a competitive advantage for US manufacturers – to stimulate domestic sales and exports of finished goods, and bring outsourced jobs home.
We see it in the coal industry as well. As Reuters reports this week, ” Call it the Keystone of coal: a regulatory and public relations battle between environmentalists and U.S. coal miners akin to the one that has defined the Canada-to-Texas oil pipeline. Instead of blocking an import, however, this fight is over whether to allow a growing surplus of coal to be exported to Asia, a decision that would throw miners a lifeline by effectively offshoring carbon emissions and potentially give China access to cheaper coal.”

Return of the Jeffersonians and the Whigs

For students of history, if this sounds like a conflict between the pro-government, interventionalist American System espoused years ago by Henry Clay, and the anti-government, libertarian Jeffersonian Republicanism that Thomas Jefferson was the chief advocate for – well, that’s understandable. It may be a little strange that Republicans are, in many ways, Jeffersonians – and that the Democratic Party has gone over to Whiggery – but that is for the students of political science to consider and debate.

The Australian example

The Age of Upstream has been coming a long time. You can see it in Australia, where record resource prices have kept the Aussie dollar and the economy afloat. But the manufacturing decline is startling.
The pro-manufacturing Australian Party reports: “86% of cars on our roads used to be Australian made. Now only 21%. One of Australia’s biggest ship builders, NQEA used to employ 1000 people. Now 60. We were once 95% self-sufficient in oil, now we’re only 65%. Our mining industry was once almost entirely Australian owned, as was dairy, sugar, meat process, railways and major construction. Sheep numbers have dropped from 174 million to 68 million…exports of vehicles fell from $4.6 million in 2005 to $1.8 million in 2007 while imports of motor vehicles tripled from $1 billion in 2004 to $3 billion.”
Why are Aussies not rioting in the streets? Upstream business is good, the country is doing well — but worth noting that iron prices have dropped from a high of $187 per tonne last summer to $107 today – and that among the dangers of an economy overly predicated on commodities are the wildly gyrating prices.

What does this mean for biofuels?

First, we see a divergence in investment strategies. We see many companies like BP, Shell or ExxonMobil invested in the upstream. Shell and BP are now owners of vast sugarcane plantations as well as ethanol production. ExxonMobil – along with Shell and BP, have been exploring algae as a feedstock.  Flint Hills Resources has invested in jatropha via SG Biofuels, and BP has been investing in miscanthus via Mendel.
Then there are the midstream players. Take, for example, Valero’s interest in Mascoma or Diamond Green Diesel – both about everything except the feedstock, which is supplied by other partners. Or Petronas’ interest in LanzaTech – again, a company that supplies everything except the feedstock. In Italy this week, Eni has just announced the conversion of its Venice refinery from fossil fuels to biofuels, using the Ecofining process to produce renewable diesel.
What’s a stronger model? We suspect that the integrated model of novel upstream and midstream offers more protection against commodity price swings – and guards against the potential for upside down economics when feedstock costs rise above fuel prices. Also guards against the problem of getting trapped inside investments that lose — as in the case of Terrabon — their feedstock-providing investor.
But investing in upstream and taking on agricultural risk is not for the faint-hearted – it is highly capital intensive. So many investors have focused on the midstream processing technologies. Their hope? They believe their technologies are so unique – in liberating value from commodity feedstocks – that they will escape the fate of first-gen producers, and will be able to lock in a higher percentage of the value add than their first-gen brethren.

The build-out of the algae platform

In biofuels, the build-out of an algae platform is the most significant effort underway to develop a new upstream source of sugars and oils. This week at the Algae Biomass Summit, we’ll be measuring the progress of companies like Sapphire Energy, Cellana, Algenol, Heliae and BioProcess Algae, to name a few.
To date, the mission is both upstream and midstream in character. The most important companies are not only trying to grow algae on a sustainable, industrial scale – but developing novel technologies to fraction and refine the algae biomass into value-add products. It’s noble, expensive work, but companies like Solazyme are making it work.
Very few companies have, for example, focused exclusively on developing extraction and refining technology – hoping to buy affordable algae biomass in the long term on the spot market or contracting with producers. Those that are developing refining technologies are, rather, focused on selling them to algae producers – upstream. That’s where they understand the winning cards to reside. That appears to be the trend of the times.
You may well ask why — if algae producers and other companies that have embraced the upstream — are so well positioned, why aren’t they dominating the world? In many cases, they have yet to shake out sufficient cost from their processes to make products at market prices. But that is changing quickly as they acquire experience, capital and scale.

