From (reproduced essentially verbatim with the permission of the publisher Inside Washington Publishers):

EPA will measure the greenhouse gas (GHG) impacts of algae-based biofuels in its final rule to implement the renewable fuels standard (RFS) in response to growing interest in the renewable feedstock, including recent announcements by Exxon-Mobil (as noted in an earlier article) and Dow Chemical that they are undertaking separate projects to help commercialize the technology. Algae is a particularly tempting feedstock choice because it can be engineered to sequester large amounts of carbon dioxide (CO2) and because algae-based biofuel has a similar molecular structure to gasoline, allowing it to be used in the existing transportation infrastructure. These qualities could help the fuel sidestep controversy associated with corn-based ethanol, which some say cannot meet the CO2 reduction goals of the RFS and which, due to its corrosivity, can impact engines, pipes and fuel pumps.

EPA fuels official Sarah Dunham said the agency considers algae “a promising feedstock” that will be included in the final RFS rule. EPA issued its RFS proposal earlier this year to expand biofuels use in line with congressional mandates, and is taking comment on the proposal through Sept. 25. Dunham was speaking to a July 16 meeting of a National Academy of Sciences panel on reducing greenhouse gas emissions from the transportation sector. Algae-based fuels could be considered under the advanced biofuel or bio-based diesel portion of the RFS, according to the proposed rule.

Advanced biofuels such as algae-based fuel and cellulosic ethanol are expected to supplement or possibly replace corn-based ethanol. EPA had originally planned to wait to include algae-based biofuels in the RFS, arguing improvements in harvesting, dewatering and lipid extraction were needed to make the fuel economically competitive with other feedstocks, according to the proposal. But the agency’s expected inclusion of algae in the RFS may help boost efforts to commercialize the technology of farming algae, using it to sequester CO2 and then turning the algae either into a biofuel or a chemical.

For example, Exxon July 14 announced its plan to invest $600 million in producing transportation fuel from algae in a partnership with Synthetic Genomics. The partnership would represent Exxon’s first foray into renewable fuels and could help stymie criticism that the company has dismissed concerns about global warming. Synthetic Genomics founder, J. Craig Venter, told the New York Times, “Algae is the ultimate biological system using sunlight to capture and convert carbon dioxide into fuel.”

Additionally, Dow announced June 29 a partnership with startup Algenol Biofuels to build a demonstration plant that would use algae to turn CO2 into a vehicle fuel or an ingredient in plastics. The process also produces oxygen, which would be used to burn coal more cleanly, allowing sequestration of the CO2 produced from the coal to be used to grow more algae. The Department of Energy (DOE) is also considering providing economic stimulus funding for the demonstration plant, that could produce 100,000 gallons of fuel a year, according to news reports.

On a July 20 conference call on development of algae for fuels and chemicals, sponsored by the Biotechnology Industry Organization, leading experts in the field discussed challenges and opportunities for commercializing the technology and how algae-based fuels can play a key role in climate change legislation pending in Congress because of its reliance on CO2. On the call, Ed Legere of Algenol Biofuels said the pending climate bill could vastly help spur the technology. “The game is changing politically and that makes a market for micro-algae,” he said, adding that any cost imposed on CO2 is “an opportunity for algae companies.”

Noting that CO2 capture and sequestration (CCS) systems to bury CO2 underground is an extremely expensive process fraught with technical and legal challenges that does not put the CO2 to use, Legere said using CO2 to produce algae-based fuel could be a win/win situation. For example, a power plant could put in an adjacent algae farm and use the CO2 to grow the fuel or use the algae to make other useful products, rather than spending $500 million for a CCS system that simply buries the CO2. A bonus is that the CO2 used for algae does not need to be compressed, saving additional money. “Forward-thinking companies are already looking at this,” he said. “If cap-and-trade is a reality at $30 a ton [of CO2 emitted], then large emitters are looking at hundreds of millions in costs coming their way.” However, Legere admitted that using CO2 generated from power plants to grow algae is still a long way off and that algae biofuels developers initially will seek to use CO2 streams from industrial processes that are cleaner than coal, with fewer toxins, and have a manageable flow rate of 5 to 100 tons an hour, rather than the 400 tons an hour released by a typical 500-megawatt coal plant.

Also on the panel, Steve Gluck of Dow noted that government support is vital to algae developers, who still need to overcome challenges of scale. Legere said in terms of renewable fuels the best thing the government can do “is not try to pick winners, so whatever policy they put in place they don’t pick who should benefit and who shouldn’t.” Gluck added that Dow is seeking to put algae on a level playing field with other fuels and hopes the government will be “responsive and quick” in deciding whether to allow genetically modified hybrid algae to be grown for fuel.

Additionally, Tom Byrne of XL Renewables said it appears the government is behind algae. In addition to EPA including it in the RFS, DOE July 15 announced up to $85 million in economic stimulus funding grants to develop algae-based biofuels, including the possible funding for the Dow demonstration plant. “So the U.S. is jumping behind it . . . seeing the potential. They understand not all the questions are answered yet but see it can be achieved,” Byrne said. XL Renewables has a 1.5-acre demonstration algae production facility in Arizona. Byrne said capital costs including harvesting and processing equipment are about $40,000 per acre while the company is harvesting about 25,000 tons of algae per acre but hopes to boost that to 100,000 tons. Additionally, he said algae-based biofuel would cost about 30-cents a gallon.