Algae Biomass Advocates Push Past Exuberance, Aim for Sustainability
Ice shut down Houston for the second time in five days recently, a weather event that, in its sheer strangeness, seemed a fitting backdrop for a gathering of alternative fuel advocates in Big Oil’s backyard.
I drove on an unusually empty Interstate 45 to Montgomery, TX, about 60 miles north of Houston, where the leaders of the Algae Biomass Organization—a consortium of scientists, entrepreneurs, oil companies, and logistics firms—have met yearly since the group’s founding in 2008.
Though the organization is based in Preston, MN, the board has gathered for its annual retreat in Texas for the past three years. Their host is one of the group’s founding members, Greg Mitchell, an algae research biologist at UC San Diego’s Scripps Institution of Oceanography in San Diego. Mitchell, a leading expert in the field, also happens to be a son of the late Texas oilman George Mitchell, known for driving the use of hydraulic fracking to aid the recovery of underground oil and gas deposits.
The younger Mitchell holds the meeting at a conservancy owned by his family’s foundation, located a short drive from The Woodlands, the master-planned community George Mitchell built in the 1970s.
Greg Mitchell invited me to join the group for part of the day to meet fellow board members and learn about the still-young organization’s efforts to boost the many cleantech uses of algae—as alternative fuel, food additive, or raw material for greener cosmetics. As the board finished up its meeting and eased into cocktail hour, I spoke to a few members, a mix of scientists, entrepreneurs, and executives, to get a sense of both the state of the algae industry and what the Algae Biomass Organization’s plans are to grow the field. First up was Tim Burns, an ABO member who is also CEO and co-founder of BioProcess Algae in Portsmouth, RI.
“Because [algae] can fit into so many markets, it’s a challenge for the industry,” Burns said. BioProcess Algae uses biofilms to more efficiently cultivate algae to replace the animal feed currently used for poultry, swine, cattle, or fish. Last year, it received a $6.4 million grant from the U.S. Department of Energy to develop algae-based fuels for military jets and ships.
But algae’s flexibility is also its greatest strength, he added. “Algae is not wasting any parts,” said Burns, who previously founded two water treatment companies and served as the board president for Save the Bay in Rhode Island.
For startups like BioProcess Algae, the focus is on ways to harness the power latent in algae at a scale that can be economically efficient.
In many ways, meeting this challenge is answering an agricultural question, much as has been done with other crops, Mitchell explained. “How do you farm algae,” he said. “We did this with corn, wheat, and other foodstuffs. How do we ‘domesticate’ algae?”
Algae, like other biofuel feedstocks, converts energy from the sun and carbon dioxide from the atmosphere into molecules that can form the basis of biodiesel, biogasoline, and other fuels. The allure of algae, in particular, comes down to its ability to grow faster than traditional root crops and its ability to use, as its carbon dioxide source, smokestack gasses from nearby power plants or industrial facilities.
When the ABO was coming together in 2008, green technologies had become darlings of investors seeking alternative fuels as a red-hot global economy helped push crude prices to $147 a barrel. It was a gold rush during which startups with shaky scientific and commercial credentials wound up attracting capital alongside more credible concerns. Venture capital investments in clean technologies—of which biofuels and biochemicals make up the largest portion—soared to a record $8.4 billion that year, according to the i3 data platform from Cleantech Group, a San Francisco-based research and consulting firm. A little more than $166 million of that went to algae companies.
But as economic activity slowed to a crawl by year’s end, oil prices plummeted—down to $32 a barrel at the end of 2008—and biofuels became less attractive as an investment. With the easy money spigot turned off, companies struggled to find capital patient enough to wait out the extended timelines for research and reengineering that developing biofuels requires.
Solazyme (NASDAQ: SZYM), for example, had to back off its initial plan to develop algae as alternative fuel in favor of quicker-to-market and higher margin products in cosmetics. And after struggling for eight years to find a way to scale and commercialize algae biofuels, GreenFuel in Cambridge, MA, shut its doors in 2009.
