While it may be one of the earth’s oldest organisms, algae are demonstrating the potential for new tricks in tomorrow’s energy supply.

And those new capabilities may help bring a renewable component to multiple markets. Algae can potentially meet a variety of needs from biofuels production to mitigating carbon dioxide, to purifying water, to creating building blocks for products like plastics and household cleaners.

OriginOil CEO and founder Riggs Eckelberry said that for companies striving to increase efficiencies and production, “the key is to get started.”

Today’s algae producers have done just that. They are ramping up to expand production capacity from thousands of gallons per acre per year to tens of thousands of gallons per acre per year.

Why algae?

Growing demand for renewable energy and the opportunity to find a useful application for industrial carbon dioxide have both expanded interest in farming algae.

Al Darzins, Ph.D. and Principal Group Manager at the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), explains that studying algae and related applications are not new ideas. NREL, for example, has been researching algae for nearly three decades. Studies on algae were conducted through the Aquatic Species Program from 1976, when rising costs at the pump generated a push for renewable fuels research, until 1996, when funding for the program ended.

Darzins said that NREL’s past research and today’s renewed interest in domestic biofuels provide a platform for new research and a more refined understanding of the value of energy independence. NREL is just one of many entities diving into the potential of algal fuels to pin down the most efficient and effective processes.

Tim Zenk, Vice President Corporate Affairs for Sapphire Energy, pointed out that the current biofuels industry has helped open the door to algae research. “The algae industry is still relatively young, and the ethanol industry has done so much over the last three decades to raise the awareness of the biofuel industry as a whole,” Zenk said.

That awareness, interest, and investment is driving the growth behind biofuels from algae. According to the 2009 publication “Algae 2020: Biofuels Markets and Commercialization Outlook” from Emerging Markets Online, the year 2008 witnessed more than 0 million dollars in investment and commitments to algae-production-based public private partnerships, private algae companies, and first-stage commercial projects.

That investment in algae-based fuel includes a roster of big names including Exxon, BP, Chevron, and DOW Chemical. Such investment from oil companies would indicate a drive to diversify supply as oil becomes more difficult and expensive to find. For chemical companies, interest lies in creating product lines enhanced or replaced by algal co-products or in assigning a green role for industrial carbon dioxide.

Airlines and trucking fleets are taking notice of algae, too. In January 2009, Continental Airlines became the first U.S. carrier to test algae-based fuel. The 90-minute test flight used traditional jet fuel in its number one engine and a 50 percent blend of algae-based biofuel in its number two engine.

National Algae Association Executive Director Barry Cohen said that the actions taken by the airlines and trucking fleets demonstrate that they want to become self-sustainable. And they’re not the only ones, based on algae’s wide variety of applications and potential products.

“ Algae oil can be made into biodiesel, it can be made into ethanol, it can be made into jet fuel, and it can be made into resins for bioplastics ,” Cohen said.

The National Algae Association is a non-profit organization representing algae researchers, producers, and entrepreneurs that is focused on growing the algae-based fuels industry and related co-products for national security and green jobs.

Researching production

A major goal of the growing renewable fuels industry is merging ethanol production from a variety of feedstocks, ranging from starch to cellulose to those of a new generation. Several companies are demonstrating that the next generation also includes algae.

In addition to biofuel, algae production can potentially result in nutraceuticals, pharmaceuticals, animal feed, soil amendments, power production, and more. An advantage of algae as a feedstock is that it can be grown all year. If the climate is right for the algae strain, the growing season is continuous.

Just as there is an array of algae strains, there is a variety of algae production, harvest, and extraction processes. The selection and application of production processes depend on the available water, the type of algae, the form of light, the intended main product, and the integrity of the downstream product.

Renewable oil production company Solazyme feeds sugars to algae to produce oil without the use of light. Sapphire Energy turns algae into green-colored crude oil for renewable diesel, gasoline, and jet fuel.

Eckelberry explained that OriginOil’s process can be divided into three steps, taking algae from sludge to solution. First, algae must be grown, either in enclosed tanks called bioreactors or ponds that can be open or closed. Second, oil is extracted from the algal cells. Third, the oil must be separated from the “green mass” and the water in which it grew.

One of algae’s advantages is its tremendously rapid growth cycle. Some strains may double their mass several times per day. For example, Eckelberry said his company harvests 10 to 15 percent of a one-million-gallon tank in one day. This means it takes only 7 to 10 days to produce an entire crop. After harvesting the product, oil is extracted from the cells for later use as a transportation fuel.

