Algae could be the most promising candidate yet for the future of the biofuels industry.

Although algae-based fuels won’t be commercially available for several years, algae offers several advantages over other first-generation renewable fuels, such as corn and soybeans. For example, algae grows faster, requires less resources, can be used as jet fuel, can use existing distribution systems, and absorbs carbon dioxide and other greenhouse gasses.

And according to the WSJ, in theory the U.S. could produce enough of it to meet all of the nation’s transportation needs.

Although developing an economically viable process for refining oil from algae faces challenges on many fronts, interest (and investment) is growing.

Major players in the emerging industry include Exxon (XOM) (working with privately held Synthetic Genomics), BP (BP) (in a development deal with Martek Biosciences Corp (MATK)), Valero (VLO) (invested in Solix Biofuels), as well as the U.S. Military.  Smaller companies include Aquatic Energy, Aurora Biofuels, PetroAlgae, and Origin Oil.

Industry experts claim that in order to speed the process along, algae biofuel feedstocks must get the same benefits and incentives that first-generation biofuel feedstocks receive.

Just recently, Senator Boxer revised the definition of biofuels in the Renewable Fuels Standards of the Clean Air Act, previously defined as “cellulose-based biofuels,” to “advanced green biofuels,” as a way to include algae as a qualifying biomass material in the Renewable Fuels Standard provisions.

All of this syncs up neatly with a White House concerned with climate change and looking to develop “green energy” technologies with long economic coattails.

While it may be too early to call algae the clear winner in the biofuels race, at least for now, the future of algae-based biofuels looks bright.

Disclosure: the author has no positions in the companies mentioned.




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