Electric Cars Won’t Take Over, Biofuels 3.0 Must Fix the Bugs, & Microorganisms as Problem-Solvers: Big Ideas from Cleantech Leaders

5/20/11Follow @curtwoodward

We had a great time at our latest Xconomy Seattle event, “Separating Hype from Reality in Alternative Fuels,” held last night at the new Institute for Systems Biology headquarters in Seattle’s South Lake Union neighborhood.

The presenters sketched some meaty ideas about the drive to develop oil alternatives, challenged a bit of conventional thinking, and got the audience to dive in with great follow-up questions. Here are a few of the big themes that emerged as Luke moderated the main discussion with Ned David and Kristina Burow of Arch Venture Partners—two of the co-founders of San Diego-based Sapphire Energy—and Margaret McCormick, the co-founder and CEO of Seattle-based Matrix Genetics. If you want to see some images from the event, check out this Flickr gallery from Vinh Chung of Total Effects Video.

Biofuels 3.0: David pointed to the U.S.’s last two attempts to develop biofuels—after the 1970s energy crunch and in the mid-2000s, when national policy ramped up the production of ethanol. Neither of those eras, of course, have delivered much in the way of energy independence.

David said the 1970s saw the first big effort to cultivate algae as an alternative fuel source, but that fell short because the technology wasn’t advanced enough to get results. That wrongly led many to believe that algae wouldn’t work, he said.

The ethanol boomlet of the past decade was the 2.0 wave of biofuels for this country, but that hasn’t produced anything like what all those optimistic politicians pledged at the outset. “Forty percent of the U.S. corn crop goes to replacing 8 percent of our transportation fuel,” Burow said. “That is not sustainable.”

At present, David said, we’re in the 3.0 phase of U.S. biofuels. Algae was a big focus of this particular discussion, since all three of our panelists have direct experience with that field. With projects like Sapphire Energy’s drive to put a huge algae-fuel production facility in the Mexican desert, you’re seeing “the first building blocks of world-scale capability” for these fuels.

“I think that microorganisms can solve most of the problems of the world. If you go back, it was alcohol or it was cheese,” McCormick said. “There’s so much potential that can be harnessed out of these microorganisms and the DNA that’s in them, and we can look at them to solve all kinds of problems.”

High stakes, but no quick fixes: McCormick said the latest phase of alternative fuels work is not purely driven by an economic need to reduce spending on oil, but is also by the need to address climate change and national security issues.

Burow added a fourth factor: “This has got to work. By 2020, we’ll have increased our need for energy by 40 percent as a world. And there’s simply no way to meet that increase without these types of alternative fuels.”

At the same time, Burow said, the cycle for developing such culture-shifting technologies is still much slower than we expect from other areas of innovation. “This isn’t Twitter. This isn’t Facebook. We’re not going to have a bunch of guys in a garage and instantly have a billion-dollar company,” she said. “That’s not how this works. It tends to be about a 30-year process.” But at this point, the industry is well into its current 30-year cycle, she added.

McCormick concurred with that point. “There has to be huge investment in this area, and there has to be a timeline that’s reasonable given the scale of the problem. It’s not a three-month software development timeline,” she said.

The panelists also said there must be a portfolio approach to generating alternative fuels and new clean-energy infrastructure in general. David used a self-confessed provocative example, declaring that he believes large-scale electrification of the modern transportation system will fail.

He said electric transportation could work in some niches—contained areas like major ports, for example, or cities like Seattle or Las Vegas with significant hydroelectric assets. But the change won’t ever be worth the trillions of dollars needed to remake the entire national infrastructure, because so much of the electric supply right now is tied to coal, he said.

“There is a desire among people who think of themselves as green-tech investors to believe in silver bullets—single solutions that solve everything,” David said. “But it’s always been a mix in different settings … the belief that suddenly everything’s going to change, and we’re going to suddenly coalesce the ways we use energy to a smaller number of things, is not based on a full understanding of history.”

Government’s role: The panelists highlighted the interesting regulatory environment of working the broad energy sector, where government is needed to drive major adoption and change, but also is feared for its tendency to get too involved.

David pointed to Winston Churchill’s leadership in converting the British Navy to oil over coal fuel in driving the modern norm for liquid fuels, and the other panelists seemed to agree with his sentiment that military procurement was probably “the most powerful instrument you can use to drive change.”

An audience member posed a great follow-up question: Since the government and military role is so important in making new types of fuels feasible, where’s the trepidation about government picking winners and losers come into play? Isn’t the government picking a winner when it cuts a military procurement contract?

Burow said there’s a big distinction between the military adopting alternative fuels for its fleets and the government mandating broad renewable fuel standards for all vehicles. When the Pentagon picks a contractor, it’s “buying a real product. They’re not picking a winner, they’re picking a partner—and it leaves the industry open for other partnerships,” Burow said.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

By posting a comment, you agree to our terms and conditions.

  • http://www.biocepts.com Durwood M. Dugger

    Even microbes have to have something to make cells out of. At the scale needed for alternative energy – algae requires peak fertilizers of petroleum and phosphate – just like our food crops. Genetic engineering isn’t going to change the non-sustainable nature of or the mass balance negativity of biofuels – especially algae. However, if we fail to ignore this biofuel flaw we can shrink the window of opportunity we have to develop alternative energy by decreasing the amount of food production potential.

  • Pingback: Electric Cars Won’t Take Over, Biofuels 3.0 Must Fix the Bugs … | Seattle Local Me.me

  • Pingback: The 3.0 Phase of U.S. Biofuels | Ascension University — Post Script - Notes about Food, Housing, and Job Security by Ascension University and the Aevia Group

  • Chris Noble

    Ned David has it exactly backwards… it is the knowledgeable greentech investors who know about the wide range of renewable energy sources and storage technologies that will eventually contribute to the electrification of the transportation grid, and it is those who can’t see beyond fossil fuels who are waiting for a single “magic bullet” before they change their minds. Fossil fuels are heavily subsidized at every stage: exploration, production, distribution, consumption and passing environmental costs on to the taxpayer and future generations. When will we be willing to abandon these fossil fuel subsidies?