Algal Fuel Supply

7/31/2019 Algal Fuel Supply

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Green Energy: Global Policy andIssues Affecting the Development of

Algal Aquaculture for Biofuel

Megan Bettilyon

Capstone Project to Satisfy the Completion Requirements for a Masters Degree inMarine Biodiversity and Conservation

Center for Marine Biodiversity and ConservationScripps Institute of Oceanography 0202

University of California, San Diego9500 Gilman Drive

La Jolla, CA 92093-0202

COMMITTEE MEMBERSCommittee Chair: Dr. B. Greg Mitchell, Research Biologist, (SIO)

Dr. Steve Kay, Dean of Biology (UCSD)Ben Gilbert, PhD Candidate in Economics (UCSD)


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TABLE OF CONTENTS

ABSTRACT.3

I. INTRODUCTION.. 4

II. POLICY OVERVIEW..5

III. ALGAL BIOFUEL....6

METHODS OF CULTIVATION...6

BENEFITS OF ALGAL BIOFUEL..8

PROBLEMS WITH ALGAE PRODUCTION FOR FUEL.14

POTENTIAL DEVELOPMENT SOLUTIONS FOR ALGAE PRODUCERS.17

IV. POLICY PERSPECTIVES.19

US POLICY.19

EUROPEAN POLICY23

V. CONCLUSION.. .25

ACKNOWLEDGEMENTS.27

REFERENCES...28


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ABSTRACT

As the global population continues to grow, the corresponding increase of

demands upon natural resources will present special challenges. Problems involving

the scarcity of fresh water and arable land, additional requirements for energy, and

accumulating pollution may all reach critical tipping points in the near future. In

anticipation of such crises, governments worldwide are regularly convening to discuss

possible strategies intended to mitigate these issues. High on the list of considered

solutions is the enactment of biofuel development policies. To gain a broad perspective

on the benefits and risks any biofuel policy/program faces, I examine the approaches

taken to date by the US Government and the European Commission - the two

prominent regulating bodies now involved in biofuels. Careful dissection of the two

different approaches taken by these parties, with their successes and failures, reveals

lessons broadly applicable to all biofuels and sustainability policy in general. U.S. and

European policy trends have increasingly encouraged renewable fuel use in recent

years. Many of these mandates and incentives have favored corn-based ethanol

because of its existing market presence, infrastructure, and political influence. However,

corn-based ethanol does not align with many of the social objectives that motivate

renewable fuels policy. Algal biofuels are better united with these objectives along

several dimensions, but economics continue to pose obstacles for large-scale

production. This paper evaluates the role for algal biofuel in the context of modern

policy and is intended to be a resource for policy makers, investors, and researchers

interested in evaluating the political landscape associated with renewable energy for

transportation and the potential for algal biofuel as a preferred feedstock.


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I. INTRODUCTION

Data from the US Census Bureau provides an estimate that global population will

increase roughly 34% by 2045, to a staggering number of 9 billion people. Competition

for arable land and fresh water has the potential to ignite a firestorm of human conflict

not yet seen in human history. Moreover, increasing levels of pollution and scarcity of

raw natural resources could further decrease the environments carrying capacity and

lead to additional strife (Sagar A. D. 2005, Sagar Ambuj D. and Kartha 2007). As

nations struggle to come to terms with the issues facing the world over the next 35

years, potential solutions such as biofuel development are receiving the full attention of

governmental policy makers. Certainly, the recent oil spill in the Gulf of Mexico has

made biofuels an even more attractive option. Both Europe and the US have biofuel

programs designed to mitigate some of the more pressing concerns associated with

providing adequate energy for the growing population, however some biofuels under

consideration compound the already tenuous issues of available land, water, food

supply, and providing energy security.

Biofuel feedstocks, such as algae, could prove to be environmentally and socially

beneficial; however, the economic issues surrounding commercialization of algal biofuel

could relegate the feedstock to relative fuel obscurity. Competition with subsidized fuels

such as corn, or traditional fossil fuel, makes it difficult for algae to compete

economically. In the next few sections I will discuss the cultivation of algae, the benefits

algal biofuel can provide, and the economic factors surrounding the development and

commercialization of algal fuel in general. I will then present the policies guiding biofuel

development in the US, such as the newly enacted Renewable Fuels Standard 2;


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followed by those policies enacted in Europe that have been met with criticism from

environmental activists concerned about energy crops competing for land with food

crops.

