Is Algae Getting In Bed With Ethanol? Odd Bedfellows in Iowa

Green Plains is the US' 4th largest ethanol producer. CEO Todd Becker explains why this ethanol producer is getting into the algae business: quick initial profits, with an eye toward longer term profits of much higher magnitude.

"We initially got into this thinking the fuel markets were where we want to go," Becker said in an interview at the Shenandoah plant. "We were going to make the algae, get the oil out of the algae and make fuel out of it."

But Becker said the profits are in algae-based feeds for fish farms and livestock and algae-derived Omega-3 fatty acids for food and dietary supplements. The venture's algae last week passed a key test for poultry feed, and Becker said customers will be in place when commercial production begins next year.

In two to three years, Becker said, Green Plains hopes to be running BioProcess Algae's "Grower Harvester" technology at all nine of its ethanol plants, including its northernmost one in Fergus Falls, Minn. The greenhouse-based system relies on sunlight, continuously harvested ponds and brush-like filaments on which algae grow. _StarTribune

Up to 30% of the carbon in maize ends up as CO2. Algae simply love CO2, and will take as much of it as you will give them, converting it into algal biomass.

In Iowa, the strategy of Green Plains and BioProcess Algae is to make money at each step up in production.

Tim Burns, CEO of BioProcess Algae, said the company got into the algae business in 2005-2006 by adapting filtration technology developed by another company he co-founded, BioProcess H2O. It manufactures filaments to help grow waste-filtering bacteria. Algae also like to grow on the filaments, Burns said.

The Iowa joint venture into algae was launched in 2008. Green Plains offered a source of carbon dioxide along with expertise in selling animal feed. The company annually produces and markets 2.5 million tons of dried distiller's grains, which are a byproduct of ethanol production.

...From the beginning, Burns said, the markets for algae-based feeds, fish food and nutraceuticals looked more promising than biofuel.

"The high-value oils will not go into the petroleum industry," said Burns. That includes algae used in Omega-3 oils, which can bring more than $3,000 per ton.

The partners haven't abandoned biofuel. Algae oils that aren't sold in more profitable markets will be sold to make biodiesel or other fuels, essentially a byproduct of algae processing.

As more algae and algae oils hit the market, prices for Omega-3s and other high-value products are expected to drop. That's why Becker and Burns see longer-term profit selling algae for animal feeds and aquaculture, which alone uses 10 million metric tons of fish food annually. Those feeds can sell for up to $2,000 per ton, and the markets pose less risk of becoming saturated. _StarTrib

This is also the strategy that Al Fin algal specialists have been recommending: Go for the high value, profitable uses of algae first. As you develop skills in the algal growing and handling process, reinvest profits into larger scale production for the lower value -- but much higher volume -- production of fuels from algae.

It is projected that in terms of algal fuels, thermochemical approaches (pyrolysis + IH2 etc) will achieve profitability roughly 5 - 10 years ahead of the synthetic biology approaches preferred by Craig Venter and Exxon Mobil.