The thinning of the herd was good for the sector’s overall health, Michael Lakeman, regional director of biofuel strategy at Boeing in Seattle, told me. “It was an irrational exuberance with unrealistic claims,” he said. “As if algae biomass was a panacea, that it just needs capital.”
Venture investment in cleantech is coming back—last year, it reached $6.8 billion, with algae companies taking in close to $60 million. But this time, advocates say, the growth is fueled more by strategy, not speculation. For its part, the ABO has concentrated on helping to build an ecosystem around algae that brings together scientists, corporations, entrepreneurs, and investors to share and promote commercialization ideas.
To make sure that algae is part of the national policy conversation on cleantech and alternative fuels, ABO has also hired its own lobbyist in Washington. The main goal is to get the U.S. Congress to put algae on par with other crops so it could qualify for crop insurance and other government programs.
Lakeman, who joined ABO in 2008 and was previously a researcher with the New Zealand Institute of Crop and Food Research, said Boeing’s interest in biofuels like algae makes sense. “We are building planes right now that may fly for the next 30 years,” he said. “We need to make sure the aviation market is going to have a fuel supply.”
So while Boeing does not do its own research in algae, he said, the plane manufacturer can still support the field by advocating for investment and policy changes that create a clearer path for commercialization.
The challenge is to mainstream algae and bring it in from the outer fringes of scientific possibility, which, in turn, builds a foundation for commercialization, say entrepreneurs. “This is by far the hardest, hardest lift I’ve ever done in my business career,” said Burns of BioProcess Algae.
Two years ago, Seattle-based Matrix Genetics was spun out of agricultural biotech firm Targeted Growth to use cyanobacteria, or blue-green algae, as a substitute for fossil fuels. Its CEO, Margaret McCormick, chairs the ABO’s board of directors this year, and she said the company is currently leveraging its biology for the nutraceutical and cosmetics industries for a commercial partner she declined to name.
Targeted Growth invested an initial $8 million in Matrix and the spinoff raised a Series A round last year. McCormick said she’s looking for additional partners this year to fund the company’s growth.
Both McCormick and Burns say their ultimate goal is large-scale production of algae for fuel, but getting there will require making other more easily marketable products as they refine their processes.
After a dinner of salmon amandine, quinoa, and beet salad, many in the group gathered around the fireplace to watch President Obama give his State of the Union address. So I quickly buttonholed Mitchell to find out more about his work with the ABO. “We were not a specific community,” he said. “Creating that network of scientists, government officials, technologists, economic modelers, that could accelerate our work, that environment is important.”
Mitchell answered my next question before I could ask it: “What is the son of George Mitchell, ‘the father of fracking,’ doing in algae?”
He explained that he started out studying marine biology at the University of Texas at Austin, looking at how sunlight got into the ocean ecosystem. There, he began to focus on algae, and worked with pioneers in the field—Harold Bold and Richard Starr—who became mentors.
Intrigued, he went on to graduate school, though he said he ended up in California largely because the surfing was better than that on the Texas Gulf coast. Over the years, Mitchell worked at NASA in an effort to create the first global satellite maps of algae distribution in the ocean and he helped found the San Diego Center for Algae Biotechnology at UC San Diego.
Greg Mitchell said his focus on sustainability actually does not fall far from his father’s priorities, even considering the elder Mitchell’s Big Oil bona fides. Sustainability, and a desire to solve urban blight, motivated George Mitchell to develop The Woodlands community on 25,000 acres north of Houston and revitalize a historic neighborhood in Galveston. Greg Mitchell points out that his father, who died last year at age 94, also helped to pay for the influential National Academy of Sciences’ report, “Our Common Journey: A Transition to Sustainability” in 1999.
“He told us, all of his kids, that we should do what we know,” Mitchell said.
Just as his father is credited with revitalizing domestic energy production, Mitchell believes the work ABO is doing with algae can also be transformative. “I agree it’s a big challenge,” he said. “But we’ve seen this happen in the market before.”
He points to advances like diesel or jet engines, technologies that took decades to get from discovery to commercialization—but he stresses that they got there. “We need a longer vision,” he said.
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