The bottom line

“All power to the Feedstocks!” – that is what we hear the world shouting. It sounds so much like “All power to the Soviets!” that one is forced to wonder if a “dictatorship of the upstream” will be any more successful than a dictatorship of the proletariat proved to be.

Friday, September 21, 2012

The Big A: Little algae go Big, Industrial and Global, and just as eco-friendly as ever

 September 21, 2012

Big Auto, Bio Oil, Big Ag, Big Pharma, Big Food – touching them all, now and increasingly, is Big A, as algae technologies gain in scale, scope and world-wide reach.

This Monday in Denver, the algae industry stages its biggest annual get-together when the Algae Biomass Organization’s four-day Algae Biomass Summit kicks off.
The annual meet-up opens just as word arrives from Australia that Aurora Algae, at the demonstration plant it opened in May of this year, met all of its ten milestone operating targets set by the Western Australian Government’s Low Emissions Energy Development (LEED) fund.
The project had been allocated $2 million in state support, subject to meeting all 10 targets – including producing biofuels onsite and and successfully completing vehicle tests. Aurora expects now to proceed to construction of a commercial-scale system.

Where else in Australia?

There’s been a huge amount of discussion about the algal opportunities in Australia – leading us to dub the country “Algstralia”. Beyond the chatter, some rigorous thinking has been done on the topic of where else in Western Australia. The Center for Researh into Energy for Sustainable Transport (CREST) has just released a report by Michael Borowitzka and a team of researchers at NMurdoch Univeristy and the University of Western Australia on that very topic. “Identification of algal biofuel production sites using GIS Model” focuses on an array of potential sites along Western Australia’s northwest coastline – the complete report is available here.

Lufthansa invests in algae aviation biofuels

This week, Algae.Tec and Lufthansa have signed a Collaboration Agreement for the construction of a large-scale algae to aviation biofuels production facility. The site will be in Europe adjacent to an industrial CO2 source. Lufthansa will arrange 100% funding for the project. Algae.Tec will receive licence fees and profits from the Project, which will be managed by Algae.Tec. As part of the Agreement, Lufthansa commits to a long-term offtake agreement of at least 50% of the crude oil produced at an agreed price. A final feasibility report will be completed once the first site has been selected. More on that development here.

14 algae companies competing in the Hot 50 (biofuels) and Hot 30 (renewable chemicals and biomaterials)

For those who are watching algae-related biofuels and products companies closely, note that Sapphire Energy, Algenol, Algix, Cellana, Phycal, Algae.Tec, Bioalgene, BioProcess Algae, Heliae, Muradel, Bio Architecture Lab, Solix, and Aurora Algae are competing in this year’s Rankings. Perrenial hot company Solazyme, last year’s #1, is also competing – and use algae in their process even though they generally prefer to be defined by their “renewable oils” product rather than their algae-based process. More on the Hot 50 and Hot 30 is here.