II. Policy Overview

Finding alternative sources of transportation fuel, in the wake of the oil crises in

the 1970s, became a pressing concern for governments worldwide. In the US, different

feedstocks for biofuels were investigated at both the academic and national levels, and

in Europe, community action plans were developed to meet the growing energy

challenges. Investigation of each type of feedstock brought individual subsets of

benefits and challenges, and world leaders began to choose different paths for securing

new sources of renewable energy. The United States chose to focus on transportation

fuels separately from creating energy for other uses such as household electricity. In

Europe, however, the question of renewable energy was approached as one

encompassing issue, and was more responsive to lobbying from environmental groups

as opposed to us policy which responds to industry groups. Algae are one feedstock

that the US chose to investigate for transportation biofuel. The results were promising,

but the technical and economic challenges were great. Here I present some of the

benefits and challenges of algal biofuel production, in the greater context of biofuel

policy.


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III. ALGAL BIOFUEL

3.1 Methods of Cultivation

Both macro and microalgae have been investigated as feedstocks for the

production of fungible (drop-in) biofuels. There are many different algal strains and

methods of cultivation currently being investigated, each with its own set of benefits and

drawbacks. Microalgal strains, such as Chlorellaand Dunaliella tertiolecta, are grown

using aquaculture methods in a variety of systems with varying results; the three most

widely-investigated methods being Open Pond (Raceways), Closed-Loop, and

Photobioreactors. Each type of production method presents unique benefits and

challenges, with no one method yet proven as the most effective or efficient way to

produce commercial-scale algal biofuel (Benemann 2009).

Open Pond Method

Open Ponds, also known

as Raceways (Fig. 1), are

large oval shaped

aquaculture facilities

wherein algae is cultivated

using a system of paddles

to continuously circulate

the algae around the pond

for maximum exposure to

sunlight, with minimal


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outside energy input. Ponds tend to use only one strain of algae (monoculture) and

their exposure to the elements makes them more susceptible to invasive algae or

contamination from external sources.

Closed-Loop Method

Closed-Loop systems house the algal cultivation facility in a sterile environment

thereby protecting the crop for outside contamination. The costs of building such large

facilities is, however, much more expensive than open ponds and a lack of direct,

intense sunlight inhibits the growth (yield) of the algae being cultivated.

Photobioreactors

Photobioreactors (Fig. 2)

are usually a series of long, clear

tubs or bags where algae are

grown in a contained

environment, while still being

exposed to sunlight. Yields are

reduced due to the natural

constraints of the tube/bag

growth chambers, but

contamination is generally kept to a minimum.


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Although we can see that different aquaculture technologies are being

investigated one fundamental issue that producers face is the permitting process for

their facility. Most microalgae strains used in biofuel production are marine resources

and are technically protected under federal guidelines for US Aquaculture production

(USDA 2010); however algal biofuel facilities have not yet been officially recognized as

an aquaculture by NOAA, the USDA , or the EPA so permitting and regulatory

compliance can become a daunting undertaking for new companies to pursue. At a

recent algae development conference in Del Mar, a representative from the USDA

indicated that algae for use in products intended for human consumption were being

treated separately from algae grown for use as a biofuel feedstock in regard to how the

aquaculture facilities are being regulated. As part of a 10-year investigation into the

development of a comprehensive US Aquaculture policy, NOAA may soon have

jurisdiction over the algal biofuel facility permitting, an effort that may help to streamline

the regulatory process as part of the Presidents Biofuel initiative (House 2010, NOAA

2010). Permitting and regulatory compliance is just one aspect that potential algal

biofuel companies currently have to face; however many feel that the benefits of algae

in the long term outweigh the start-up concerns.

3.2 Benefits of Algal Biofuel

Fresh Water Use Avoidance: Fresh water will continue to become scarcer as

nations around the world continue to deplete their natural water resources in an effort to

provide potable water for drinking, farming, and other critical activities (Berndes 2002,

Edwards 2008). Algae is one of very few biofuel feedstocks that can be grown in saline


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water, often from recycled sources (see Wastewater Remediation), or in naturally

occurring salt lakes, ponds, and coastal areas. This avoidance of using fresh water to

grow an energy crop leaves more water that can be used for farming food or urban

communities.

