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Advanced Algae Biofuels

The Best Little Fuel House in Texas

By Sam Hopkins
Thursday, March 18th, 2010

Cell biologist and Dr. R. Malcolm Brown, Jr. was the first professor at the University of Texas to work on a personal computer.

"They told me I had to use the mainframe," Malcolm recalled to me over a meatloaf and catfish lunch yesterday at the Eastside Cafe in Austin.

"But I said 'no,' I'm gonna go ahead with this." I could tell the excitement he felt 30 years ago from the way he told the story. "You'd be amazed what you could do with 48K in those days!"

Even though he was a trailblazer in putting the PC to academic use, Prof. Brown has made a career out of playing with plants. His greenhouse and garden in the hills west of the Texas state capital are immaculately arranged, and at his namesake laboratory back on the UT campus, some beakers hold algae cultures that have been growing for 40 years.

Just as over time the rest of the world woke up to the possibilities of computing and connectivity, today the tiny organisms that Malcolm Brown and dozens of his graduate students have nurtured and examined for over a generation are recognized as potential biofuel powerhouses.

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From Pond Scum to Blue-Green Gold

algea
The future of biofuels?

Dr. Brown got in touch with me early this year after reading my dispatch from the American Council on Renewable Energy's RETECH expo. I noted that Brazil's largest sugar processor Cosan (NYSE: CZZ) had entered into a $12 billion joint venture with Royal Dutch Shell (NYSE: RDS), Europe's second largest oil producer.

As I've stated a few times now, there are several pivot points between fossil fuels and renewables. Maybe it's an offshore oil rig being powered by wind turbines, or in the case of Dr. Brown's research, oil fields in west Texas where waste water is host to a cornucopia of productive organisms.

New federal rules and incentives are making collaborations between oil titans like Shell and biofuel powerhouses like Cosan commonplace. The next step is bringing cellulosic ethanol to billion-dollar scale.

On February 3, the Obama Administration released its Final Renewable Fuel Standard, known as RFS2. Under RFS2, corn ethanol's status will diminish over the next decade because of its weakness relative to sugarcane ethanol. This is a point of heavy contention from corn state lobbyists and corn ethanol enthusiasts across the board.

From farmers to ADM crop scientists, many assert rightly that corn ethanol research and development should continue. I invite feedback from anyone involved in the sector.

However, the chain from research to policy to profit right now runs straight through what are known as advanced biofuels. Advanced biofuels have a greenhouse gas (GHG) footprint that is over 50% better than gasoline. Land use factors in heavily to the Environmental Protection Agency's GHG calculation, and RFS2 follows EPA stats showing that sugarcane ethanol has an International Land Use Change (ILUC) impact less than 1/6 that of corn-based fuel.

There's a step above sugarcane feedstock, however, and it's cellulosic ethanol. This is where Dr. Brown and his beakers come into play.

If you think of cellulosic ethanol currently, corn husks and switchgrass may come to mind. Yet, this week I've seen time-lapse footage taken through a light microscope in Malcolm Brown's lab that shows a bug called acetobacter spinning out cellulose like a spider spins a web.

The strands produced by these micron-sized bacteria are nanometers wide, which means that when put together, a sheet of cellulose produced under optimal conditions can be as strong as steel. It can also be used to make paper, of course, since it's analogous to wood pulp.

There are other mighty bugs in Brown's lab, too.

One Man's Trash...

EPA calculations put cellulosic ethanol GHG emissions at 60% less than gasoline, but that includes land use just like corn ethanol. Being a Texan, Malcolm Brown has grown cultures in water from all over the state; he's found that some of the best water for growing bugs that produce sugar and cellulose is found in oil wells where brackish water is a waste product of crude extraction.

Even enhanced oil recovery (EOR) techniques now in use to get more oil out of dying fields can lead to bountiful bacterial produce, because the carbon dioxide from that process can be used to stimulate increased sugar production during photosynthesis.

Prof. Brown also showed me in his lab how cyanobacteria, commonly known as blue-green algae, can be shocked into producing more sugar than normal by changing the salinity of the water they're in. It's basic osmosis—the kind of stuff you learn in high school biology class—but seeing it applied to create next-generation biofuels is pretty amazing.