The big themes at ABS this year

· More than fuels. Big advances in commercializing co-products like feed, food, cosmetics and chemicals are giving legs to an industry that is building up to providing commercial quantities for fuel markets.
· Success is begetting success. Big steps on the commercial side are being recognized and accompanied by progress in science and research. DOE just awarded $15 million for the first national algae testbed in AZ, and the Summit has remained a place to learn about the latest breakthroughs since its inception.
· The Murky Policy Pond. Prospects for biofuel policy that could stabilize investment and production have been murky this year at best. The Summit comes just a few weeks before elections–speculation, projections and analysis of what the future holds will be part of plenary and hallway discussions. Even in today’s tough political environment algae has made great inroads by proving itself and getting on the radar of Congress and state governments. How will the momentum continue?
· Algae’s sustainability advantage—the ability to generate high yields without major impacts on freshwater and agricultural land has attracted more attention as drought withers crops around the country. L. Hunter Lovins, President of Natural Capitalism Solutions will discuss during a keynote on Tuesday morning followed by a plenary on algae becoming global feedstock for renewable products.
Mary Rosenthal, executive director of the Algae Biomass Organization notes, “You can trace the arc of progress in our industry through the annual Algae Biomass Summit,” said Mary Rosenthal. “From the early summits that were highlighted by scientific discovery and theoretical possibilities, through announcements of breakthrough technology and bench success, to today, where a thriving ecosystem of companies and leaders network, share information, exhibit, showcase posters and give live presentations. If you’re in the algae space, there’s no better place to be.”

Top speakers at the Algae Biomass Summit

Colorado Governor John Hickenlooper will deliver the opening keynote address when the event convenes in Denver on Monday, September 24th. Governor Hickenlooper will discuss the importance developing algae-derived fossil fuel replacements and other products for the economy and energy independence.
Immediately following the governor’s address, executives from some of the top algae companies will discuss their own companies as well as pressing industry issues. The session will feature Alex Aravanis, CSO of Sapphire Energy; Tim Burns, CEO of BioProcess Algae; Martin Sabarsky, CEO of Cellana; Dan Simon, CEO of Heliae; and Paul Woods, CEO at Algenol Biofuels. More on the ABSincluding a complete agenda is here.

The Summer of Algae – a recap.

In case you missed them, here are some of the highlights from this year’s Summer of Algae celebrations:
• Seattle’s Beer Belly Summer of Algae
• San Diego’s Concentrated Algae
• Colorado’s Summer of Algae
• The Summer of Algae in Minnesota

Algae’s Big 2012 – 5 Huge Events

2012 was supposed to mark, according to some observers of the Mayan calendar system, the end of the world as we knew it. It just may well turn out that way, after a big year for algae.
1. Sapphire Energy’s Green Crude Farm completed.
Late last month, Sapphire Energy announced that the first phase of its Green Crude Farm, the world’s first commercial demonstration algae-to-energy facility, is now operational in Columbus. Construction of this first phase, which began on June 1, 2011, was completed on time and on budget. When all phases are completed, the facility will produce 1.5 million gallons per year of crude oil and consist of approximately 300 acres of algae cultivation ponds and processing facilities. The farm has already produced 81 tons of algae biomass to date.
2. Aurora Algae opens its demonstration scale project in Western Australia
Earlier this year, we wrote: “Word has been sneaking back to the United States from Australia that Aurora Algae is well into a $100 million capital raise from a combination of existing and new investors, and is aiming at an IPO later in the year to fund its growth from a 6-acre demonstration unit to a small commercial facility of 250 acres, and then potentially to thousands of acres in its next iteration.”
3. The first National Algae Testbed.
The DOE announced last Tuesday that a $15 million award for advancing algae production will go to supporting efforts at the Arizona State University led Algae Testbed Public-Private Partnership (ATP3). ATP3 is a network of research institutions and companies that will pool resources in a way that allows new algae technologies, strains and techniques to be tested and evaluated for their potential to succeed at large-scale production.
4. Lufthansa, Algae.Tec to build commercial scale algae aviation fuels plant in Europe
In Australia, Algae.Tec and Lufthansa have signed a Collaboration Agreement for the construction of a large-scale algae to aviation biofuels production facility. The site will be in Europe adjacent to an industrial CO2 source. Lufthansa will arrange 100% funding for the project. Algae.Tec will receive licence fees and profits from the Project, which will be managed by Algae.Tec.
5. 2012 RIMPAC exercises feature the Green Strike Group, powered by algae.
At the beginning of the summer, the Green Strike Group got underway at RIMPAC. The United States Navy may be laboring under a congressional ban on biofuel purchases that cost more than bargain basement fossil fuels, but no one said the Navy can’t burn the biofuel it’s already got. Nothing would bring that day closer than the naval exercises held off the Hawaiian islands starting June 29, known as the Rim of the Pacific Fleet Exercises, or RIMPAC War Games. The setting of the movie “Battleship”, RIMPAC is a competitive war simulation in which participating fleets and naval vessels attempt to outmaneuver and “sink” each others’ ships, winning or losing tactical points in the RIMPAC scoring system.
You can read more about the 10 biggest milestones in the “Summer of aviation biofuels” in the Digest’s “Fly the Bio Skies.”