Wastewater Remediation: A number of large and small scale studies are

currently underway to investigate algaes potential to recycle wastewater in farms,

sewage facilities and industrial plants. To varying degrees of success, microalgae has

been shown to reduce nitrogen, ammonia and phosphorus (Shi et al. 2007, Travieso et

al. 2008), as well as certain heavy metals such as Chromium (Han et al. 2008).

Restoration of the Salton Sea, in the Imperial Valley of Southern California, could

potentially be accomplished through building an algal facility nearby, using the water to

grow algae for use as a biofuel, and then recycling the water back in to the sea

(Prakesh 2009). While it has been proven that algae can use wastewater as a growth

substrate, more research is needed to find a balance between successful production of

algae as a biofuel, while properly mitigating chemicals and metals in the recycled water

(Schenk et al. 2008).

Reduction of Greenhouse Gas Emissions: Climate change is a topic that has

come to the forefront of many political agendas and concerns over greenhouse gasses

(GHGs), especially those emitted during transportation activities, has become a focal

point of policy discussions worldwide. When compared to gasoline, many biofuel

feedstocks provide a net reduction in GHG emissions, although no standardized metric


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currently exists for measuring emissions during biofuel production (Scharlemann and

Laurance 2008). Algae have been shown to have a significant reduction in GHG

emissions, estimated at a 36% net reduction over fossil fuel (Brune et al. 2009).

Although a recent study conducted by researchers at the University of Virginia (Clarens

et al. 2010) states that algae may, in fact, increase greenhouse gasses due to the high

requirements of CO2 and fertilizer. Many algal researchers found that the Virginia study

utilized outdated methods and references and that the basis for their lifecycle

assessment is now obsolete (ABO 2010, Baum 2010). There is currently no

standardized metric that researchers agree upon for calculating the reduction of

greenhouse gasses from any one feedstock. Some include the full life-cycle emissions

including planting, harvesting, transport, and refining of a feedstock and some only look

at the tailpipe emissions. As part of the 2007 Energy and Security Act, the

Environmental Protection Agency has undertaken a well-to-wheels life-cycle analysis

of every potential feedstock considered to be a renewable fuel (ICF 2009). The results

have not yet been released so, for now, most estimates are based on synthesizing large

amounts of published data, like I have done here. It is expected that the EPA analyses

will have a large impact on future policy decisions, subsidies and incentives.

Applied CO2 Fixation: Algae produces oil through the process of

photosynthesis wherein it intakes sunlight and CO2 and turns them into biomass. This

biomass contains ca. 30% lipids (oil which can be refined into biofuel) and 70% non-lipid

material which can be used for secondary products (see Secondary Products). This

requirement for CO2 is both a benefit and problem for algae producers in that naturally


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Figure 3. Cartoon depicting problems with energy crops competing with

food crops. Source: Washington Post Writers Group

occurring CO2 is difficult to sequester in a form that can be fed to into ponds requiring

that condensed CO2 be delivered to the production facility by an outside company. The

potential exists for flue gasses from industrial plants to be piped directly to the algal

facility where it is then sequestered and fed to the algae (Brune et al. 2009, Pulz and

Gross 2004, von Blottnitz and Curran 2007). The amount of CO2 produced by an

industrial plant compared to how much CO2 the algae needs to grow varies widely

depending on the nature of other chemicals in the plants flues and the size and method

of harvesting of the algal capture facility. For purposes of a general calculation it is safe

to say that algae require approximately 1.5 to 2 tons of CO2 for every ton of biomass,

and that one ton of algal biomass equates to roughly 100 gallons of biofuel (Bionavitas

2010, CCS 2010). Reducing CO2 emissions from industrial facilities could go a long

way to mitigating airborne pollution.


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CASE STUDY: Mexico

In 2006, rising crude prices led domestic fuel

blenders to use more corn-ethanol in gasoline

production (13). This resulted in a huge

increase in corn-prices domestically and

exported to other countries (10). Mexico

imports around 10 million tons of corn from the

United States per year. As a result, corn-prices

in Mexico doubled and tripled in some areas

leaving many Mexicans unable to afford to buy

tortillas, a basic staple of their diet, and the

source of about 40% of their protein (10, 14).

