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?)

Of 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.

Yesterday, I interviewed Robert Do, president and CEO of The Solena Group, which is a Washington, DC-based bioenergy company. (Read my article here.)

On 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.

Solena’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.

Solena 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.

Do 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.

For 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.

Even 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?

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4 Responses to Biofuel plant launches for USAF customer, but economic concerns linger

  1. Will Baird 13 March, 2008 at 5:24 pm #

    Algae’s not a plant. It has traits in common with plants, but itself is not one. I’d recommend one of the latest cladistic trees of life to dig further.

    Do you think that OPEC will actually be effective in killing the biofuel development? There’s a lot of work coming out of the biotech/synthetic biology groups that have the potential to drop their production costs much, much lower than needing the $100/barrel prices.

  2. Mark Brueschke 15 March, 2008 at 8:10 am #

    Algae are kind of plants. They predate plants as we think of them, Algae don’t have leaves, or roots, nor cell walls (most of the time), but they do get their energy from photosynthesis. Some algae do take in carbon for energy

    They transcend alot of our assumptions about plants because they are so primitive, like corals and lichens.

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