The Bottom Line

A zillion speakers at the Algae Biomass Summit will reinforce a common theme: With algae just as with computers and software, intensive R&D will and must go on, but algae-based companies are leaving the lab in large numbers and heading for the markets. For the technology’s many fans, it’s hugely exciting to see.
Investor Update
19 September 2012
Algae.Tec Limited is pleased to announce that Algae.Tec and Lufthansa have signed a Collaboration Agreement for the construction of a large-scale algae to aviation biofuels production facility.
The site will be in Europe adjacent to an industrial CO2 source.

Lufthansa will arrange 100% funding for the project. Algae.Tec will receive licence fees and profits from the Project, which will be managed by Algae.Tec.

As part of the Agreement, Lufthansa commits to a long-term offtake agreement of at least 50% of the crude oil produced at an agreed price

The agreement forms the base for a long-term cooperation between Algae.Tec and Lufthansa for the industrial production of crude algae suitable for conversion into aviation kerosene and conventional diesel fuels.

The Agreement states:
"Both parties will jointly develop a large-scale industrial algae oil production plant based on Algae.Tec's technology and operating support, and Lufthansa's offtake commitment for such algae oils."
Algae oil produced by the Project shall fulfill at all times the EU Renewable Energy Directive ("EU-RED") and shall be certified according to ISCC -Standard.

This agreement builds on and supersedes the MOU signed between the two parties in January 2012. It is subject to final Board approval of both parties and the final sign off for the algae oil conversion into aviation kerosene. A final feasibility report will be completed once the first site has been selected.          

See algae to aviation fuel video here
See more Algae.Tec images from the ILA Berlin Airshow and the dedicated Alternative Aviation Fuels Pavilion here.
ILA Berlin Airshow meetings and media reports
Algae.tec was profiled in some of the world's leading aviation media at the Berlin Airshow. They included Aviation Week, Flight Global, and BlueSky as well as the influential Show Daily. Please see some of the reports here.

Algae.Tec was also represented on key sustainability and biofuels panels and met with dignitaries including the German Agriculture Minister and leading aviation industry biofuels executives and investors. 

Thursday, September 20, 2012

World oil price to increase, what are future- Fix Biofuel now.

The United States Navy, and the navies of 24 other nations, prepare to counter the threat Iran poses to the Strait of Hormuz, a vital trade route.(Official U.S. Navy Imagery/flickr)
The United States Navy, and the navies of 24 other nations, prepare to counter the threat Iran poses to the Strait of Hormuz, a vital trade route.
(Official U.S. Navy Imagery/flickr)

Tensions Mount in the Strait of Hormuz

September 19, 2012  •  From
Amassive fleet of navy vessels from around the world converged on the Strait of Hormuz last week to prepare for an annual 12-day naval exercise. Ships representing 25 nations, including the United States, Britain, France, Saudi Arabia and the United Arab Emirates, began exercises Sunday in preparation for potential retaliation from Iran should Israel strike Iran’s nuclear sites.
Fearing that Iran might close down the Strait of Hormuz, the fleet is scheduled to conduct exercises on “how to breach an Iranian blockade of the strait and … counter-mining drills,” as well as destroying Iranian ships, fighters and missile batteries in the Persian Gulf area, the Telegraph reported. Though these war games are conducted every year, never before has such a large force participated. The exercise will include three full U.S. carrier groups, each accompanied by dozens of support vessels and carrying more aircraft than the entire Iranian air force.
With tensions mounting between Israel and Iran, Western powers are concerned Iran will retaliate by closing the strait, which would prove costly to the U.S., Britain, Europe and Asia. Eighteen million barrels of oil, roughly 35 percent of the world’s traded oil, flow through the strait every day.
The Strait of Hormuz has long been a disputed area and a significant bargaining chip in Iran’s favor. Fear of the strait being closed is always a deterrent for Western powers to take action against Iran. If Iran were to close it, the economic impact would be immense, as the cost of oil would rise drastically.
For years, the Trumpet has prophesied about Iran’s “pushy” foreign policy. The closing of the Strait of Hormuz would be just another step in Iran’s increasingly aggressive policy.
To understand the significance of what is going on in the Strait of Hormuz, read “Europe, Iran and Bible Prophecy Come Alive in the Strait of Hormuz!” 