Mexicos president, Felipe Calderon, responded

to the crisis by capping tortilla prices at $0.78

per kilogram, but many shops ignored the edict

and continued to sell the tortillas at an average

of $0.06 more than the cap. This story

illustrates how the demand for ethanol for US

domestic use, has far-reaching implications

and, in some cases, can cause food prices toskyrocket. Some have argued that even

biofuels derived from non-food crops still place

a large demand on land and water resources

which could lead to higher food prices in

general (8-10). As I have demonstrated, algal

biofuel development is exempt from arable land

and freshwater use concerns.

Modified from Bettilyon (2009) Algal Aquaculture for

Biofuels

Avoidance of Arable Land Use: Biofuels have created a media backlash in

recent years in that land that would normally be used to grow food is being diverted to

energy crops (Bento 2008, Foley et

al. 2005, Galbraith 2008, Runge and

Senauer 2007, Sagar A. et al. 2000,

Sagar A. D. 2005, Sagar Ambuj D.

and Kartha 2007, Tilman et al. 2009,

Waltz 2009). For algae, this may be

the single most important factor in

weighing its long term benefits to

society. Algae are cultivated on

marginal (non-arable) land using less

fertilizers than terrestrial plants.

Unlike feedstocks such as corn and

timber, algae does not need to

displace farm land or rainforests to

be produced and in fact grows best in

areas where direct sunlight is

generally too strong for other crops.

Avoidance of arable land use has led many developing nations to investigate algae as a

feedstock that could provide not only transportation fuel, but biofuel for household use

as well (See Case Studies: Mexico, India). Displacing food crops for energy in the face


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of a rapidly growing global population has become a great concern for policy makers

and has the potential to create even more interest in using algae as a primary biofuel

feedstock under many governmental policies.

Arable Land Use Comparison

The Renewable Fuels Standard, which I will go into more detail later in this

paper, calls for a total of 21 billion gallons of non-corn-based biofuel by the year 2022.

Table 1 represents seven major feedstocks and the arable land each would require to

meet that mandate. The data are based on an average of reported figures for each

feedstock from multiple sources (Benemann 2009, Bionavitas 2010, Brune et al. 2009,

Chisti 2007, 2008, Clarens et al. 2010, EurActiv 2009, Kanes 2010, McMartin and

Noyes 2010, National Agricultural Statistics 2009, Pienkos and Darzins 2009, Schenk et

al. 2008, Tilman et al. 2009). Corn is included to give a general idea as to how that

feedstock compares with other examples. These numbers are predicated on the

USDAs 2009 report that 321 million acres of principal crop land were planted in that

CASE STUDY: India

India is facing an energy crisis that is very multi-faceted. Although they have some oil and

natural gas resources they are not enough to support the countrys burgeoning population.

Refineries in India are antiquated and cannot run at full capacity due to a constant need for

repairs. Some do not even have the ability to extract kerosene, one of the major energy

sources for household lighting. Although about 48% of India is considered to be arable

land, Indias population density based on arable land is 488.84 people/km, and has

averaged a 2% growth rate in that number since 1961 (NationMasters 2005). Furthermore,

Indias inland waterways and coastlines are highly polluted and providing clean water has

been a long-standing issue. For all of these reasons and more, India has begun to heavily

investigate the use of microalgae for transportation and household biodiesel use, as well as

flue-gas sequestration, and wastewater remediation. By the year 2050, India is projected

to be the most populous country in the world with a total population of 1.7 billion people

(CNN 2009). As India looks toward the future their researchers hope that algae will

perhaps make us self-reliant and improve our economy many folds (Khan et al. 2009).

Modified from Bettilyon (2009) Algal Aquaculture for Biofuels


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year. In my example, soy, a low-yielding feedstock, would require over 362 million

acres of land to fulfill the RFS2 mandate. This is to say that if we used soy for all 21

billion gallons of fuel required, we would have to plant almost 113% of the total US crop

land to meet the demand. Whereas algae would only require 1.3% of total US cropping

land, and thats only ifarable land, and not marginal land, was utilized.

3.3 Problems with Algae Production for Fuel

Cultivation of algae for biofuel is not without its own unique subset of problems.

Issues with funding, harvesting,economics, and commercialization are at the forefront of

challenges that algal biofuel producers and investors are facing right now.

