To many, algae is little more than pond scum, a nuisance to swimmers and a frustration to boaters. But to a growing community of scientists and investors, there is oil locked in all that slimy stuff, and several dozen companies are racing to try to figure how best to produce an affordable biofuel.
The companies and several research labs have set up shop in the San Diego area, many of them in an area nicknamed Biotech Beach. About 200 biotech companies of all kinds are clustered on the mesa above Torrey Pines State Beach.
“It's a critical industry, and it's kind of exploded,” San Diego Mayor Jerry Sanders said. “It's going to create a tremendous number of jobs.”
National energy companies are converging on the fledgling industry. Exxon Mobil Corp. announced a $600million partnership with La Jolla biotech company Synthetic Genomics Inc. in July.
Last year, $176million was invested by venture capitalists to develop biofuel from algae, according to industry publication Biofuels Digest in Miami.
With the region's proximity to the ocean and its history with biotech businesses, San Diego is a familiar spot for clean-energy investors, Biofuels Digest editor Jim Lane said.
“San Diego wants to be associated with algae,” he said, “while other cities have other fish to fry.”
Skeptics say that algae is a beachcomber's fantasy, that it's too costly to cultivate any significant amount of algae, that the fuel inside is too expensive to extract or produce on a large scale.
But in recent years, San Diego, Silicon Valley, St. Louis, Seattle and a few other cities have disregarded the skeptics and emerged as hotbeds of algae biofuel research.
One of the nascent industry's major annual events, the 2009 Algae Biomass Summit, is headed to San Diego Tuesday through Friday. It is put on by the Algal Biomass Organization, a Preston, Minn., group that seeks to promote commercial uses of algae products.
Seeking to unite and enhance the algae work under way in San Diego County is a new research consortium. It aims to help clear barriers to commercializing algae biofuels by identifying new algae strains and harvesting methods.
The San Diego Center for Algae Biotechnology was launched in 2008 with 16 founding partners from the University of California at San Diego, the Scripps Institution of Oceanography, Salk Institute for Biological Studies, biofuel companies and more.
Until recently, “algae has been this complete backwater of scientific research,” said the center's founding director, Steve A. Kay, who is also dean of biological sciences at UC San Diego. “But we've all woken up with the realization that we are junking the planet.”
Known by scientists as “nature's solar panels,” the “amazingly clever little chemical factories” soak up carbon dioxide and sunlight, which they convert into oil through photosynthesis, Kay said.
Fuel from algae has been tested in airplanes and is being groomed for use at NASA test facilities and in the Navy. Last month, San Diego-based Sapphire Energy unveiled its Algaeus plug-in hybrid vehicle, which will run on an algae-based renewable gasoline.
Still, expecting algae to make a meaningful dent in fossil fuel usage is a tall order, experts said. The production process is called inefficient by other biofuel competitors.
“We can certainly come very close, but we're not there yet, and I'm not sure when we'll ever get there,” said John R. Benemann, an algae biofuel consultant with Benemann Associates in Walnut Creek, Calif. “It's a significant challenge to get down to the price point, or even just the ballpark of fossil fuels.”
Algae-generated oil currently costs $20 to nearly $33 a gallon to produce, with some estimates soaring to $60.
“There's a valley of death between research and development and commercial development,” said Lisa L. Mortenson, chief executive of Community Fuels in Encinitas.
The intensity of the algae hype is making some investors wary.
“The majority (of the efforts) are … trying to make coal out of diamonds,” said David Andresen, a clean-tech investment banker at Oracle Capital Securities. “There's such a high level of scientific illiteracy in the investment community that investors have a very hard time picking winners and losers.”
Still, even Andresen is an investor in the clean-tech industry, advising Kai BioEnergy Corp., a San Diego company named after the Hawaiian word for “ocean.”
Although Kai can currently process only about 20 gallons per minute while it needs 300 gallons a minute to be commercially viable on a large scale, Chairman Mario C. Larach is optimistic.
“It's just a matter of scaling at this point,” he said. “If nature can do it, we can do it.”
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