Micro-algae have considerable potential for the production biofuel and in particular biodiesel (1). At present the process of producing fuel from algae would appear to be uneconomic with over 50 algal biofuel companies and none as yet producing commercial-scale quantities at competitive prices (2) (3) It has been suggested that the cost of production needs to be reduced by up to two orders of magnitude to become economic (4). Others estimate biodiesel from algae costs at least 10 to 30 times more than making traditional biofuels (5).

Algae can be grown in simple open systems or closed systems known as bioreactors (6) (7). Although, bioreactors can have benefits, their cost may prohibit their use for the production of biofuel. (8) The cost of producing dry algal biomass in a tubular bioreactor has been given as US $32.16per kg in a tubular bioreactor (9). Some estimates have indicated that closed reactor systems will only be able to compete with crude oil at US$800 per barrel (US$5 per litre) (10). Solix Biofuels has developed technologies to produce oil derived from algae, but it costs about $32.81 a gallon (over US$8 per litre) (11).

The NREL in the USA concluded that open systems were the only economic solution for large-scale production and a study by Auburn University again concluded that open systems were the only economic system (12) (13). A common feature of the three most common algal species (i.e. Chlorella, Spirulina and Dunaliella) currently produced commercially for food supplements etc is that they are grown in open-air cultures (8) (14) (15) (16). The production cost of oil from algae, grown in open saline ponds in a project involving Murdoch University in Perth, Western Australia, has been reported below $4 per kilo reduced from $12 a kilo in a year, but their aim is to get it down to less than $1 a kilo to be competitive. (17). A review of the potential of marine algae as a source of biofuel in Ireland estimated that the cost of algal biodiesel feedstock produced in open ponds in Israel is over $2.80/kg and concluded that a cost reduction of at least a factor of five is required and that current cultivation costs can only justify extraction of high-value niche components (18).

Many in the industry admit algae cultivation simply for biofuels may not be currently profitable by itself and that the industry must take advantage of markets for additional high-value co-products such as ”nutraceuticals”, fertilizers and the energy production from algal biomass “waste”. (19). A recent economic model of the production of algal biofuel found that oil for biofuel production could represent a relatively small portion of algae-related revenue opportunities. (The model assumed an algae strain with an oil content of 20% and a “nutraceutical “content of 2%). The study concluded that harvesting and oil extraction technologies need to focus on the capture of all valuable algae materials and that co-product markets must be rigorously analyzed to assess the feasibility of realizing revenue opportunities for non fuel products. (20)

The oil content of algae can be high at over 70% with oil levels of 20% to 50% being reasonably common, but more typically 10 to 30% when grown under nutrient replete conditions (21) (22).The NREL study found oil yields in certain species up to 60%, but maximum productivity levels were found at lower oil content (12). A figure of 50% oil content for commercial algae has been suggested, but this is considered higher than feasible by many and a lower figure of 20% may be more realistic and is supported by initial large scale production trials (22). 50% - 80% of the material produced from the production of oil for algal biofuel could, therefore, be algal “waste” biomass. If the production of algal biofuels becomes a commercial reality the amount of algal “waste” biomass could be very large and it will be essential for environmental, energy and commercial reasons that it is used effectively.

The algal “waste” biomass could be used to provide further bio-energy. It could be used in co-generation, but the biomass may have a relatively low energy density and may present problems with drying and handling. An alternative approach may be to use anaerobic digestion to produce biogas. A recent study has shown that the conversion of the algal waste biomass to methane can recover more energy than the extraction of lipid from algae and that when the lipid content is below 40% the anaerobic digestion of the entire biomass without lipid extraction may be the optimal strategy for energy recovery. (23).

The European Algae Biomass Association has estimated that it may take another 10 to 15 years to turn laboratory experiments into industrial-scale production of algal biofuel (5). For this to be achieve an economic process must be established that will include efficient algal cultivation, harvesting and extraction and may require the movement away from the historical emphasis on fuel from algal lipid. It will also require that yield of economic products is maximised, be that energy, chemical, feed or fertilizer and that the entire algal biomass is utilised. Anaerobic digestion could be a vital part of an economic algal energy process.

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