Algalbiobränsle: Den nästa energirevolutionen?

Koldioxidneutral bränsle

To reduce carbon emissions, the favored road has been to replace combustion engines and thermal power plants with alternatives like EVs and förnybara energies. But this is not always easy.

For example, airplanes have, for now, no realistic pathway to run on electric power, as batteries are too heavy to fly. And even if we finally reach this point, it will take decades for the existing fleet to be renewed.

Other advantages stem from the practicality of liquid fuels. They are easy to store in massive volumes for emergencies. They can stay stable for months or even years. And they are easy to carry by tanker or pipes. This makes them ideal for remote locations, military uses, and shipping.

Until some revolutionary new technology emerges, there will be a persistent demand for liquid fuel. So, the challenge is finding liquid fuels which are not reliant on the supply of fossil fuels.

Biobränslegenerationer

This was the reason for the push toward the use of biofuel.

1^st generation biofuels var och är fortfarande problematiska, eftersom de bygger på att omvandla livsmedelsprodukter som majs till etanol. Detta lägger extra press på miljön och förlitar sig på enorma industriella jordbruk som praktiserar monokultur. När man beaktar de fossila bränslen som används för gödselmedel och traktorer, kan de vara knappt bättre än vanlig bensin. Och det finns det etiska dilemmat att använda mat för att producera bränsle, där bränsleförbrukarna bor i rika länder medan fattigare länder lider av matbrist eller inflation.

2^nd generation biofuels är utformade för att använda restprodukter från jordbruket eller andra växter som gräs för att producera bränslen. Detta är redan bättre, eftersom det inte konkurrerar direkt med livsmedelsproduktion. Men det kräver fortfarande mycket mark, och omvandlingen från växt till bränsle kan vara ganska ineffektiv. Dessutom är bara jordbruksavfall inte i tillräckligt stor volym för att göra en verklig skillnad i den totala bränsleförbrukningen.

3rd Generation biofuels förlitar sig på alger och ett slutet system oberoende av odlingsbar mark. Teoretiskt sett bör detta vara det perfekta sättet att producera biobränsle, eftersom det inte konkurrerar med befintliga jordbruksresurser. Det kan också använda rikligt havsvatten istället för tidigare sötvatten.

Källa: Exxon

In practice, algae biofuel has been tested but not produced on an industrial scale.

Det finns till och med diskussion om 4^th generation biofuels, eller “fotobiologiska solbränslen”. De skulle förlita sig på att efterlikna algers fotosyntes med artificiella nanoteknologier. Men dessa är fortfarande i laboratorier och kommer inte att nå kommersiell skala på några decennier.

Hinder och begränsningar för massproduktion

The problem plaguing 3rd generation of biofuels has always been yield. Algae concentration is too small, production costs are too high, and conversion into fuel is both capital expenditure and loss of some of the energy contained in the algae.

Any contamination by other organisms could also destroy a harvest and reduce profits. An alternative was to grow it in closed sterile containers, but this raised costs as well.

In addition, the first tentative of algae biofuel production in the 2010s required algae harvesting, a complicated process that also interrupted the production.

The consequence has a production cost staying above $5 to $8 per gallon, making it not competitive against fossil fuels.

Andra gången blir det rätt?

Due to elusive profitability, the first algal biofuel boom in 2009-2010 did not turn into an energy revolution. Du kan läsa mer om vad som gick fel i den här artikeln från 6 år sedan.

Since then, progresses have been made that are “fueling” a new boom in the sector:

• Avancerade genetiska ingenjörstekniker är nu tillämpbara på alger.
• Bättre förståelse för hur alger omvandlas till bränsle.
• Upptäckt av sällsynta arter som kan motstå föroreningar och odlas i öppna dammar.

Another factor is the de-facto end of cheap oil. Shale oil needs at least a barrel at $50-70$ to make a profit, oil discoveries are at their lowest since 1946, and the war in Ukraine has triggered a global energy crisis.

With oil getting rarer and more expensive, domestic algal biofuel production is suddenly a lot more attractive. So, a new wave of algae companies is now scaling up to produce carbon-neutral fuel in the most environmentally friendly way. (more on that in the “Investing in algal biofuel” section)

Driva den nya algerboomen

Beyond technology and fuel price, what has changed is how to invest in algal biofuels. The last boom was driven by an army of ambitious startups with limited funding. This was a problem in a business requiring not only innovation but also a massive capital investment. In all likelihood, algae biofuel will become a real thing only through a successive process:

1. Fundamental sciences for att förstå biokemin och genetiken hos mikroalger.
2. Urval och ingenjörskonst av rätt algstam optimerad för lipidproduktion.
3. Optimering av produktionsprocessen, inklusive odling, skörd och omvandling till bränsle.
4. Skalning av produktionen för att minska kostnaderna

In 2010, steps 1 & 2 were not really there, with no reliable method for modifying algae genetics, for example (including no full genome sequenced for most species).

