Ethanol, and to a lesser extent biodiesel, have been the only biofuels products of note to be offered thus far. Why? For the simple reason that the technology already existed to make these products at a cost that allowed for commercialization without too large a subsidy. But, if one thinks about the ideal biofuel process, there is a much more attractive option being pursued at a number of early-stage biofuels developers.

Imagine a process that converts carbon dioxide–a greenhouse gas!–into a biofuel while growing in a pond or in sea water. This would be biofuels nirvana, and it may not be too far from becoming a reality.

Here are a few companies to watch.

Aurora Biofuels is using a genetically modified algae developed at the University of California at Berkeley to efficiently produce biodiesel using CO2 as the feedstock. The Aurora claims the technology can create biodiesel fuel competitive with $50 per barrel oil.

Synthetic Genomics approach does not use algae, but rather, specially created micro-organisms that are built by redesigning the genome almost form scratch. The ultimate goal is the conversion of carbon dioxide into fuels or commodity chemicals using energy from the sun to drive the process. Craig Venter, of genome-sequencing fame, leads this effort with up to $300 million in funding form Exxon Mobil. That kind of financial support gives Synthetic Genomics a good shot at success.

Solazyme was named the Biofuels Digest “Company of the Year,” ranking number one on their list of the 50 Hottest Biofuels Companies. Solazyme has also announced a near-term focus on launching food products produced by algae, with a food oil similar to olive oil as a lead product. This probably stands a better chance of  near-term commercialization since the prices are about 25 times higher than for a fuel. The hope appears to be that cash flow from a large-volume food product will help fund even larger-volume fuel production.

Sapphire Energy is developing a product the company calls Green Crude. The product is green because it is produced by algae from sunlight and carbon dioxide. If successful, Sapphire’s crude product will be refineable into the three most important fuels in use today: gasoline, diesel, and jet fuel. With more than 100 employees and blue chip venture capital support, Sapphire bears watching.

Compared to bio-ethanol companies, algae companies have been lurking in the shadows, but they may be about ready to pounce.

Biofuels Digest released its 50 Hottest Biofuels Companies for this year and Solazyme is number 1, now well-established as a leader in the use of algae to produce biofuels. Read our  profile of Solazyme from March 22, 2009 here.

Algae has garnered a lot of attention as a biofuels source, but a big economic hurdle is collecting the oil-rich algae from ponds in which they are grown so that they can be processed to extract the fuel. LiveFuels has a novel approach to that problem: have fish eat the algae and recover and process the fish. The tag-line: biomass concentration as nature intended it. One algae expert called this approach “not impossible.” I also find it not unlikely that no funding will not be found from investors who are not unbelieving this not impossible approach.

Solazyme, which until now has positioned itself as a producer of biofuels from algae, has just announced a shift in focus to produce food oils. The company believes it can have products on the market in 2010.  According to chief technology officer Harrison Dillon, the decision to diversify into food products came about by almost by accident when scientists at the company discovered their algae could excrete oils that were similar to olive oil. Olive oil has a market price about 25 times higher than fuel; I’ll bet that also played a role in the decision.

The cover story in the October 19, 2009 Wall Street Journal names 5 technologies that could, if successful, radically change the world energy picture, and next generation biofuels from algae is one of them. I would broaden the category to include designer microorganisms of the type being developed by Synthetic Genomics, but in general, I agree. Converting carbon dioxide into fuels using energy from the sun to drive the process would be a game-changer. Let’s hope it works out.

Exxon Mobil, which has avoided the biofuels frenzy so far, has finally made its entrance, and it is a grand one.  The oil giant has announced a $300 million investment to develop algae as a producer of hydrocarbons, which could then be processed in existing refineries. Exxon Mobil’s partner is notable as well–Craig Venter’s Synthetic Genomics. If all goes well, Venter’s company will engineer carbon dioxide-utilizing algae to produce and–the key step–then secrete the hydrocarbons to eliminate the need for isolating and breaking the cells. It is an ambitious goal, and if successful, a commercial home run.

GreenFuel Technologies Corporation, which planned to convert CO2 from smokestacks into fuel using algae, announced it is closing and put its assets up for sale. This is after spending more than $70 million in venture funding. I like this lead sentence from its web site announcing the offering of assets: “After leading the algae clean tech industry for the past 8 years …“. Leading the industry where?

I will be interested to see if this claim actually proves to have substance behind it. OriginOil, a California-based algae biofuels company, reports that it has patented techbnolyg that solves the previously difficult problem of extracting oil from algae economically. he company said that its patent-pending process does not require chemicals or significant capital expenditure for heavy machinery, and no initial dewatering is required. According to the company, its technology combines electromagnetism and pH modification to break down cell walls, releasing algal oil within the cells. The oil rises to the top for skimming and refining, while the remaining biomass settles to the bottom for further processing as fuel and other valuable products. The technology will be showcased next week at the National Algae Association meeting in Houston.

For a self-described “more sober” look at algae-based biofuels production, read this assessment in Biodiesel Magazine.

Sapphire Energy has announced short-term, medium-term, and long-term projections for its algae-based fuel production. The company projects that by 2011 it will be producing 1 million gallons of diesel and jet fuel per year, double its previous estimates. By 2018, Sapphire projects that it will be supplying more than 100 million gallons annually, and by 2025, up to 1 billion gallons of fuel per year. If these projections become reality,  Sapphire will be supplying, all by itself, enough fuel to meet approximately 3 percent of the country’s 36 billion gallon renewable fuel standard and will have established itself as a major biofuels success.

