Which technologies are likely to enable us to meet longer-term sustainable biofuels targets for transport?

By GenetiFuel (Howard Siow, Dr Desmond Lun, Lawrence Auffray) August 2011 Government mandates and energy independence is driving the rapid commercialisation of sustainable biofuel technologies. This paper looks at which of the current technologies is likely to meet the sustainability, energy independence, total cost and scale requirements to replace fossil fuels. “Energy from the combustion of fossil fuels is the largest source of air pollution and greenhouse gases. These environmental implications of fossil fuels have generated political pressure to diversify fuel sources. Among the alternatives to fossil energy are renewable (including biofuels) and nuclear energy. While the high capital intensity of power generation means that changes in the fuel mix occur only very gradually, the proportion of power generation using modern renewable technologies is projected to grow rapidly from 1% in 2005 to 6% in 2030, including biofuels (source: OECD). Toughening climate change policies are likely to accelerate.”i

The Market for Liquid Fuel
According the Central Intelligence Agency (CIA) 2009 Fact Book, the world consumes 84 million barrels of fossil fuels (BBL) per day, or 13.3bn litres of oil per day. Of this, USA consumes 18.7M BBL/day, Europe consumes 13.6M BBL/day, and China consumes 8.2M BBL/dayii. By 2030, global oil consumption is expected to increase by more than 20% to over 100 million BBL per dayiii.

Global Crude Oil Demand Forecast to 2030 Millions Barrels per Day
30 25 20 15 10 5 0 China India EU USA

2030 2020 2010 2002

Source: Algae 2020 Study, Emerging Markets Online Consulting Services, IAE, EIA forecasts

A 2010 study by McKinsey found that government mandates are the key drivers towards production of new biofuels. Instability in oil producing countries has increased oil supply and price uncertainty. Top Drivers for Biofuels Growth Percent Mandate Improved energey security Development of affordable fuels Need for sustainable fuels Other 31% 20% 19% 19% 11% Regulatory Source: Oberman R. Per dollar of GDP 25 Brzail India 20 Russia China 15 10 5 0 1990 2000 2005 2010 2015 1020 2025 2030 Source: Energy Information Administration. Voters are increasingly looking towards government‘s sustainability credentials.China’s energy consumption projected to exceed 20% of world consumption. and local inflation. Sustainable Biofuels Growth: Hurdles and Outcomes (2010) . thus outpacing the rest of the BRICs % of World. Goldman Sachs Global Markets Institute Governments are determined to develop alternatives to fossil fuels.

45 per gallon for ethanol and $0.be required to comply with European cap and trade regulations beginning in 2012. with implementation handled by Member States. United States 1) Blendstock: Volumetric excise tax credit (VEETC) . about 10% of their oil consumption) of renewable biofuels be consumed annually by 2022. 2) Diesel: Mandated minimum 5% biodiesel blend. 2009 Ethanol Industry Outlook http://blog."Blenders' Credit" currently set at $0. 2. In practice.not just flights associated with European carriers .com/environment_impact/2009/06/mandate. Ethanol and Advanced Biofuel Mandate in USA Federal law requires that 36 billion gallons of renewable biofuels be consumed annually by 2022 and that no more than 15 billion gallons of that be from corn ethanol.74 million BBL/day. 2) Jet fuel: Proposal that all flights to Europe .In the USA. and that no more than 15 billion gallons of that be from corn ethanol. establishing an EU-wide binding target of 10% of transport energy from renewable sources by 2020.jpg Region Brazil Key biofuels and clean energy policy drivers 1) Ethanol: National Alcohol Program (PROALCOOL) requiring a minimum of 25% anhydrous ethanol. Federal mandated totals (Billions gallons) Corn ethanol 40 35 30 25 20 15 10 5 0 '02 '04 '06 '08 Advanced biofuels '10 '12 '14 '16 '18 '20 '22 Source: Energy Information Administration. most vehicles in Brazil are now flex-fuel capable for up to an 85% blend of ethanol (E85) and some can run on E100.oregonlive.60 per gallon for advanced alcohols 2) All biofuels: RFS2 mandate for 36 billion gallons of biofuels for . European Union 1) Diesel: Directive for Renewable Energy (DRE). federal law requires that 36 billion gallons (equivalent of 136 billion litres/year.