The chemistry of conversion into fuel was hazy at best, especially on an industrial scale. And a misguided focus on ethanol production instead of lipid proved a dead end.

Step 3 also proved difficult, with scientist-led startups often failing to implement industrial design.

Finally, with low production yields, no amount of scaling up could solve the profitability issue, and capital quickly dried out.

Investering i algebiobränsle

In 2023, the scientific questions have been solved in large part. For example, The company Viridos discovered how to more than double the concentration of lipids in algae by changing just one gene. For that matter, tools developed in the last 5 years, like NGS (Next Generation Sequencing) and CRISPR, also made gene editing so much easier and cheaper. Similarly, there are now many well-understood methods to turn algal lipids into fuels.

The last thing is that while the fundamental research is often done by focused startups, the money and industrial scaling-up now come from very large companies. Often old-school oil companies.

As a result, investing in algal biofuel means investing in the few big companies that are building a future where they grow carbon-neutral oil instead of drilling for fossil fuels. This might not be good for dreams of 100x gains. But they should nevertheless be good investments, as these few large corporations will be the only energy companies with the unique IP to manage the energy transition without competing with every other renewable energy. They are also already profitable companies giving away generous dividends or growing aggressively.

1. Exxon Mobil

This is maybe the most surprising name on the list of possible biofuel investments. Exxon is something of a nemesis for environmental activists, regularly accused of being a major contributor to global warming. But it is also the world leader in algal biofuel through its collaboration with Viridos.

(XOM )

Viridos is a company founded by Craig Venter, the father of synthetic biology and among the first to sequence the human genome. It was also the first to create a synthetic genome and an artificial/synthetic cell.  And they have come a long way since they started researching algal biofuel more than a decade ago:

We have already demonstrated a 5-10x improvement in bio-oil productivity over natural strains in an outdoor real-world setting. And we plan to improve well beyond that.

Exxon is planning to produce 10,000 barrels of algal biofuel a day in 2 years. It is still small compared to the total of 3.7 million barrels per day produced by the company, but if successful, it could be ramped up quickly to represent a large part of the company’s production by 2030.

2. Reliance Industry

Reliance Industry is a massive Indian conglomerate, the largest private company in the country, active in telecom, textiles, and energy. In 2022, it was the first Indian company ever to reach $100B in revenues.

Reliance has released a video announcing its entry into the algal biofuel market, boasting “one of the largest algae cultivation systems in the world”. Until now, its energy portfolio was mostly refinery and petrochemical plants. With this alge

Crowdfunding & VC

We could not find an ongoing campaign at the time of this article. But it is something investors with more risk appetite will want to look out for, like the successful 2021 crowdfunding campaign for Manta Biofuel. They are using open ponds and magnetic nanoparticles to harvest the algae.

Accredited investors and VCs will also have access to a much more diverse array of investing options. For example, Primary Ocean, growing seaweeds for food, bioplastics, and biofuels. Or Algenol (chemical cosmetic and biofuels) or Gevo (diverse biofuels).

Slutsats

Algal biofuels have been undergoing a silent renaissance behind the closed door of megacorporations with deep enough pockets and the patience to solve the problems of costs and scalability. The emergence of large-scale projects like the Exxon 10,000 barrels/day is a sign that algal biofuel is now becoming a mature technology.

This also means that new startups will likely emerge in the field, as Manta Biofuel did in 2021. So, investors should have a growing array of investment options in the next few years. Other oil companies might also look to catch up and bid up for any company with the technology to help. Most likely, this will be companies already producing high-value compounds from algae and experienced in large-scale production. So algae companies, in general could become the new big trend by 2025-2026

Investors in companies like Reliance or Exxon might not want to invest in these companies solely on the algal biofuel thesis, as they are going to be, for still a few years, mostly reliant on other income streams. However, this technology will improve the long-term prospect of these companies, as an oil giant like Exxon will be able to smoothly transition from fossil fuels to algal fuels by simply redirecting its capex from drilling to building algae-growing pounds.

In the case of rising carbon taxes, this will also provide a viable alternative to keep liquid fuels at a reasonable price, making algal biofuels a lot more profitable in that scenario. And contrary to fossil fuel, costs are expected to decrease with constant improvements in the genetic engineering of algae.