Sapphire’s product is everything a biofuel should be: it is produced from sunlight, CO2, and non-potable water , uses non-arable land, and produces biofuels using a photosynthetic algae as the production organism. Based in San Diego, CA, Sapphire is focused on developing biofuels products that are as similar as possible to petroleum-derived gasoline and aviation fuels, thus requiring no change in fuel transportation infrastructure or retooling of engines. Investors including Bill Gates and the Rockefeller family led a new round of investors in a $100 million infusion of capital late last year, so Sapphire has the financial muscle to carry forward for a while.

Like Live Fuels, Solix is also working on a bio-crude product produced by algae that could be refined in existing refineries, but its approach is based on a closed-tank bioreactor set-up. Based in Fort Collins, Colorado and founded in April 2006, the firm is backed by Colorado State University’s Engine and Energy Conversion Laboratory. The list of major investors includes I2BF Venture Capital, Bohemian Investments, Southern Ute Alternative Energy LLC, Valero Energy, Infield Capital. The company has said that construction will begin shortly on its first, large-scale bioreactor at the nearby New Belgian Brewery in southwest Colorado, where CO₂ waste produced during the beer-making process will be used to feed the algae. This test facility will cost Solix a cool $5 million in greenbacks. But perhaps it will lead to green crude.

Instead of attempting to convert algae directly into ethanol or biodiesel, this startup is trying to create green crude that could be fed directly through the nation’s current refinery system. Calling itself a mini-Manhattan project, LiveFuels is an alliance of labs and scientists with the common goal of generating 1000 gallons or more of oil per acre of land dedicated to growing algae. National lab Sandia oversees the alliance of various scientists and labs with expertise in process engineering, bioscience, and biotechnology. The Menlo Park, Calif-based startup uses open-pond algae bioreactors and plans to commercialize its technology by 2010. With the tag-line and trademark “Pond to Pump,” LiveFuels’ investors include the Quercus Trust (David Gelbaum’s well-known environmental funding group) and Sandia National Labs. The web site is clunky looking and is in dire need of updating. It’s hard to say if that is because all the money goes to the science (which would be a good thing), or if there isn’t much money.

Algae have been touted as one of the Next Big Things in biofuels. The high oil content of some algal strains provide a potentially inexpensive source of oil that can be processed into biodiesel, and pathway engineering in algae could lead to the production of other fuel-like compounds as well. But it is the minimal growth requirements for algae that provide the real attraction of algae as a source of biofuels. Algae can grow using carbon dioxide from the air as a carbon source and sunlight as its energy source. Thus, cultivating algae could potentially cost next to nothing, and actually consume carbon dioxide. So then, why is Solazyme trying to produce biofuels by growing algae on sugar in the dark? Good question! Solazyme brushes this question aside with the glib, inconclusive response of “it’s more efficient this way.” OK, we’ll see.

Solazyme is not publicity shy. The company cranks out press releases at a rate of about one per month. The web site lists many different TV shows and magazine articles in which the company has been mentioned (favorably, of course). Executives actually attended the Sundance Film Festival in 2008 with a short film on algae-derived biodeisel that you can view on the company web site. I don’t know if all that PR advanced the technology platform very far, but it probably helped Solazyme raise money. The company has raised $70 million since inception, including $45 million is a round closed in August 2008, right before the markets tanked and financing dried up. This was very fortuitous timing for the company. Solazyme has used those funds to expand its R & D team and hire scientists from companies that include Genencor and Novozymes.

What about the technology? The Solazyme platform derives from technology to manipulate algal pathways, and the company claims that it will produce a range of useful compounds, including fuels, nutraceuticals and specialty chemicals. In June 2008 Solazyme announced that it had made the first algal-based renewable diesel to pass American Society for Testing and Materials D-975 specifications. Chevron has signed on to collaborate with Solazyme on developing and commercializing this product. Patent applications describe the production of chemicals that range from hydrogen to biodiesel to cholesterol reducers and compounds that lubricate your joints and improve the appearance of your skin. Solazyme has painted an incredible picture of its future. Economics are not yet proven, however, so we will be monitoring the progress closely. If the company delivers on just some of its promise, it will be quite successful. 

Modification of photosynthesis in green microalgae may permit the generation of biofuels in a very different way. Why Algae? Because these microorganisms naturally accumulate oil, have a fast rate of growth (ever seen pond scum in the summer?), grow in hot conditions and can use land not otherwise usable for food crops. Even better, algae are photosynthetic, and can grow on CO₂ and sunlight as raw materials. At least, that is the theory behind why algae may be a source of clean, renewable and economically viable biofuels. However, specific biological problems associated with a sustained, high yield photosynthetic production of algal biofuels remain to be addressed. Engineering algae is not as easy as yeast or simple bacteria. In fact, as you will see in upcoming profiles, some algae companies have abandoned the idea of photosynthesis entirely, and grow their algae on sugar in the dark! In that case, the algae are going head to head with yeast, and that makes for tough competition. The next group of companies are all staking their future on algae as The Next Big Thing in fuels.