Algae Trek: The Next Generation

Round up the unusual suspects. A new generation of companies like Pond Biofuels, SFN Biosystems and Eco2Capture are redefining the use of zero-cost emissions as algal feedstocks.

For most occasional observers of the algal scene, the focus generally follows on major players such as Sapphire Energy, Algenol, Solix Technologies, Phycal, and Aurora Algae.

They have soaked up a good percentage of the media attention, grant money, loan guarantees in their (generally) five-year missions to boldly go where no algal ventures have gone before – that is, towards the sunny uplands of commercial success at scale. It’s been quite an algae trek.

But the next generation of companies and technologies have continued to come along. Last week we profiled BioProcess Algae, and its remarkable efforts to convert corn ethanol plant CO2 emissions into a feedstock system for growing algal biomaterials.

Overall, there remain more than 100 companies chasing the prize of developing an algae biomaterials project, profitable and at commercial scale.

Yesterday, on the eve of the annual Algal Biomass Summit, two of the long-time leaders in the commercialization of advanced algal biofuels and biomaterials – attorney Todd Taylor (of Frederickson & Byron) and venture capitalist Bill Lese (of Braemar) – organized a remarkable day-long Algae Financing Symposium in Minneapolis that brought out several of the most interesting next-generation algal biomaterials companies.

Gone were the usual powerpoint presentations to large crowds, replaced by a rapid-fire set of one-on-one and two-on-two pitch sessions designed to replicate the real-world experience of investment banking and venture capital, with feedback provided by luminaries such as Alberti Advisors’s Doug Cameron, Piper Jaffray’s Tom Halvorsen and Mike Ritzenthaler, and early-stage venture capitalist Kiki Wang of Chysalix.

The specific pitch materials have to remain confidential, but the companies and technologies are to some extent out of stealth mode and can be profiled in terms of their public announcements.

The next generation of companies

Generally, there are three types of companies emerging, of real interest.

1. Front end transformation: Zero and negative cost feedstock plays.

2. Back-end transformation: Low-cost, high throughput harvest, dewatering and extraction systems.

3. Super high-value product plays: companies focusing on the production of, for example, $5000 per ton astaxanthin, a/k/a “the new vitamin D”, which can be extracted from certain algal strains and for which there is an established and fast-growing market.

In today’s update on the new micro-algal technologies, we will look at front-end transformation. We’ll look at the back-end transformation in harvest, dewater and extraction on Wednesday, and the new high-end products on Thursday.

In the first category, we profiled the afore-mentioned BioProcess Algae last week, which is utilizing CO2 emissions from the Green Plains Renewable Energy ethanol plant in Shenandoah, Iowa.

Pond Biofuels

But just as interesting: Canada’s Pond Biofuels has developed a fully integrated process that is capable of producing energy, biofuels, and protein rich biomass derived from microalgae, while capturing CO2 emissions and other harmful pollutants like NOx, SOx from raw, untreated smokestack emissions.

In Canada, the St. Marys Cement plant has introduced a CO2 pipeline from its main facility to a $4 million algae-growing demonstration facility operated by Pond Biofuels, which absorbs the CO2 using a strain of algae from the nearby Thames River and produces algae which is burned for electricity used by the plant, or can alternatively provide liquid biofuels for the plant’s truck fleet.

The plant, a subsidiary of Brazil’s Grupo Votorantim, is seeking alternatives to potential payments of up to $15 per tonne of CO2, which is estimated to add 8 percent to the overall cost of cement. The two project partners received funding from the Ontario Centres of Excellence towards development of the project. Pond Biofuels is utilizing a closed photobioreactor system at a 1500 square foot facility.

You can see a lot more about the project in YouTube, here. http://www.youtube.com/watch?v=PwcNjLcSoBs

SFN Biosystems

A remarkable technology has emerged that targets exhaust and emissions from natural gas compressors, over at SFN Biosystems.

It’s not a small source of feedstock: in the Canadian province of Alberta alone, there are 5,600 compressor stations that compress and dewater natural gas to pressure levels suitable for long-range pipeline transmission. The waste process and heat generated by that network has, just on the waste alone, enough residual waste energy to fully heat every Albertan home – and that’s a cold climate.

