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Four Days in the Algae Epicenter

A review of the Algae Biomass Summit and the state of the industry
| November 21, 2011

To say that there was a sense of excitement or a positive buzz at the 2011 Algae Biomass Summit would be a gross understatement. Spending four days in Minneapolis amidst the largest and most impressive gathering of algae experts in academia, private business and government institutions, would convince anyone that in the algae industry today there is a whole lot more to the story than buzz or excitement. As the summit revealed, the industry is shifting to a more serious context and real-time vision of what the algae industry is, and what it has already accomplished, more so than the simple promise of dreams. More than anything, in those four days of talking with people, listening to them, admittedly overhearing conversations, it became clear that this sector is best described by two words, one of which is diversity. And the executives of five well-established algae companies exemplify the vast diversity that exists.

On a featured panel designed to update attendees on the state of several major algae companies, one executive explained plans to farm and refine algae on a massive scale to provide liquid transportation fuel; another provided proof that co-locating an algae growing operation at an ethanol plant works; and yet another executive detailed an operation that simply uses algae to produce ethanol.

From the number of different utilization approaches alone, the outlook for 2012 cannot be defined by one pathway as that feature panel showed, rather it needs to include everything from nutraceutical use to fish feed to algae crude oil. “It’s going to be a very interesting story in 2012,” said Paul Woods, founder of Florida-based algae-to-ethanol producer Algenol, adding that it will be an exciting year. Even so, the real story of the algae industry today and tomorrow wouldn’t be complete without the other word that best describes the general mood during the conference: opportunity.

Payback Potential

Cynthia J. Warner, former BP executive and now president of Sapphire Energy, says there is nothing like feeling the actual vibration of 200,000 barrels a day of petroleum flying by you in a pipeline. Part of the reason she left petroleum and joined the algae team at Sapphire was because she realized the oil industry was not only maturing, but also depleting. “The bottom line is that we have a need for a sustainable source of liquid transportation fuel to supplement the world’s supply of crude oil,” she said.

According to Warner, the world crude oil demand of today is roughly 87 million barrels per day—the U.S. uses 20 million of those—“a number that is a lot like the national debt,” she explained. “You can’t actually relate to it because it is just so big.” By 2030, demand will reach roughly 115 million barrels per day, making the payback potential “enormous,” she said.

Sen. Al Franken, D-Minn., got a loud cheer from the crowd during his opening remarks about the need for new energy. “We need to stop subsidizing dirty energy,” Franken told the audience. Sen. Amy Klobuchar, D-Minn., also provided a clear vision regarding algae’s potential in relation to fossil-based energy. “Americans have shouldered these costs (oil subsidies) for too long,” she said. “Those companies no longer need those tax breaks and we can’t afford them with the debt we are facing. This isn’t about whether those oil companies deserve a profit. It’s a question about whether the American people should pay the cost of providing preferential tax treatment to the five largest oil companies in the U.S., which have racked up almost $1 trillion in profits over the last decade.”

Klobuchar insisted that if we are going to develop the next generation of biofuels and biobased products to break our dependence on foreign oils, “our tax code needs to reflect that priority.” In addition to a revamped tax code that would help algae companies compete with big oil, she also said the continued institution of the RFS2, in which algae-based advanced biofuel would qualify, will help develop not just algae, but the future of America’s energy use.

The global consumption demand that Warner pointed out along with the political perspective from both Minnesota senators were just two of many areas in which the idea of opportunity showed up. Amy Bann, director of environment and aviation policy for Boeing spoke about the global aviation powerhouse’s need for algae. “Algae is really something that Boeing is committed to,” she said. “But not just Boeing, really the whole aviation industry, and so keep us in mind.” For Boeing, she added, “this is the alternative solution and we are going to keep pursuing it.”

Why? For one, Bann explained, companies like the sustainability aspect of algae “because you avoid some of the issues that happen with other pathways.” She also explained the infrastructure is already in place to use algal biofuels. “What I want for you to keep in mind as you produce algae and you look for end markets for your product,” Bann said, “is that there is not much here that needs to be done. There are not that many airports, the airlines are very united and there is a demand for this, and you don’t need to change infrastructure.”