Yanosek and Victor argue that the rush to meet the collective 2020 targets are only developing short-term solutionsv that may not actually drive us towards the ultimate objective of supporting a sustainable replacement to fossil fuels. • Contribute to also grow energy crops in areas with marginal conditions. China Under its 12th Five Year Plan. • Develop efficient micro-organisms and enzymes to convert the (hemi)cellulose to sugars. but further development will likely proceed. which calls for 33% of electricity to come from renewables by 2020. China increased its solar installed capacity targets to 10GW by 2015 and 20GW in 2020. Solar installed capacity target moved to 67GW from 20GW by 2020. Reducing nuclear's share of the overall generation mix and increasing solar subsidies to accelerate installations ahead of summer 2011. Germany suspended production at 7 nuclear plants. corn and wheat. and • Convert agricultural waste into biofuels. Increased solar installed capacity target from 8GW to 23GW by 2016. including techniques that can helpiv: • Increase biomass yield/ha while reducing the needs for production inputs. Germany also targets 80% of power from renewable sources by 2050. For example: • Arable farming land and feedstock being used to produce fuel crops like sugar cane. with discussions about a potential 50GW target by 2020. • Improve crop quality (higher biofuel yields). with associated RINS ranging in value based on the type of biofuel and market conditions. 3) California's legislature codified the state's renewable portfolio standard. These techniques cannot be scaled up economically or without jeopardising food security. Germany India Italy Japan Increases in consumption and these government mandates for biofuels has driven significant investment into biotechnology.road transportation by 2022. The country's nuclear plans are being re-examined. There has also been discussion about increasing the RPS to 40%. representing about 25% of its nuclear capacity. • Subsistence farmers in Africa being displaced to plant poisonous Jatropha plants. . which can then be fermented into biofuel.

Synthetic biologyvi aims to create algal-based organisms that can efficiently consume sunlight and carbon dioxide and convert it directly into high quality biofuels or even jet fuel without the need for expensive refining and processing. . Corn (USA and China) or Wheat (Europe) crops are harvested and the sugars are converted to ethanol in a chemical process. Biofuel generated from Algae. The lowest current cost is $2. It is. highly sensitive to the price of raw materials (crops) and has to compete for arable farmland. 2.37/litre in open ponds. however. This technology is currently cost competitive with fossil fuels and can scale up to a maximum of 50% of current fossil fuel capacity. and thus not compete with arable farmland.Current BioFuel Technologies There are generally 2 types of biofuel production: 1. and $6. This technology has already been proven to work by GenetiFuel with biologically similar E. The cost is as low as 23c/litre in Brazil. where some organisms are placed in waste water or sea water. multiplies and grows and consumes sunlight. which does not naturally produce biofuel. The goal of crop-based biofuels is to be able to economically produce biofuel from cellulosic feedstock like switchgrass plants that can be cultivated on low-quality non-farm land. Algae seems an idealistic futuristic concept. Biofuel generated from farmed crops. coli bacteria. CO2 (potentially next to a coal power station). The future is to scale and lower costs by reducing the capital and operating costs of running PBS and using synthetic biology to do almost all the processing and refining inside the algae organism. and the significant scientific challenge to economically utilize cellulosic feedstock. harvested and refined into biofuels. Although this technology is not currently cost competitive with fossil fuels and in its relative infant stages (few commercial scale projects). Algae is cultivated in open ponds or photobioreactors (PBS). and economically extract the oil from the algae. The challenge of algae-based biofuel production is to be able to economically harvest the algae mass from the ponds or bioreactors. Sugarcane (Brazil). The risk with this technology is the potential environmental issues of farming large areas of this previously uncultivated land. The future is to scale and lower costs by making the process more efficient and by using cheaper biomass materials or developing technology to extract sugars from cellulosic feedstock (switchgrass) that can grow in less arable land.30/litre in PBS. But we are a long way off from it being commercial without significant subsides. algal biofuel has the potential for significant scale and does not compete with arable farmland if technological hurdles can be overcome. nutrients and generates an energy dense biofuel.

Niton Capital. There is enough land for biofuels but 80% lies in the South Source: Brunner G.Biofuel generated from farmed crops Some studies have shown that scaling up ethanol produced from farmed crops in Brazil have the ability to replace 50% of fossil fuels vii. Biofuels and Sustainability (2009) .