Now, as with every single renewable energy type we talk about in Green Chip Review, it's a matter of scale. These cyanobacteria have been tested in ponds and can be scaled up to testing in square-mile size tracts of foot-deep water. They can be placed next to power plants to take carbon dioxide into the fuel production process, or large tracts of scrubby west Texas land can be laid across with oil well water to grow the bugs.

The Brazilian Connection

Jose Goldemberg, the Brazilian scientist who set off that country's biofuel revolution in the 1970s, has met with Malcolm Brown and marveled at the production he's been able to get out of such simple organisms.

In test tanks and ponds, the UT-Austin team has logged 14 tons of sugar per acre-foot per year. In laboratory conditions, that harvest rises to 94 tons of the sweet stuff, which is equivalent to 13,000 gallons of ethanol per acre-foot per year. That sucrose can then be added directly to yeast to create ethanol, instead of breaking down cellulose starch to get glucose.

The best part is that while these scummy powerhouses work, the sugar they put out can be taken without blasting the cells apart — this may be the ultimate renewable fuel.

You can learn more about Dr. Brown's work and goals here at his laboratory's website. He'd be happy to hear from you, and I can tell you that his enthusiasm for creating a high-efficiency, world-leading biofuel in the United States is contagious.

Just as Jose Goldemberg's vision in 1978 was turned into a national initiative to make Brazil a world energy power and investment target, researchers across the U.S. are working to make American biofuels maximally efficient and, ultimately, very profitable for investors who follow the idea flow from lab to market.

As Nick Hodge reported last summer, Exxon Mobil has already made a $600 million bet on algae biofuel. Surely that's not the end of the money movement into this sector.

What are you up to? We like hearing from the Green Chip community about the ideas that are driving investment. Contact us any time through www.greenchipstocks.com.

Regards,

Sam Hopkins

Sam Hopkins


Editor's Note: From solar and wind to geothermal and biofuels, Green Chip readers want to know which renewable energy resource will take over where fossil fuels leave off. The answer is...all of the above!

There is no one single solution to today's energy crisis. However, the combination of all viable renewable energy resources, coupled with energy efficiency, conservation and smart grid development will not only lead us to energy independence and a cleaner, more sustainable energy infrastructure — but also to what will soon prove to be the greatest investment opportunity of the 21st Century.







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Comments:

Comment by Chris on 2010-03-18
The idea is great, but how do we invest in this new bug?

Does the good doc at UT have a spin off in mind this is very basis and neceesary development??
Comment by Larry E. White on 2010-03-18
Mr. Hopkins,
Good article - well stated as an overview with good details. However, just one point that needs to be covered based on your valuable time with the professor and that is very important to us investors. What is the capital cost necessary to generate those 14 + tons per year. My research into algae reactors requires over $21,000 per acre and that equipment out in the sun will need to be replaced about every 5-7 years. We need some basic ROI forecasts. Even OriginOil will not tell us that number, because they know it is very high to prevent contamination by dust, dirt and other algae species and other organizims. We do appreciate the knowledge you are passing along, but without the whole story, we cannot start this engine.
Comment by Ron Shook on 2010-03-18
I like it when you-all report on facinating research, investment grade or not. We need ever more variety of energy solutions and whether this feeds into that or not it may prompt other avenues. Keep it up.
Comment by Sam Hopkins on 2010-03-22
Thanks for your comment, Larry, and you're absolutely right! That's why I'll be following up with Malcolm Brown and other researchers as venture capitalists and others who can bring 4th generation biofuels to market ask tough questions. Of course, no VC invests without an exit strategy, and we wouldn't present a stock to you without doing the math and making sure the business can work. Stay tuned for more!
Comment by ddugger on 2010-03-22
I am always amazed when "green" authors try to substitute "enthusiasm" for economics. Mr. Hopkins you do understand that algae require fertilizers - just as terrestrial crops do? You do realize that those fertilizers come from petrochemicals? That waste nutrients could supply less than 3% of energy needs. Essentially we are using petroleum to make ethanol or algae oil at a time when petroleum stocks are running out. Please explain how this works economically - especially over time? Having worked with the saline waters of west Texas and the Permian Basin, I can also tell you that the economics and environmental constraints of using these waters (which are often contaminated with heavy metals like boron) are very difficult since once you pump it up (assuming it isn't filled with toxins) - it evaporates into brine and there is little fresh water for dilution in west Texas so you either have to make salt with it or pump it back down into injection wells - if you can get a permit and afford to pump it back down. While all of the things you mention are technically possible, few if any seem economically practical - and that is where your article is exceptionally weak. Please address the economic details and life cycle analysis related to R&D projects you write about with some of your enthusiasm.
Comment by R. Malcolm Brown, Jr. on 2010-03-25
Obviously this person is very negative on "green technology" as well as our process, as I expect some people will be; however, we did not disclose to him/her or the public that many of our cyanobacteria fix atmospheric nitrogen, thus ruling out any need for n-based fertilizers. This should be a big "+" in terms of the costs of such fertilizers for plants like corn, sugarcane, trees, etc.