As I have presented, there are a number of ways which algae can be cultivated using

aquaculture methods. Open Ponds present issues of potential contamination, and


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closed systems and photobioreactors experience problems with developing cost-

effective technology and infrastructure, as well as attempts to increase yield. All

methods face one very daunting challenge and that is procuring enough CO2 to feed the

algae. Costs for delivering CO2 to algal biofuel producers ranges widely based upon

the amount required and location of the facility. Estimates to build even simple, open-

pond algal biofuel facilities have been estimated at $40,000 per acre inclusive of land,

and construction costs, with an additional 20% capital cost for CO2 and operating

expenses (Benemann 2009).

Finding the correct location to build can also be an issue as algae grown in Open

Ponds tends to do best when in an area with direct, intense sunlight. These areas,

however, tend to be less populated, with reduced infrastructure (highways, etc.) and

could lead to the requirement to transport the oil some distance to the nearest refining

facility. At a recent conference, Martin Lambert, a representative for Shell Oil,

discussed the need for oil companies and biofuel developers to work together to

strategize ways that biofuel could be delivered to refining plants using the existing

network of oil pipelines.

Recent public and private funding of algal biofuel projects has helped to progress

the technology needed to bring these costs down significantly. Companies like

Sapphire Energy, Solazyme, and Algaenol each have received funding from the

Department of Energy for pilot facilities and aim to be producing algal oil at $60 - $80

per barrel by 2014 (Gardner 2008, Jaquot 2010). The general consensus among

investment and Venture Capital firms, however, is that without the large federal funding

grants that some companies have received, smaller start-up firms should look for new


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ways to decrease the amount of time it takes to be become profitable (Edwards 2008,

Kanes 2010).

At the Algae World Summit in May 2010, a panel of investors implored would-be

biofuel producers to look into more profitable algae-based products that could be

brought to market more quickly while buying that company time to work on their biofuel

producing technology. Co-products such as synthetic polymers, nutraceuticals and

animal feed were generally regarded as viable products within the algae value chain

that could be vertically integrated with a companys biofuel production process. Some

even suggested that companies apply for funding for these products to be the primary

form of profit, with biofuel being a co-product somewhere down the line. Indeed, the

remaining 70% of biomass, after the lipids have been extracted, represent huge

potential for commercialization. The following is a brief overview of the algae products

currently produced.

3.4 Potential Development Solutions for Algae Producers

Food, Nutritional, and Beauty Co-Products: Products made from algae for the

nutrition and beauty markets have been around for a very long time. Both micro and

macroalgae have been utilized as natural alternatives to chemical thickening agents and

stabilizers for in many foods (Edwards 2008, Liang et al. 2004, Pulz and Gross 2004).

Many believe that some strains of algae possess heightened nutritional benefits and

can now be found in everything from protein shakes, to frozen foods. Properly

extracted algae for use in human-food nutraceuticals can fetch as much as $10,000 per

ton (Kanes 2010); although generally required only in smaller quantities. Some algae


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Figure 5: Products made with algae.

contain high levels of Omega3, 6, & 9 which can average a price of $1,200 per ton

(Kanes 2010). Cyanotech, a

large-scale algae production

company in Kona, Hawaii,

produces a popular

nutraceutical known

generically as Astaxanthin and

has reported a Q3 2010 12%

increase over 2009 primarily

based upon its BioAstin and

Hawaiian Spirulina Pacifica

sales (Cyanotech 2010). It

should be noted that Cyanotech provided the cultivated algae to Sapphire Energy that

was used, along with a jatropha-derived biofuel, in a successful Continental Airlines

biofuel test flight in 2009 (John 2008).

Animal Feed: One of the most potentially lucrative products to be derived from

algae is animal feed for both aquatic and terrestrial uses. Just like it makes sense to

avoid the use of arable land for energy crops, so too does it figure that we should not

deplete our oceans of foraging fish for the sake of feeding carnivorous fish grown in

aquaculture environments. Algaes high Omega oil content makes it particularly

attractive to aquaculturists and dairy farmers. Currently, high protein fish food sells for

about $1300 - $1600 per ton with many millions of tons required to feed a variety of


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animals farmed for human consumption. The price per ton could soon enjoy a sizeable

nudge upward when NOAA releases its final Aquaculture plan later this year which is

expected to address the issue of the amount of fishmeal that can be used in fish food

(NOAA 2010). Aquaculture suppliers are already anticipating that fishmeal will have to

contain a much higher ratio of non fish-based feed to meet the new rules.