23 USA (corn) 0.25 0.60 for a litre of gasoline in the European Union: . McKinsey. McKinsey analysis Ethanol made from refined farming crops can be produced from Brazil sugar cane for as little as 23c/litre.39 EU (wheat) 0.05 0. paying all relevant tariffs and taxes.18 0. Riese J. shipping that litre to Western Europe.900 Enough for 360 billion gallons Source: FAPRI. and delivering it to the consumer will be roughly $0. FAOSTAT.48 Raw materials Conversion Source: National Renewable Energy Laboratory (NREL). SRI. Beyond the Hype – Perspectives on Growth in the Biofuels Industry (2007) Crop-based Ethanol Production Cost US$ per liter (2007) Brazil (sugarcane) 0.34 0.000 900 900 3.52 China (corn) 0.18 0. McKinsey researchviii suggests that by 2020.Enough biofeedstock to replace 50% of fuel Incremental Feedstock Potential 2020 (Millions tons) Wheat/corn Sugarcane Agricultural residues Energy crops Forestry Total 200 800 1.13 0.73—far less than today‘s prevailing price of $1. the cost of producing a litre of ethanol in Brazil.

University of Sao Paulo. Emerging technologies will probably make it possible to produce ethanol or other ―drop in‖ fuels more cheaply with cellulose derived from other feedstocks. in China it may be possible to produce ethanol from rice straw at a cost of about $0. These technologies will require significant scientific breakthrough before becoming commercially viable within the next 10-20 years.16 a litre.Cost to produce 1 litre of ethanol in Brazil and export to Western Europe (2020) US$ per litre Source: Centro de Estudos Avancados em Economia Aplicada (CEPEA). farm land used to produce crop-based biofuels is set to increase rapidly. Biofuels from residues from other agricultural crops may be cost effective at producing 5-10% of fuel requirements. ix . FNP. including relatively inhospitable ones). For example. National Renewable Energy Laboratory (NREL). such as switchgrass (which can grow in a broader range of habitats. McKinsey analysis Biofuels from farmed crops is scaling up quickly with downstream consequences At current food price and crude oil price levels.

Technology to extract cellulosic feedstock is still in infancy. This intensive farming is driving the use of arable farming land or rainforests in some of the world‘s poorest nations to produce oil for the world‘s richest nations. Competition for food-based agriculture for arable farmland. but like nuclear fision (power from water). Government mandates for ―non-crop based biofuels‖ .xii 4. including political challenges around food prices and water security/shortages xi 2. the cost of maize (up 84 percent). Competition for feedstock from a growing list of market entrants. Increasing feedstock costs and feedstock price volatility. 5. The key challenges with crop-based biofuel are: 1.5 million litres/day to potentially 13 billion litres per day (183 times increase in production to replace fossil fuels). According to the World Bank. However in scaling up from 71. sugar (up 62 percent). the potential impact on the land and environment to achieve such large increases in crops in South America and Africax has to be questioned. and is a very difficult scientific problem. it is still a large unknown. there is an increased drive on production of biofuel crops. wheat (up 55 percent) and soybean oil (up 47 percent) have now risen to near record highs from mid-2010 to mid-2011.As the cost of oil increases and to meet government mandates. It is predicted to be solved by 2020. 3.

059 1.Biofuel generated from Algae Algae at first take is an ideal organism for creating feedstocks to manufacture biofuel. wastewater and excess heat from power stations and other heavy polluting industries.xv Typical oil yields from the various biomass sources in ascending order Oil yield (litres/hectare) Corn Soybean Peanut Canola Rapeseed Jatropha Karanji (Pongamia pinnata) Cconut Oil palm Microalgae (70% oil by wt.590 2. which flourishes only in tropical climates like those of Brazil.900 58.) Microalgae (30% oil by wt. and provide carbon creditsxiii  Compatible with integrated production of fuels and co-products within biorefineriesxiv  Can produce other higher value products (Singh and Gu. and some basic inexpensive nutrients  Grows almost anywhere. The sugarcane plant. compared with only 3.892 2. even on sewage or salt water. and does not require fertile land or food crops  Minimizes competition with conventional agriculture  Can capture/recycle stationary emissions of carbon dioxide. carbon dioxide.500 liters from corn.700 . 2010) and jet fuels  It has high area productivity and one of the fastest growing plants in the world.190 1. Algae:  ―Blooms‖ when exposed to sunlight.689 5.190 1.000 liters of ethanol per hectare.950 136. produces 6.) Source: Chisti 172 446 1.