Hoping that point might satisfy this individual, he/she goes on to argue that West Texas saline waters may not be useful for growing algae, but while we have not yet set up any on-site testing in W. Texas yet, we
are confident that the water available there will be suitable for growing our microbes, and we will not require as much water as most people would expect. Whether or not the person is correct about West Texas salt water, the beauty of these cyanobacteria is that they can be raised in many salinities of salt water found in many areas of the United States, the Middle East, and in the oceans and seas of the world. Even if West Texas salt water used in oil wells should turn out to be unsuitable (and I am not conceding that), and this person does not have sufficient data at this point to back up his/her blanket statement of unsuitability, there are so many suitable salt water media in the world that this is neither a valid nor a seriously negative problem for the economic viability of this technology even if the person might be right.

As to whether or not all of this will be economically feasible, I would venture to guess that yes, it will become economically feasible as we conclude more research on scaleup and the costs for such, as well as a number of other factors which are proprietary.

Thus far in outdoor field trials in ponds, our yields have far exceeded what we projected even in extreme temperatures. Our outdoor trials last summer produced more than 7X the equivalent gallons of ethanol/acre/year of corn, and these data enhance the ultimate likelihood of scalability. Had it been otherwise, we might agree with this person's criticism, but under the circumstances the evidence strongly suggests otherwise. This coming spring and summer, we will continue our outdoor research and we will learn more about the economy of scale and the adaptability of our organisms to expected variables found in outdoor ponds. We are acutely aware of most of the exaggerated claims regarding the use of algae for biodiesel, but we are conservative in our approach, but not to the point that it could never get off the ground if we viewed our work like this person has done.

By "nipping the concept in the bud" as this writer is trying to do, this person seemingly does not want our project to succeed. I am sure that there are others like this person; but I believe for every person like this person, there are many more who can see the value of our proposition and understand that R and D and lots of things will need to be tested and confirmed along the road to a profitable pathway. This is the way all visionary ideas get put into practice. I believe we are on that pathway.

In summary, I think we can still be enthusiastic, and I am a proponent of thoroughly looking at all of the ways and methods to optimize this technology so that it CAN become profitable in large scale. We are aware of the fact that sucrose produced on our proposed scale probably will be classified as a "commodity product"; but we are also optimistic that our microbes can also be coaxed into producing value-added products in addition to sugar.

We do not believe that you wrote an exceptionally weak article. You wrote an excellent and strong article about a little-known technology from an experienced scientist studying algae and cellulose, and from this beautifully crafted writing, we hope that it will encourage scientists, engineers, geologists, and businesses to work together toward a common goal to try and resolve an exceptionally difficult and challenging problem facing our Nation and in fact, the entire planet. Being positive is far better than being overly negative and super critical as this person has demonstrated. I venture to say that most people commenting on the article have had a positive response. Please let me know otherwise.

Thank you,

R. Malcolm Brown, Jr.