Developing Nations: It would be possible for investors and NGOs to fund

algae production on a village-scale basis in developing nations as part of a proof-of-

principle operation, with very real social benefits. Traditional forms of household fuel

can cause many different types of respiratory problems (Goldemberg et al. 2004, Khan

et al. 2009, Utria 2004); algal biofuels could be used as a sustainable substitute.

Reducing the amount of noxious emissions from fossil fuels could help to alleviate some

of those issues. Furthermore, small-scale production could create jobs in economically

challenged regions as well as provide practical field testing for new technological

developments. Funding for these village-scale projects could potentially be obtained

through world Development funds, federal grants, and private donors.

IV. POLICY PERSPECTIVES

Issues surrounding the continued use of fossil fuels have prompted lawmakers

world-wide to re-examine their energy needs and resources. Environmental impacts,

energy security, and economics play a large role in the development of policies

designed to face these challenges in near and long-term perspectives. New sources of

renewable energy are currently being heavily investigated by nearly every developed

and developing nation around the globe. Biofuels have the potential to alleviate some


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of the pressing concerns facing nations right now do to their ability to reduce

greenhouse gas emissions compared to fossil fuels, and be grown locally providing

energy security and green-collar jobs. The United States and the European Union are

the two most prominent actors in the biofuel policy arena and for the purposes of

providing a clear comparison this analysis of the current literature and mandates

focuses on their efforts.

4.1 US Policy and Perspectives

Following the oil crises in the early 1970s the National Renewable Energy

Laboratories began an intensive study in 1978 into the feasibility of developing algal

biofuels for transportation use (Sheehan et al. 1998). The program lasted until 1996

when it was closed-outdue to a lack of promising results with producing algal oil in

regard to the costs of scaling-up production to meet commercial demands. NREL

believed that the start-up costs of building an algal facility for commercial-scale

production would be too prohibitive when faced with producing a non-subsidized crop

that would have to directly compete with corn and cellulosic biofuel. This lack of policy

parity has continued and is only now being addressed by lobbyists from multiple biofuel

industries. Recent advances in technology has significantly reduced the costs of

cultivating and harvesting algae in recent years so much so that NREL is now revisiting

algal biofuel capabilities, though not at such an intensified level as of yet..

Corn-ethanol, already being used as a fuel additive to control carbon monoxide in

cold-weather cities like Denver, Colorado, was in a prime position to act upon Congress

newfound interest in renewable energy. In 1992, the US Congress enacted the Energy


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Policy Act which mandated that many government fleets would be required to run

partially on alternative fuel sources (Solomon B. D. et al. 2007a). Corn was in a prime

position to fill much of the requirements of that mandate as Farm Bill subsidies were

already encouraging many American farmers to grow corn crops. Furthermore, corn

ethanol was already well-studied and under production in a few Midwestern plants.

The 2004 Jobs Creation Act contained an additional incentive US corn growers

by providing a $0.51 per gallon tax credit to gasoline refiners for inclusion of ethanol.

By 2006, corn-ethanol comprised nearly 95% of all US ethanol production (Quear and

Tyner 2006, Saltone et al. 2009, Solomon B. D. et al. 2007a, Urbanchuk 2009).

While corn-ethanol did provide a path toward reducing Americas dependence on

foreign oil, the environmental benefits were beginning to come into question. The

original estimates of a 19% greenhouse gas reduction were found to have not included

the machine-intensive process of planting and harvesting the crops and that corn-

ethanol actually accounted for an increase in net carbon emissions when emissions

from cultivation were accounted for (Hill 2007, Hill et al. 2006, Pineiro et al. 2009).

In 2005, the Energy Policy Act included a provision for the development of a

Renewable Fuel Standard (RFS) which was primarily concerned with ensuring that

refiners and gasoline importers had met the percentages requested to receive the

ethanol subsidies.

By 2007, concerns over greenhouse gas reductions and land use were beginning

to make their way onto lawmakers desks. Under the Bush Administration, Congress

enacted the 2007 Energy Independence and Security Act (EISA) which modified the

Renewable Fuels Standard for transportation fuels beginning in 2008 and ramping up


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through 2022. The act mandated that US transportation fuel requirements be replaced

with 50% renewable fuels for a total of 36 billion gallons of biofuel by 2022 (Bento 2008,

Davis 2009, Environmental Protection 2007, Solomon Barry D. et al. 2007b). By 2015,

only 15 billion gallons could be corn-based ethanol, remaining at that level until 2022.

