HK firm plans US$50m algae biofuel study

PUBLISHED : Sunday, 02 January, 2011, 12:00am
UPDATED : Sunday, 02 January, 2011, 12:00am

A Hong Kong company is trying to unlock the clean-energy potential of algae - a dream of a renewable energy source that, besides easing the world's reliance on petrol, might reduce the amount of carbon dioxide in the atmosphere.

World Wide Carbon Credits (WWCC) is not the first to see the water plants as a possible solution to greenhouse gas emissions and energy security.

But it has backed its belief by funding a research project at Australia's Flinders University that, the company says, has succeeded in genetically tailoring a strain of algae to produce a class of hydrocarbons similar in structure to crude oil.

The company aims to raise up to US$50 million by selling a mutual fund to private investors to finance further research and build a factory to enable the commercialisation of its algae biofuel project.

The company claims to have modified a strain of algae called Botryococcus Braunii so that it can produce crude oil that can be turned into fuel using existing refineries.

'Most of the projects out there produce low-grade biofuel and require massive infrastructure investment, which is not cost effective,' said WWCC spokesman Mark Bayoud. 'Ours is a plug-in solution providing high-grade fuel that can be made by existing infrastructure.'

WWCC technical director Steven Hensen said each tonne of algae biofuel used up five tonnes of carbon dioxide as it was produced. One tonne of carbon dioxide was released when the fuel was burnt. The result: a net four-tonne reduction of the greenhouse gas that most scientists blame for global warming.

The company says the process also produces squalene, an oil compound used as a skin moisturiser and health supplement. It's obtained mainly from shark liver oil, although increasingly from plants like rice bran, amaranth seed and olives because of concerns over excessive shark hunting. WWCC has filed for patents in 150 nations, Bayoud said.

But WWCC - wholly owned by the family of John Kortum, director of New Zealand-based financial services provider General Equity Building Society - has plenty of competitors.

'There are hundreds of companies, small and large, and research teams, many from very good universities, who are all now working on this topic of algae biofuels and are making all kinds of claims about breakthroughs,' said one algae biofuel expert, who asked not to be named because of a potential conflict of interest.

He said WWCC's claims should be taken with a grain of salt. He noted that neither the company nor Flinders had published findings in academic journals, and: 'Publishing a paper in some journal is not proof of reality - producing some data on actual outdoor production would be a good start.'

WWCC itself acknowledged in a fund-raising document that its project is 'speculative' and a suitable investment only for those prepared to lose all their money. It said some directors of WWCC are also directors of the mutual fund's promoter and investment manager, which together can earn up to 8.5 per cent of the amount of funds raised, regardless of the project's result.

Anyone seeking to turn algae into a practical source of energy - and there have been many, dating back to rooftop experiments at the Massachusetts Institute of Technology in the 1950s - faces daunting challenges.

'Algae oil production will be neither quick nor plentiful,' said a University of California-based report released in October. 'Ten years is a reasonable projection for the research and development to allow a conclusion about the ability to achieve relatively low-cost algae biomass and oil production ...'

The University of California researchers concluded that major advances in technology would be needed before biofuels could be produced cheaply enough to compete with fossil fuels. They also raised questions about algae fuel's vaunted capacity to reduce carbon dioxide. Because algae farms need to be near power plants to reduce carbon dioxide transportation costs and because there was a limited supply of land, water and favourable climates, only a fraction of 1 per cent of US coal-fired power plants' carbon dioxide could realistically be absorbed by algae biofuel farms, the report said.

John Benemann, who has researched algae-based biofuels since the early 1970s and has led several US Department of Energy projects, said the algae industry is still a nutritional products industry churning out high-value food supplements and animal feed that sells for up to US$100,000 a ton.

For algae biofuel to be commercialised independently, production costs would have to come down substantially.

Despite the challenges, the allure of algae has intrigued many companies and researchers.

Algae can theoretically produce 10 to 100 times more oil per hectare than non-food biofuel crops, according to an article last year in the Journal of the Royal Society.

International oil firms are in the hunt. ExxonMobil last year announced an investment of US$600 million with biotechnology firm Synthetic Genomics to research changing the genetic code of some algae to make their oil easier to extract.

Royal Dutch/Shell, Toyota Motor, British government-funded Carbon Trust, billionaire Bill Gates and the Rockefeller family's venture capital firm Venrock Associates are also backing algae biofuel research.

Despite all this, no pilot plants of significant scale are operating.

Big potential

Algae has the potential to generate more energy per hectare than any other non-food biofuel, by a factor of: 100