Wednesday, September 19, 2012

EPA OK’s 30% increase in US biomass-based diesel mandate as domestic production capacity expands.

 September 19, 2012

What will bigger targets mean for producers, livestock, obligated refiners, and the diesel-using public?

In Washington, the EPA issued its final rule for 2013 establishing 1.28 billion gallons as next year’s biomass-based diesel volume requirement under the Renewable Fuel Standard (RFS), up from 1.0 billion gallons in 2012.
“This 1.28 billion gallon level is in-line with what the EPA had originally proposed for 2013 dating back to last year,” commented Raymond James energy analyst Pavel Molchanov. “However, the delay in formalizing this target had led investors and biodiesel industry participants alike to question the EPA’s commitment to this level. The RVO was originally expected to be completed in July, and with the election fast approaching many had thought the final ruling may not occur until mid-November.”

What does this mean in the context of the overall RFS2 targets for 2013?

The 2007 EISA Act called for 2.75 billion gallons of advanced biofuels in 2013 – that’s up from 2.0 billion gallons in 2012. That can come from any qualifying source (a registered fuel that provides a 50 percent lifecycle reduction in emissions, compared to petroleum-baed fuels), and includes sugarcane ethanol, some advanced forms of corn ethanol, biobutanol, and all forms of biomass-based diesel. Obligated parties can also buy RIN credits in lieu of blending “wet” gallons of fuel.
Overall, it means that the diesel side is expected to pick up 40 percent of the increase in RFS2 mandated volumes for 2013 (280 million out of 750 million gallons). That’s relatively conservative – given that biomass-based diesel accounted for 50 percent of the 2012 pool. According to producers, it’s highly feasible to achieve the production volumes.

Do biomass-based diesel fuel mandates cost the public?

The Yes view. Mandates invariably cause fuel prices to increase – in many cases, massively so – by requiring fuel distributors to utilize fuels with favorable environmental or social attributes, instead of choosing the lowest-cost supplies.
The No View. Mandates can reduce fuel costs by reducing demand for imports – and even small reductions in import volumes through alternative production – in these times of tight refining capacity – can have substantial depressive impact on prices.
The social cost view. Fuels cost more than money. They can have impact on air quality and health (particularly among children); energy imports come with hidden social and financial costs in burdening the nation’s military with the task of defending fuel shipping lanes; energy imports also reduce local employment in energy production and reduce the direct and indirect local economic impact that flows from job creation.
The EPA responds. Yes, there is a financial cost – but it’s a rounding error. “The AEO projects that the U.S. will consume 44.9 bill gal of blended diesel in 2013.75 Averaged over this diesel pool, the quantifiable costs of the 1.28 bill gal mandate translate into a per gallon cost of between $0.006 and $0.008 in 2013.”

Why don’t ranchers and poultry farmers freak out over increases in the biomass-based diesel portion of the Renewable Fuel Standard?

Generally, because they use soybean meal rather than soybean oil to feed livestock – so there’s less competition between livestock and fuel on the biomass-based diesel side. Plus, animal residues have to be used somewhere – and they have made an excellent feedstock for fuel production at the 75 million gallon Dynamic Fuels facility (owned by Syntroleum and Tyson), and will be the key feedstock at the 130 million gallon Diamond Green Diesel facility (jointly owned by Darling and Vaero).