The SFN system (stands for “something from nothing”) utilizes the waste emissions  at zero cost- which are an area of increasing attention from regulators (they account for 2 percent of total Canadian CO2 emissions, for example) to grow microalgae – and at scale, they believe they can reach commercial-feasible, at-scale production, on an unsubsidized basis, making algal biomass for the animal feed, biomaterials, and fuels markets.

The production of natural gas from reservoirs at depth delivers low pressure gas to treatment facilities at surface.  Treated gas must be compressed to very high pressures in order to transport it through pipelines for transmission to major markets.  Long distance pipelines are served by numerous large compressor installations along their route to maintain pipeline pressures.  Natural gas fueled engines drive the compressors for both pipeline and field compression.  These engines consume 6-7% of the total gas production before delivery to market.

Since all engines are relatively inefficient (basic thermodynamic properties) large quantities of heat are rejected to the environment. Rejected heat is dissipated by radiators and through the heating of the engine exhaust.  SFN Biosystems will use this rejected heat to maintain optimal temperatures in our facilities while processing the exhaust stream.

The combustion of natural gas in these compressors results in the emission of large volumes of carbon dioxide, a greenhouse gas.

The technology developed by SFN Biosystems is applicable beyond natural gas compressor engines to any larger stationary engine that burns natural gas.  It is scalable to natural gas generation facilities, steam generators, and so on.  The number of potential applications is very large. The commercial system is modular, and any site can be serviced by installing the appropriate number of cells.

Eco2Capture

Over at Eco2Capture, based on technology spin out of Ohio University, the founders have come up with technology addressing one of “holy grail” to industry opportunities: the commercially-feasible capture of atmospheric CO2. It’s the ultimate algal feedstock, of course, free now, and probably free forever, and directly addressing the carbon problem.

Their technology? A membrane system that traps ambient CO2 in water. The liquid media is distributed across the membrane through the company’s Hybrid-Flow-Controlling-Header (HFCF). The HFCF is designed to allow for an even distribution of the liquid media across the faces of the membrane at the right flow, pressure, and temperature to ensure maximum mass transfer. Depending on the application, the HFCF can be adjusted to allow for more viscous liquid media or to allow for the actual production of algae on the membranes.

The company is developing a system for open pond raceways, and one as a vertical Membrane Bioreactor that will produce micro algae rather than just distribute CO2 into a raceway system.

One of the most interesting advantages of the system: beyond the appeal of using atmospheric CO2, the carbon dioxide is fed into the system so efficiently that it reduces the PH spikes associated with bubbling CO2 into a system from gas feeders. Those PH spikes can cause pond crashes.

Cautionary note

With all these technologies, the transformative nature of the economics is based on the adoption of low-cost, zero-cost or negative-cost feedstocks – primarily in the form of waste smokestack emissions that plants must otherwise pay up to $100 per ton to sequester or otherwise pay heavily for emissions permits, up to $15 per ton in Canada and now $23 per tonne in Australia.

The business plans are dependent on two elements.

One is the continuation (or even escalation) of efforts around the world to price carbon or otherwise charge for emissions and remediation.

That may well be a no-brainer in the long-term, given what we know about the carbon problem and the rising tide of legislation to address climate change.

The second problem is the continuation of the availability of low-cost feedstock, given that these companies will be unlocking value. Ultimately, the feedstock provides are going to feel pressure from their shareholders to monetize the feedstock streams. It wasn’t all that long ago that restaurants paid to haul away their fryer grease – now, at best they are getting rid of it for free, and in aggregate form the choice white greases and tallows are now sold for up to 30 cents per pound in some markets.

Generally, there are two ways that projects hedge against these risks.

One, through long-term feedstock contracts. These may not keep waste emissions from pricing in the future, but they lock in economics over, say, the life of a project loan.

Second, targeting complex emitters running large-scale businesses for whom dealing with monetizing emissions streams is a pretty minor value-add for the company as a whole. Natural gas companies and power plants, for example, may fit in well here – simply making too much money at too vast a scale to be able to transform their economics by developing a material business transformation around charging for their complex, hard-to-handle flue gas.

For the small-scale corn ethanol plant, or the cement plant – well, that’s a much purer stream of CO2, and the overall business is smaller. Many of them already have a CO2 offtake partner – and more so will have them in the future. For those plants, emissions may well only be available at market rates.