like bioplastics. flocculation. mixotrophic) for cost. Feedstock • Algal Biology: strain selection and genetic manipulation for "best" breeds • Algal Cultivation: evaluate cultivation technologies (open. preserve co-products • Fuel Conversion (eg. redice contaminants and emissions • Co-products (high value chemicals and materials. Because of these significant challenges. Infrastructure • Distribution and Utilization: Establishing supply chain and meeting regulatory classification requirements • Resources and siting: Integrate production systems with wastewater treatment. and reduction in very high extraction and processing costs. fertilizers. dissolved air floatation. industrial enzymes): improve extraction and recovery 3. closed. Conversion • Extraction and Fractionation (eg. Algae biofuel producers are working towards finding an algal strain with a high-lipid content. centrifugation. sonication. . thermochemical conversion. hybrid. biogas. selective extraction): minimise waste and energy to achieve high yield of desired intermediates. scalability and environmental impactxviii • Harvesting and Dewatering: Evaluate cost and sustainability of approaches (sedimentation. animal feed. heterotrophic.Algae has significant technological challenges The biggest challenge of algal-based biofuels is cost and complexities in scaling up. Current R&D challenges with Algal Biofuels technology arexvii: 1. filtration. photobioreactor. anaerobic digestion): improve efficiency. fast growing. coastal. few large scale commercial projects existxvi. CO2 and land resource requirements Algae-based biofuels is waiting for a disruptive technology to overcome these technological issues and significantly improve the economics. easy to harvest. mechanized seaweed harvesting) 2.

Though the technology still requires significant development. The aim of synthetic biology for biofuel production is to manufacture an organism capable of harnessing solar energy to convert carbon dioxide to fuels such as biodiesel.The next generation of Algae biofuel technology To overcome these challenges. coli converts sugars to fatty acids. This would eliminate the major costs associated with algae harvesting and extraction. the future of Algae-based biofuels is to create a completely new algae organism. As opposed to traditional genetic engineering. allowing direct. The only major process cost would be the cost of running photobioreactors to grow the organism. coli to efficiently produce fatty acids. and biojet fuel. Synthetic biology is made possible by rapid advancements in genomic technologies for sequencing and synthesizing DNA that are revolutionizing biology and biological engineering. We have proven our approach on engineering the bacterium E. allowing fundamental changes in function. which Is not ultimately scalable because the sugars need to be obtained from food crops. and also refining the algal oil into finished products. synthetic biology uses engineering principles to modify whole systems of genes. Genetifuel is taking a rational design approach to synthetic biology that uses computer modelling to identify how organisms need to be modified for biofuel production. sustainable. high-efficiency conversion of carbon dioxide to fatty acids using solar energy. which are close chemical relatives of biodiesel. using synthetic biology that can directly produce and secrete finished biofuels and high value products. Genetifuel is now working on applying our rational design approach to a strain of blue-green algae. E. which typically involves modifying single genes to improve traits. and biojet fuel at maximum efficiency and of secreting the fuel into the organism‘s growth media so that it can be easily skimmed from the bioreactor. and cost competitive to fossil fuels. . biogasoline. it is the most viable candidate for producing biofuel in a way that is scalable. Synthetic biology allows organisms to be genetically engineered on a large scale to fundamentally modify their behaviour. biogasoline.

For example. better. Another example is to employ a method that uses algae cells as mini-processors and refineries in a process referred to as ‗milking the algae‘ that will consume CO2 and excrete hydrocarbon fuels directly. and $15–$40 in photobioreactors (PBRs). Since algae production systems are a complex composite of several sub-sets of systems (i. With the advent of cheaper photobioreactors (PBRs). . and lower cost systems. reducing the number of steps in algae biofuels production is essential to providing easier. However an important advantage of synthetic biology Algae is that the algae-based organisms can also produce a number of other amino fatty acid based products very cost effectively. Higher value products that can be manufactured from synthetic biology Algae Market size (billions. these costs are likely to come down significantly in the next few years. production. ―A crucial economic challenge for algae producers is to discover low cost oil extraction and harvesting methods. harvesting. Origin Oil has developed a technology to combine harvesting and extraction systems into a single process that is designed to reduce system complexity and costs for algae producers. drying systems). log scale) Source: Goldman Sachs Research ―Algae 2020 study has reported the estimated costs to produce algae oils and algae biodiesel today between $9 and $25 per gallon in ponds.The goal of synthetic biology algae is to achieve large scale biofuels with low capital costs that can produce biofuel below the cost of mining and refining fossil fuel-based petrol. reducing these costs is critical to algae biofuel companies for its successful commercial implementation. Companies such as Amyris has taken advantage of this to profitably make products at up to $4 per litre. Extraction systems with estimates up to $15 per gallon of oil produced depending on the extraction method can be less than cost-effective. In the present scenario. extraction.e.