The Food Conservation and Energy Act of 2008 (FCEA) reduced the ethanol

subsidy from $0.51 to $0.45 per gallon of ethanol, although demand for corn-ethanol

remained high because of the 2007 Energy Act . However, some of the language in the

bill indicated a potential shift in policy away from favoring corn and recognizing the

potential benefits of other feedstocks. Congress requested that a research team

complete:

a comparative analysis of corn ethanol versus other

biofuels and renewable energy sources, considering cost,

energy output, and ease of implementation(110th United

States Congress 2008).

Based upon this mandate, the Interior Secretary, along with a team from the

Department of Energy and the Environmental Protection Agency, began looking into

alternative feedstocks more thoroughly to create a broader pool of eligible biofuels to

meet modifications requested to the Renewable Fuels Standard.

After receiving thousands of complaints, critiques, and suggestions during an

extended commenting period, the EPA finally announced the final rule for Renewable

Fuel Standards 2 (RFS2) in January 2010 (EPA 2010, McMartin and Noyes 2010). The

new RFS2 rules are a complex web of regulatory guidelines, but do provide for a more


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even playing field in regard to feedstock selection. The EISA divides biofuel feedstocks

into three primary categories: 1st Generation (Corn), Cellulosic (Switchgrass,

Miscanthus, etc.), and Advanced (Algae, Sugarcane, etc.). The new RFS2 standards,

which go into effect on July 1, 2010, are divided into four categories based on

greenhouse gas reductions over fossil fuels. Type A Advanced Biofuels must meet

various requirements including at least a 50% GHG reduction. Type B Biomass-Based

Diesel must meet various requirements including at least a 50% GHG reduction. Type

C Cellulosic Biofuels must meet various requirements including at least a 60% GHG

reduction. Type R Renewable fuel must meet various requirements including at least a

20% GHG reduction (McMartin and Noyes 2010).

The Final Rule published on May 10, 2010 is essentially the finalized framework

for the RFS2 policy, but there is still room for public comment. According to Mary

Rosenthal, Executive Director of the Algal Biomass Organization, algae industry

representatives are still working to revise the wording in the regulations to remove the

special section for cellulosic fuel and combine that category into Type A - Advanced

Biofuel. This change would increase the total amount of required Advanced Biofuel to

36 billion gallons in the year 2022. Increasing the amount of Advanced Biofuel required

for meeting the requirements stands to benefit all Advanced Biofuel feedstocks as the

effort to meet those demands will most likely be collaborative.

4.2 European Policy and Perspectives

Europe has taken an entirely different approach to the development of renewable

energy programs. Environmental and social concerns led Europe to begin their


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transition to renewable energy much sooner than the US. The European Commission

(EC) adopted a more holistic approach and began to look at substituting all of the

energy requirements with renewable sources, not just biofuel for transportation. The

Commission, which represents all member nations of the European Union, has primarily

dealt with the issue of renewable energy with a series of broad mandates; as opposed

to the US which tends to approach energy in a more piecemeal fashion.

Europe began on its quest to replace fossil fuels with a White Paper issued by

the European Commission in 1997 which called for 12% of each member nations

energy utilization be replaced with renewable energy. The directive laid out in the White

Paper was accepted in the 2001 Directive on the promotion of Electricity from

Renewable Energy Sources as part of its obligation to the Kyoto Protocol (EurActiv

2007).

In 2007, the EC rolled out a Renewable Energy Roadmap that dictated each

member nation should strive to replace fully 10% of their transportation fuel needs with

biofuel (CEC 2007). As a whole, each member nation was required to increase their

share of renewable energy by 5.5%, over their individual 2005 levels, by the year 2020.

A statistically based renewable credit scheme was created to enable member nations to

sell or trade their renewable credits to another member. In December 2008, the EU

Roadmap was adopted and Europe began to strive toward the 10% renewable Energy

goal, although the directive was clear that the 10% should be defined as that share of

final energy consumed in transport which is to be achieved from renewable sources as

a whole, and not from biofuels alone (Council 2009).


