Algae: Will Bossie Like it?

September 29, 2014 |

CowfaceWill protein be the Big, Easy app that puts algae technology on the road to awesome?

The Digest ruminates.

It’s the world’s favorite biobased feedstock, the crop of dreams, and you just can’t find as much as you’d think would be out there. Why, everyone asks?

That’s easy.

With algae, the most pressing need relates to the toughest economic challenge.

No US president has ever gone on television to talk about the pressing national security need to develop alternative sources of omega-3 fatty acids, livestock feed, or astaxanthin. But they do go routinely on television to talk about the need for alternatives to petroleum.

For investors, there’s not much appetite for technology risk in markets that are easily saturated and where the need is not urgent and obvious.

algae.tec-2

For corn, things were more aligned at the outset. When Squanto showed the Pilgrims how to plant maize in 1621, the pressing urgent need was for food, which happens to be the easiest and cheapest thing you can make out of sweet corn. Following harvest of the ear, it’s a case of shuck and cook and chew.

So, corn had it easy — and everything that used corn has had the crop available, ever since.

Big Markets with Easier-to-Hit price targets

Over the years, more complex processing has emerged — now there’s dextrose, corn oil, distiller’s grains and ethanol just to name a few of the apps. All of which required complex thinking to develop and prove — but the corn was already there, because of the first big, easy app.

aurora-algae-karratha

Algae needs one too.

Not just where it’s easy to hit the economics, like $10,000 per ton markets for which the global demand can be measured in the dozens of tons. Not just where it’s easy to find big volumes with tough economics, such as making money competing with $750 per ton petroleum.

Which brings us to protein.

Most algae strains — though far from all — have protein content in the 40-60% range. Which, at the end of the day, puts any algae farmer into the meal market. There’s too much value there to be discarded. In fact, fishmeal is worth more than petroleum on a per-ton basis, by a considerable distance.

The thing about fishmeal

So, fishmeal is a long ways from algae biofuels. But so are golf balls a long way from fuel, and that’s a petroleum app just as much as diesel.

Fishmeal is running around $1500-$1700 per ton. Algae enterprises that can realize $1500 per ton, averaged, for 60% of their crop — well, you start with great economics and a proven market. From there, if you have around 15 percent carbohydrate content and can sell algae based starches at around $900 per ton, and 25 percent oil content and can sell that for $770 per ton, you have dry algae biomass with revenues of $1227 per ton.

Petroleum had one too. That was kerosene, which via the lamp oil market did more to get the petroleum business going than any other app. It’s far less important today (excepting in the jet fuel arena), but it was completely vital when John D. Rockefeller was first putting his ideas together.

For now, there’s a shortage in fishmeal and no one is quite sure, given rising population and tougher ocean conditions, where all the food’s coming from.

Alternative ideas

There are alternatives in the algae world, for sure. Dozens of companies targeting only the nutraceutical markets. Companies such as Algenol with milking technologies — algae organisms that secrete fuels.

For the majority, however, here’s the question: Does the route to fuels pass through the livestock pen? It certainly did for ethanol. Those distillers grains add critically to the economics of first generation corn ethanol. Dakota Gold DDGs have immeasurably helped the economics of POET and its farmer partners in every year of their operation — and especially, when the fuel market economics go upside down to corn.

LIFE cereal – it came down to the question “Will Mikey Like it?”

For algae, it may well come down to whether Bossie the Cow likes it. We hope she does.

Print Friendly, PDF & Email

Tags: ,

Category: Top Stories

Thank you for visting the Digest.