But the opportunity for algae is more than the demand created from a global fossil-fuel source on the decline, political support or even the simple fact that aviation companies looking for an alternative energy source don’t have the option of wind or solar power. As Life Technologies’ new media kit shows, algae companies now have the ability to skip past the tedious task of finding consistent testing methods and developmental lab tools. Dan Schroen of Life Technologies, a global synthetic biology company, says that his team’s use of what it calls UCI, user centered innovation, has helped them develop a suite of tools ranging from media growth kits to algae strains to DNA vectors available to everyone from lab directors to industrial scientific companies such as Sapphire to find the next breakthrough. “A lot of really smart researchers were spending more time on that”—finding consistent and dependable testing tools—“then developing the next breakthrough,” Schroen says. Now, after research in the field and time spent with experts such as Stephen Mayfield from the University of California San Diego, Schroen is developing a kit that would help anyone interested in algae development. A simple catalog order can provide researchers with consistent products, including robust strains that have not been damaged by genetic drift, and vector maps that are up to date, all of which can be customized for specific strains, making the path to commercialization much quicker.

How to Get Paid

Although the algae industry outlook for 2012 is based on an ever-growing list of fish food providers, nutraceutical ingredient providers or biofuel producers that are diverse in their vision and approach, all in combination with an overhanging cloud of opportunity, none of it matters if those visions don’t produce a profit. To make sure those in the business don’t mess up the chance for a positive financial return before their time comes, there are companies like Fortune 500, led by Bill Shireman, president and CEO. Shireman’s company helps private companies join up with their “enemies,” as he said during his talk at the summit, helping to “identify risks and find solutions.”

One of the major issues facing algae companies and their future ability to turn a profit, he explained, is that “the public has no clear perception about algae at this time.” But, “it will be determined by the actions that you take from here on out.” The path from here, he said from experience with other companies, “will take one of two narratives.” The first narrative looks good, and includes the perception and truth about algae regarding energy, water consumption, CO2 reuse, and the ability to reduce our reliance on foreign oil. The second, however, is much bleaker, and includes the ideas that algae could someday cause more global harm than good, or it will be overtaken by global companies and it will induce major water-use problems.

“Those are the two narratives that you can choose from, and the narrative that gets the most play will depend on how well you engage with the stakeholder community right now,” he said. It also depends on how well algae companies perform “as an industry across the issues that are raised in those narratives.”

Shireman’s advice is to take all issues seriously, recognizing each before it happens. “The big mistake,” he said, “is when you counterattack,” instead of acting first.

Tensie Whelan, president of the Rainforest Alliance, also agreed with Shireman, pointing out the importance of stakeholder involvement early on, as well as the development of common sustainability standards created by all stakeholders as a common point of reference when speaking about an algae-related business.

There are two times when a company should engage with stakeholders: pre-crisis and post-crisis. And there are two models of engagement that work: a more formal stakeholder meeting where a company can pitch itself, or one-on-one conversations with potential stakeholders. The formal approach, although successful, limits a company to the stakeholders that it thinks are right, while the less formal approach allows a company to feel out who the right partners might be based on common interests provided by both parties. When a crisis hits, those stakeholders with a shared interest will be there to help provide positive feedback and positive perspective.

As Tom Byrne, owner of Byrne and Co. Ltd., mentioned at one point during the conference, it might not always matter how well an algae company has aligned its stakeholders, proven out technology or addressed outside issues. “You will hear some things you want to hear,” he said, “and you will hear some things you don’t.” Given Byrne’s perspective, combined with a history of algae companies making big claims without providing results, not to mention recent milestones and small achievements by several of the companies at the summit that have broken ground, proven technology at some level, or achieved what they said they would, the words of Mark Allen, vice president of Accelergy Corp., could be taken two ways. What he said during his introduction of Franken might be, just as Byrne said, something you want to hear, or something you don’t. “We are on the verge of breaking out on a global scale,” he said. For some, this rings positive. Others may hear it as just another statement from an emerging industry perpetually stuck on the verge.

Author: Luke Geiver
Associate Editor, Biorefining Magazine
(701) 738-4944
lgeiver@bbiinternational.com

 

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