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This holistic approach is perhaps one reason why European biofuel producers

are looking to thermal-conversion technologies, instead of producing fungible fuels. At

the 18th Annual European Biomass Conference, organizers scrapped one full day of the

conference that they originally intended to devote to algal biomass related business due

to a lack of submitted abstracts (Personal Communication). The option of creating one

type of renewable source, such as pellets made from compressed feedstocks that can

be burned for energy, seems to be a very compelling one. This may be due to Europes

attempt to tackle renewable energy as a gestalt, instead of the more fragmented

approach favored by the United States.

Although algae still remains a good option within environmental circles for

fulfilling Europes 10% replacement mandate, the costs for creating an infrastructure for

algal biofuel are still too high. There are currently no subsidies for any energy crop,

partly due to the nature of the EU being comprised of many member nations and not

individual governments. The director of the European Biomass Association, Rafaello

Garafolo, warned that "It will never be economically viable to produce biodiesel or

bioethanol from algae biomass if we dont think about the co-products" (EurActiv 2009).

Furthermore, whereas in the United States, most political action is urged and

guided by powerful lobbying forces, Europe has a long history of responding to the

social concerns set forth by Non-Governmental Organizations (NGOs). European

NGOs originally favored renewable energy and biofuel production for their capabilities to

reduce greenhouse gas emissions (Teske et al. 2007), but recent media reports on the

increasing global food shortages have led these organizations to strongly urge the EU

to choose a different path (Cendrowicz 2008). Europe covers a geographic region that


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is primarily at higher latitudes, with cooler temperatures, and less direct sunlight than

would be considered optimal for algae production. The EU has often outsourced its

biofuel production needs to areas in Africa more favorable to biofuel crops. This is an

issue of great concern for the European NGOs. Greenpeace and the European

Renewable Energy Council have issued a report wherein they claim that biofuels will

take a 6% share of transportation in India and a 7% share in Asia by the year 2050.

This share, combined with electricity from renewable sources will significantly reduce

the amount of CO2 released into the atmosphere in developing nations (Teske 2008).

V. CONCLUSION

As I have presented, algal biofuel has the potential to alleviate many of the

worlds transportation energy concerns. The ability for algae to be cultivated on

marginal (non-arable) land, using saltwater, greatly reduces its impact on the

environment relative to other biofuels and fossil fuels. Moreover, algaes cultivation

does not require that it compete with food crops, a social benefit that may be

underestimated by many lawmakers. Algaes high-yield and reduced greenhouse gas

emissions make it a good candidate for reducing transportation related pollution.

However, the current economic climate makes development of algal programs quite

costly. Without the benefit of the subsidies that other feedstocks such as timber and

corn enjoy, algal producers must be able to scale-up production while still remaining

economically competitive with other biofuels and fossil fuels. In that light, policy makers

and investors should look for opportunities to match the currently available scale of

production to existing markets for algal fuel, in order to achieve small scale


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commercialization in the near term while working on long-term innovations in scale. For

algae to be truly competitive, it should receive its own share of the subsidies currently

only allocated to feedstocks whose industries have long been subsidized as a whole.

Moreover, producing algal fuel as a co-product to more lucrative products such as

animal feed and nutraceuticals is a highly feasible way to continue biofuel development

while remaining commercially competitive. Another option is to combine biofuel

production subsidies with economic aid to developing countries by sponsoring village-

scale fuel production projects in India. The political interest in developing algal fuel is

still high, but clearly algal biofuel producers must prove that they can operate at a much

higher capacity, with lower production costs, than what currently exists, while remaining

commercially viable entities.

Developing and maintaining close relationships with American and European

NGOs could greatly aid in giving algae a more even playing field in the biofuel market.

This should not be done merely for the sake of profit, but as an undertaking dedicated to

bringing the world a truly remarkable renewable energy source that could revolutionize

global energy consumption and mitigate the very real issues surrounding climate

change for future generations.


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ACKNOWLEDGEMENTS

I thank Dr. B. Greg Mitchell, Dr. Steve Kay, and Ben Gilbert for their guidance

and support on this paper and for graciously serving as members of my Capstone

Committee; Dick Norris, Russ Chapman, and Jane Weinzierl for their steadfast

dedication to the students of CMBC; and Tom Driscoll for everything. This project was

funded in part by the Center for Marine Biodiversity and Conservation.


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