Other changes in RFS2 relating to home heating fuel: Amended Definition of Home Heating Oil

This year, the EPA amended its rules to expand the scope of renewable fuels that can generate Renewable Identification Numbers (“RINs”), to include fuel oil that will be used to generate heat to warm buildings or other facilities where people live, work, recreate, or conduct other activities. This rule will allow producers or importers of fuel oil that meets the amended definition of heating oil to generate RINs, provided that other requirements specified in the regulations are met. Fuel oils used to generate process heat, power, or other functions will not be approved for RIN generation.

Industry reaction

Randy Olson, executive director, Iowa Biodiesel Board
“We applaud this smart growth in biodiesel production, which keeps America‚s domestic energy industry moving forward. When the United States manufactures its own products, it benefits society. Encouraging production of American-made fuel brings economic development and energy security – two of our nation’s top priorities. 

”As the nation’s leading biodiesel producer, Iowa stands to gain more jobs and economic growth from this policy. The new biodiesel production will create and support green manufacturing jobs at Iowa’s 13 biodiesel plants instead of sending money overseas for oil. It will also enhance the rural economy by supporting Iowa farmers. This includes livestock farmers, because demand created for soybean oil has the positive effect of lowering meal prices from what they otherwise would be.”
Daniel J. Oh, President & CEO, Renewable Energy Group
“This announcement offers certainty throughout the biodiesel supply chain, will grow green collar jobs and enhances our nation’s energy independence. We applaud and thank President Obama and his administration, including Secretary Vilsack and EPA Administrator Jackson and her team, for their public support and due diligence in working with the biodiesel industry to implement these sustainable growth numbers. They have reaffirmed that RFS2 is working as intended for biodiesel and that it will continue to do so.
“We believe the biodiesel industry, and REG specifically, are positioned to utilize the waste, by-products and recycled fats and oils from American agriculture and food production to meet the 2013 RFS2 number.”
John Plaza, CEO, Imperium Renewables
“This policy will be critical in ensuring strong demand for biodiesel nationally and help companies like Imperium increase production going forward. This showcases the leadership needed to increase America’s ability to source our energy right here at home.
“Imperium Grays Harbor employs 45 full time employees, several of whom are veterans of Iraq and Afghanistan, in the production of American-made biodiesel at competitive prices. This policy will enable us to increase production, continue to support family wage jobs in Washington state and result in several million dollars in additional revenue to the county of Grays Harbor and the state of Washington in the form of port fees, payroll and sales taxes and other economic benefits.
“A strong and stable RFS has been key to the development of the US biodiesel industry and is important as the industry continues to grow and provide increased economic benefits and job creation. The biomass-based requirement alone will reduce the import of petroleum-based diesel next year by nearly 31 million barrels and keep over $4 billion in US dollars from going overseas.”

Bipartisan support

In thanking RFS2 supporters on Capitol Hill, Iowa’s Randy Olson pointed to a concerted, bipartisan effort, including support from Sen. Charles Grassley (R), Sen. Tom Harkin (D), Rep. Leonard Boswell (D), Rep. Tom Latham (R), Rep. Bruce Braley (D), Rep. Dave Loebsack (D), and Rep. Steve King (R) — plus the backing of former Iowa governor and now Secretary of Agriculture Tom Vilsack.

Shares impact: Renewable Energy Group

Over at Raymond James, Pavel Molchanov writes, “REGI production margins rely heavily on RIN values, which should increase now that the RVO is in place. Approximately one-third of REGI’s per gallon selling price for biodiesel is tied to the value of RINs – which are the enforcement mechanism of the RFS2 program. Obligated parties are required to deliver RINs to show compliance to the RFS2, as such when mandated volumes increase (and outstrip production levels), the RINs become dear and increase in value – this occurred in mid-2011. In recent months, the lack of clarity around the 2013 mandate has resulted in lower RIN values. Changes in the RIN value have a direct impact on REGI’s production margins. We estimate a $0.10 per gallon increase in the realized RIN value would serve to boost 2013 EBITDA by ~25%.