30 per gallon of oil harvested compared to traditional centrifuge technologies which can cost up to $1 or more per gallon. Cost reductions in algae production systems are essential for algae producers to establish economically sustainable and profitable enterprises. ―Examples of this include Arizona State‘s blue–green algae that excrete a kerosene type of jet fuel and Algenol‘s blue–green algae that excrete ethanol fuel directly. Microalgae still faces significant scale and production cost constraints.―One company. and help to simplify complex processes for emerging algae producers and customers of new algae biofuels production systems.50 to US$1.‖xix Conclusion Some groups have claimed that current crop-based biofuels technologies not only can be produced for less than fossil-fuel based fuel. Companies like GenetiFuel are trying to solve these significant issues by engineering new algaebased organisms that can organically produce finished biofuel or oil products. Algae to Energy. By milking the algae. These economics means government mandates for biofuels are likely to continue to drive the conversion of food crops to oil crops. These methods have the capability to significantly reduce production costs. .08 up to $0. the algae biofuel industry is still perhaps 10 years and many hundreds of millions of dollars of research away from achieving its scale and cost objectives. Given forecasted severe global food and water shortages and already worrying signs about the displacement of food crops to produce more profitable oil crops. uses a patented system from Missing Link Technology that can extract algae oil from 0. poultry and fish feed additives valued from $800 up to $2500 per tonne. ―Another example is a harvesting technology from Algae Venture Systems that costs less than $0. This biomass fraction contains valuable proteins for livestock. which are not crop based. but can also be scaled up to supply perhaps 50% of global oil demands. there are still scalability issues that will need to be solved over a 5 year time period. Despite aggressive claims to be able to scale up and achieve costs of between US$0. the additional 50% of the biomass remains. While these technologies appear to be able to achieve cost and scale requirements. There are also a few species of algae that will naturally excrete oils from the cells. the trend is moving towards biofuel sources such as microalgae. extraction and refining systems all together by excreting forms of biofuels directly from the cells. these algal microrefineries help to bypass the harvesting.00 per litre.29 per gallon (depending on the species used) compared to other algae extraction methods ranging from $2 a gallon up to $12 per gallon. ―Finally the co-production of some more valuable fraction and their marketing is also important for the success. Even with algae species with up to 50% oil content.

Department of Computer Science and Center for Computational and Integrative Biology. Clean Energy Report (2011) CIA World Fact Book (2009). process and technology change and sales & marketing. Howard has experience in managing and growing successful startup companies.com/print/67876) ii . His experience includes large energy reform. Yanosek K. Emerging Markets Online Consulting Services. Rutgers.Authors GenetiFuel GenetiFuel is in the process of raising US$3.html iii Algae 2020 Study. policy.com/print/67876) vi Victor D. Accenture. consulting/strategy. Yanosek K.com Ph.5m for building a pilot of its biofuels using synthetic biology. +61 401 164 860 (Australia) Lawrence has over 20 years business experience primarily in the energy sector ranging from commercial & financial advisory. EIA Forecasts iv Carrez D.foreignaffairs.cia. European Association for Bioindustries. energy business model review. IAE. Lawrence Auffray CEO. GenetiFuel Desmond started research at MIT in 2002 (10 years of research experience) and is a recognized expert in complex systems engineering and synthetic biology. The Crises in Clean Energy (2011) (http://www. GenetiFuel Howard has 7 years management consulting experience in the Energy & Utilities sector with PriceWaterhouseCoopers. The State University of New Jersey He received his PhD in electrical engineering and computer science from the Massachusetts Institute of Technology (MIT) and did postdoctoral training in genetics at Harvard Medical School. Howard Siow Strategy. risk business planning and operations. He is currently Associate Professor. Energy Australia and TXU (TRUenergy / SP Ausnet). He is a member of the Infrastructure Partnership Australia Energy and Sustainability Taskforce As an Engineer and recognised leader in the sector has advised many clients in moving to a low carbon economy Dr Desmond Lun Chief Scientist. business management. AGL. i Goldman Sachs. Desmond has published 15 peer-reviewed journal papers. regulatory.gov/library/publications/the-world-factbook/rankorder/2174rank. https://www. project management. The Crises in Clean Energy (2011) (http://www. Energex. Biofuels in Europe (2007) v Victor D. GenetiFuel lawrence_auffray@genetifuel.foreignaffairs.

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