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The rapid decline in oil prices over the past six months has taken away the immediacy of developing biofuels, and the overall economic collapse has reduced funding to a trickle. But despite such short-term gloom and doom, researchers and investors in one of the newest feedstocks for biofuels — algae — say a slower pace could be a good thing.
“Most of these algae companies are still in their earliest stages, so the current downturn really won’t hurt them too much because there are no revenues or customers to worry about,” said Dennis Costello, a managing director in the Boston office of Braemar Energy Ventures, a venture capital firm based in New York that invested in California-based algae technology developer Solazyme Inc. last fall.
“It buys these companies time,” Costello said.
Locally, the most well-known names in the algae business are Cambridge’s GreenFuel Technologies Inc. and Boston’s Bodega Algae LLC. While GreenFuel initiated a round of layoffs earlier this month — about 19 people, just under half its staff — CEO Simon Upfil-Brown said the move was done in an effort to outsource much of the physical engineering associated with the company’s $92 million bioreactor project in Spain. Despite the layoffs, he said, the company and project are still moving forward.
“Algae is still the best (biofuel feedstock) option in terms of viability,” Upfil-Brown said. But officials have always maintained that the time to perfect such a system would be measured in years, rather than months, he added.
Smaller Bodega Algae, a six-person company focused on developing new light sources to enhance the growth of algae in bioreactors, is also pushing ahead. According to CEO Joe Dahmen, the company has four prototypes of its system in the field — two at NASA’s Ames Research Center in California and two at a research center at the University of Washington — and is in the process of building a next-generation product, expected to be smaller and more efficient.
Dahmen said that the waning interest in biofuels as a replacement for oil and gas is temporary, and the situation is encouraging researchers in the algae sector to look at other areas for more general algae applications.
“There are other applications, such as bioplastics, bioceuticals and industrial applications, that are being looked at as near-term markets,” he said.
Recently, jet fuel has been identified as one such application, with Continental Airlines announcing earlier this month that it had successfully executed a test flight of a 737 using an algae-based biofuel.
Upwards of 15 other companies nationwide are working solely to bring algae-based products to market, while a number of companies from other industries are hoping to get in on the action, including Cambridge-based biotechnology startup Codon Devices Inc., which last summer signed a multiyear partnership with Florida-based Algenol Biofuels to help develop biofuels from algae.
There is also a host of university researchers working with the technology as well. In Connecticut, the University of New Haven recently landed a $135,276 grant from the Connecticut Center for Advanced Technology to research the possibility of using algae in Long Island Sound as a fuel source. At the University of New Hampshire, professor Ihab Farag and his group of graduate and undergraduate students in the school’s Biodiesel Lab have been looking into effectively growing algae in wastewater or seawater.
While funding over the past four months has slowed, it has not completely dried up. Costello said his firm is working with at least two additional groups, though he declined to name them. Allied Minds, a Quincy-based investment group that focuses on bringing university research out of the lab, recently invested in a University of Washington spinout called AXI LLC, which is developing commercially advantageous strains of algae for the production of biofuels.
In addition, the U.S. Department of Energy recently announced $200 million in funding for pilot-stage biofuel facilities, which is expected to include algae bioreactors. At the same time, President Obama has remarked several times on the need for biofuels, and industry insiders are looking at the new administration with great optimism.
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