Biofuel plant launches for USAF customer, but economic concerns linger

Biofuel plant launches for USAF customer, but economic concerns linger

I seem to be writing a story about algae on a monthly basis now, and I still think that's weird for an aerospace journalist. (Question: What is algae precisely? Wikipedia classifies it as a \"plant-like\" organism. Any biology majors here know what that means? Is it a plant or not?)\n\nOf course the reason for my recent algae obsession is simple. The US Air Force and airlines want alternatives to petroleum. Algae consumes carbon dioxide and produces oil in potentially feasible quanitites for the aviation industry. Thus, it is one of the leading feedstock candidates for the blossoming demand for biofuel.\n\nYesterday, I interviewed Robert Do, president and CEO of The Solena Group, which is a Washington, DC-based bioenergy company. (Read my article here.)\n\nOn March 7, Solena announced that it is developing one of the world's first biofuel production plants to open in California in 2011. The US Air Force is in price negotiations with Solena for a five-year offtake deal, as are multiple airlines, he says.\n\nSolena's feedstock for the biofuel is the roughly 10,000 tons of urban waste produced every day by the good citizens of San Francisco and Sacremento. \n\nSolena will use about one-tenth of that output per day to produce about 1,800 barrels of biofuel of aviation, although I won't bore you with the details of the production process. Solena eventually plans to open a more efficient factory that harvests algae to produce oil, but the technology for algae isn't ready yet, he says.\n\nDo was very honest with me about some of his concerns. Harvesting biofuel is not really a technical challenge, but he is concerned about the economics. \n\nFor example, Do's current business model depends on two financial assumptions: 1) the US Congress will extend tax credits for biofuel producers currently set to expire in 2008, and 2) OPEC keeps the price of oil at current market rates, which, as you may have heard, are surging past \$100 per barrel.\n\nEven if Congress comes through on the tax credits, OPEC's next move may not be so reliable. I wonder if all OPEC needs to do to crush the biofuel movement is to summarily reduce oil prices to pre-Katrina levels. It's happened before, but could it happen again?