Late bloomer

The image of biofuels has taken a pounding in the past year. First promoted as the answer to the depletion of oil reserves, a way of cutting greenhouse gas emissions and reducing dependence on imported fuels, they are now being cast as an environmental villain.

Biofuels are blamed for damaging biodiversity and those based on grain and oilseeds are now claimed to be pushing up food prices as farmers grow crops for oil rather than food. A recent

report said biofuels were the major factor in a 75 per cent increase in food prices. Last year, the

called for a moratorium on their production.

But crops such as maize, oilseed rape and palm oil are not the only potential sources of biofuels. While fuel companies are busy developing second-generation biofuel technology which would convert wood chips and agricultural 'waste' such as straw into hydrocarbons, attention is also focusing on an alternative source.

Algae, ranging from single-celled microalgae to large seaweeds, are the simplest and most abundant form of plant life, responsible for more than half of the world's primary production (the conversion of carbon dioxide into living organic matter, by photosynthesis).

In the right conditions, they can harness the energy of sunlight more effectively than even the most advanced solar cells, allowing them to double their mass several times a day. This rapid growth has caused problems in recent years as algal blooms, fed by runoff of fertilisers from agricultural land, choke waterways.

Algae also produce oil, and because of their growth rate, they could produce a lot. Single-celled algae are estimated to be capable of producing 50,000 litres of oil per hectare a year compared with 6,000 litres for palm oils, 1,400 litres for oilseed rape, and 1,000 litres for sunflowers. This could be converted into biodiesel by conventional processes and be used to fuel vehicles from jets to tractors and make high-grade lubricants.

Technically, they are a first- generation biofuel crop, producing hydrocarbons directly, without the need for a complex chemical process to break down cellulose. They are also a compact crop; if they replaced current oil crops they could, in theory, relieve the food-versus-fuel pressure on agricultural land, allowing food prices to fall again and restoring biofuels' place as the Great Green Hope.

According to the most common theory, the world's oil reserves are formed from millennia-old algae trapped between layers of sedimentary rocks and transformed by prolonged pressure and temperature. Would it not be a fitting use of human ingenuity to unlock the potential of algae directly?

Many companies think so.

, for example, entered into a partnership late last year with a Hawaiian company,

, which is growing algae in seawater ponds to investigate which strains produce the highest yields of vegetable oils.

Shell isn't the only oil major interested in algal biofuel.

has formed a partnership with Californian firm

, which is transferring its expertise in genetically-modified algae for pharmaceuticals production into biodiesel.

Solazyme uses algae developed at the Carnegie Institution in Palo Alto, California. Rather than deriving their energy from sunlight, they extract it from glucose, supplied to them in the form of sugars. This allows them to grow in the dark which, the company claims, means they can be grown at scale and in high densities. The algae are engineered to produce a mixture of oils which can be converted into biodiesels.

The company says its 'Soladiesel' grade conforms to US and European standards. But it estimates that it will not be able to achieve commercial production economics for two to three years.

Another company, San Francisco-based

, has attracted investors including the

for its technology, which uses genetically transformed microalgae to produce what it claims is 'green crude', a mixture of hydrocarbons that can be processed in the same way as crude oil. The company estimates this green crude could cost the equivalent of about $60 per barrel — less than half the price of oil.

But after a flurry of announcements at the start of the year, algae fuels firms have gone quiet and none approached by

were willing to talk.

So, is this a green hype? Steve Skill of the

, has been researching the production of organic chemicals from algae for 25 years, mainly using algae that have been genetically engineered to make chemical compounds for the pharmaceutical and cosmetics industries.

Skill says the problem is in the technology, rather than the concept. 'You can grow algae in open ponds but you're at the mercy of contamination,' he said.

One of Sapphire's innovations is to genetically engineer pesticide resistance into its algae so they can be grown in an open pond with some pesticide to kill off unwanted species. 'That gives you the problem of release of GM organisms. But even leaving that aside, the growth rate in open ponds is too slow. It doesn't make sense if oil is less than $100 a barrel.'

The answer is to switch to a closed system, a photobioreactor, where the algae grow under controlled conditions with access to sunlight.

'There are technological issues here too, the most prominent of which is that algae produce oxygen, which is highly toxic to the blooms in a closed system,' said Skill. 'You have to devise a way of getting rid of it.'

Skill believes this is what is stalling firms. 'They're twiddling their thumbs because they can't go much further until someone develops a decent bioreactor.'

Sapphire's science is sound, said Skill, with the genetic manipulation technique allowing it to produce algae that will make fatty acids to order, which can then be transformed into various grades of biofuel and lubricant oils.

'The company's approach is right. We need to engineer the bugs so they'll give us what we need. Sapphire has achieved that and demonstrated the stability of the genetic transformation: the algae will produce oil and won't lose that ability in successive generations. But they need that bit of kit.'

Once this problem is cracked, Skill thinks it could open up a new sector of agriculture. 'You'll have big players with large capacity bioreactors but you'll also have those with a couple of hectares growing algae and producing some biodiesel. They could easily be self-sufficient in fuel.'

Geoffrey Love, head of venture capital at the Wellcome Trust, was optimistic enough to sink $25m (£12.7m) into Sapphire. 'We're expecting a significant return,' he said. 'And by the time we'd made it, Sapphire had proved it could engineer algae to produce proper crude oil.'

Both Skill and Love are enthusiastic about algae for another reason: like all plants, they need carbon dioxide to grow and will take advantage of any nutrients in the environment. That means they could be used as part of a carbon capture and storage solution while providing a source of biofuel.

Skill's main project takes another tack, growing algae as part of a sewage treatment system.

'In the UK, the problem with photobioreactors is that we don't get enough sun, although we can develop the technology to harvest sunshine,' he said. 'But we could implement a sewage algae biofuel system in the UK.'

The technology is a win-win, Skill claims, as it cuts the energy required to treat sewage while generating a refinable biocrude. 'Currently, when you oxidise sewage, it releases carbon dioxide and you have to put a large amount of mechanical energy in to effect that oxidisation. But as we're growing algae, we're using the sun's energy to oxidise; the algae use the carbon dioxide released to make biomass and in doing so, take up nutrients in the sewage which could otherwise cause algal blooms in rivers, lakes and at sea.

'By processing algae, we can recover nutrients and use them to make fertilisers, and also have a crude oil we can refine using conventional technology.'

PML is to build a test bioreactor in south-west England this year, with a full-scale unit scheduled for 2009.

So the potential is there and industry observers consider algal technology to be a possible game changer in the fuel sector, allowing fields to fuel the world as well as feed it.