Leaders of the Advanced Biofuels Assn., the Biotechnology Industry Organization and Algal Biomass Organization recently met with representatives of the Obama Admin. to emphasize the vital role the advanced biofuels industry plays in achieving America’s energy security, while strengthening the nation’s economy by creating new jobs.

The three groups, which represent more than 100 advanced biofuels, renewable chemicals and bio-based product member companies, delivered a letter to President Obama, thanking him for his “commitment to developing secure, sustainable, domestic alternatives to imported petroleum,” the ABO says on its website.

One of the most promising alternative fuels is derived from algae. However, the development of cost-competitive algae biofuels production will require more long-term research, development and demonstration, says a new report from the Energy Biosciences Institute in Berkeley, CA.

Researchers Nigel Quinn and Tryg Lundquist of Lawrence Berkeley National Laboratory (Berkeley Lab), which is a partner in the BP plc-funded EBI, reach this conclusion after a detailed techno-economic analysis of algae biofuels production.

The project is one of the more than 70 studies on bioenergy being pursued by the EBI.

“Even with relatively favorable and forward-looking process assumptions (from cultivation to harvesting to processing), algae oil production with microalgae cultures will be expensive and, at least in the near- to-mid-term, will require additional income streams to be economically viable,” the report says.

The EBI scientists say algae oil production will be neither quick nor plentiful. “Ten years is a reasonable projection to allow a conclusion about the ability to achieve – at least for specific locations – relatively low-cost algal biomass and oil production.”

While more than 100 companies in the U.S. and abroad are working to produce algae biomass and oil for transportation fuels, most are small and none have operated a pilot plant with multiple acres of algae-production systems, the report notes.

However, several companies recently have initiated scale-up projects, including major oil companies such as ExxonMobil Corp.,which a year ago announced a $600 million commitment to algae biofuels technology; Royal Dutch Shell plc and HR BioPetroleum Inc.,with a joint venture project in Hawaii and Eni SpA, an Italian oil company with a pre-pilot plant in Sicily.

The U.S. Department of Energy has funded several research and development consortia and pilot programs, including one 300-acre (121-ha) demonstration project in New Mexico by Sapphire Energy Inc.

In the U.K., the Carbon Trust has initiated a 10-year effort to develop algae oil production, engaging a dozen universities and research laboratories, while the European Union recently funded three 25-acre (10-ha) pilot projects.

Most of these programs hope to show it is possible to mass culture algae with current or near-term technology within the technical and economic constraints required for biofuels production.

Once the technologies are developed, global resource availability will be a major controller of algae production, the report states.

Four key resources: suitable climate, water, flat land and carbon dioxide, must all be available in one location for optimal algal biomass production. Despite these requirements, algal oil production technology has the potential to produce several billion gallons of renewable fuel in the U.S. annually.

However, the report cautions that achieving this goal, particularly at competitive capital and operating costs, will require further R&D in both biology and engineering.

Despite the well-known rapid growth rate of algae, increasing the volume of algae oil produced per unit of surface area per year is a crucial goal. Oil-rich algae strains that are biologically competitive with contaminating wild species and that consistently grow well in various climates are needed.

Other key steps to be improved are low-cost harvesting of microscopic algae cells and the extraction of their oil content, as well as dealing with the biomass residue remaining after oil extraction.

The report's analysis includes five hypothetical facilities for algae-pond biofuels production, four of them 250 acres (101 ha) in size and one 1,000 acres (405 ha). All used municipal wastewater as the source of both water and nutrients, with some emphasizing production of oil, while others have wastewater treatment as their main priorities.

Biofuels products included either biogas and oil or just biogas production, with the biogas used for electricity generation.

The conceptual location chosen in the report was Southern California’s Imperial Valley, where the only major microalgae farms in the continental U.S. are located. In several scenarios, productivity peaks in the summer months but is essentially nil in the coldest winter months, with light and temperature being the main limiting factors.

Engineering designs and cost analysis for the various cases were based on projecting current commercial microalgae production and wastewater treatment processes at much larger scales. They assumed higher productivities due to plausible technological advances.

The estimated capital costs for a 250-acre biofuels-production system emphasizing oil production were about $21 million, with annual operating costs at some $1.5 million, to produce about 12,300 barrels of oil, giving a break-even price per barrel of oil of $330 (based on an 8% capital charge).

Increasing the scale of the system to 1,000 acres reduced the break-even price to about $240 a barrel. These prices considered wastewater treatment credits, which reduced costs about 20%.

Other facilities that maximized wastewater treatment produced fuel at lower cost due to greater treatment revenue. However, the availability of wastewater would greatly limit the national scale of this lower-cost fuel production.

The report says other co-products, specifically animal feeds, could help offset costs, but these products are of relatively low value or have limited markets.

“Wastewater treatment is the only realistic co-product for (algae) biofuels production," the report concludes. “Only through intensive, continuous, large-scale research with outdoor ponds can we hope to progress in a reasonable timeframe.”