The company is experimenting with the geometry of the bioreactors, lighting, harvesting and extraction strategies, and where the optimal application of this technology may be located. Eckelberry sees opportunity for growth through entrepreneurs prepared to produce a private fuel supply or in coordination with wastewater treatment facilities.

Water treatment is a focus area for many algae producers because algae can grow in salt, fresh, or even in polluted waters. “Algae has no problem processing brackish or salt water,” Eckelberry said. “It can be use water crops can’t use.” As a result, his company is bullish on potential relationships with wastewater treatment plants.

Algenol CEO Paul Woods explains that, while the basis for his company’s algae production is saltwater, he sees the potential for improving water quality from many sources. “Now, in Florida, it is the time to make an exception to the rule and be a benefit to polluted water,” he said. “We want to be a significant provider of freshwater.”

In particular, Woods said Algenol intends to be a net provider of fresh water, producing one gallon of treated water for every gallon of ethanol created.

Algenol uses a one-step process that combines the growth, harvesting, and extraction. Woods says they use strains of blue-green algae, known as cyanobacteria, to transform industrial CO2 and sunlight into sugars. The algae grow in a bioreactor that he likens to a huge bottle turned on its side. As sugars are created, ethanol and moisture are sweated by the cells and evaporate into the headspace of the sealed plastic containers. There, the water condensates and the ethanol remains. Evaporating the ethanol and moisture establishes parallels to traditional ethanol production practices currently in place.

Growing the fuel supply, algae and biofuels

To meet the goal of significantly contributing to domestic energy supplies, algae-based fuels must be inexpensive and grow rapidly to compete with oil, gas, and coal. Despite significant research investment, algae-based fuels, of any kind, remain expensive.

“ The techno-economics of this whole process is going to be absolutely critical ,” said NREL’s Darzins. Specifically, the question is whether the fuel can be produced in a cost-effective way that makes it competitive with oil.

Eckelberry agrees and pointed out that more expensive petroleum and less expensive algae fuel will set up the dynamics for this energy marriage. Right now, he said, the energy and cost inputs are extensive.

Genet Garamendi, Vice President / Corporate Communications for Solazyme, said that his company is on target to be at fuel economics for a barrel of oil in 24 to 36 months. “We are rapidly moving toward commercialization and are focused on continuing to drive the cost out of production,” Garamendi said.

“For algae to be viable on a global scale in the short run, capital investments and government support in the form of incentives are needed, just as incentives have been provided to fossil crude oil producers over the last 50 years,” added Tim Zenk of Sapphire.

David Haberman, President of renewable energy finance business IF, LLC, believes algae-based fuels “will be positioned to address national transportation requirements when large-scale algae cultivation is achieved.” The timing of that depends on addressing issues including the scale of financing available and risk management.

Applying the concept

According to Darzins, oil or biodiesel production from algae may be the first commercial application of algae-based fuel because “there is a greater likelihood of success on a larger scale to go into an industry with existing infrastructure.”

This approach is exactly what Solazyme has planned for its final product. Garamendi said that Solazyme’s technology “is designed to fit into existing fuel infrastructure at nearly every step of the process.” In addition to fuel, the company also makes edible oils.

The idea is that, because oil is the addition to the fuel supply, it can more easily assimilate to current fuel production already in place. The question remains whether current federal standards and state incentives will be extended to include algae-based fuels.

At press time, legislation had been introduced by U.S. Representative Brian Bilbray (R-CA) to expand the Renewable Fuel Standard (RFS) definitions to include algae-based biofuel and to extend the cellulosic ethanol production tax credit to include algae-based biofuel producers.

Uniting the goals of algae-based biofuels with those traditional biofuels is important for meeting the fuel needs of consumers. Eckelberry recognizes the role of algae-based biofuel production is to complement traditional ethanol and biodiesel production.

“ There’s been a lot of brick and mortar put into ethanol, and it can’t just go away ,” Eckelberry said, emphasizing that synergy among biofuels producers is key.

According to Cohen, algae production is “one solution to help get the U.S. off foreign oil, become energy independent, and create new green jobs.”

Zenk believes new areas of the country can benefit from these “green jobs,” rural areas where they didn’t previously exist because of poor land quality and limited freshwater resources. “Algae has the potential to recitalize those areas of the country that are most in need of jobs that can sustain them for the long run,” Zenk said.

The investment, the research, and the interest all point to a growing desire to understand more about algae’s potential for commercial scale and the role its production can play in establishing domestic energy supplies. Algenol CEO Paul Woods believes that algae producers will be “a very important part of the future.”