As Congress Delays the Energy Debate, Should Algae Green Up its Pitch?

If the BP oil disaster in the Gulf of Mexico has a silver lining, it would have to be that it drew enormous attention to our dependence on fossil fuels and the lengths that our industry leaders will go to extract them from our planet. Environmental and renewable energy issues were brought to the forefront of daily news broadcasts for all to see and debate. Finally, there was a hint of momentum building for appropriate energy legislation to curtail harmful emissions and set standards to guide a safe transition to a new styled economy over the next two decades.

Fuels derived from algae have molecular structures that are similar to petroleum products, including gasoline, diesel and jet fuel.

July 29, 2010 – Vol.15 No.19

As Congress Delays the Energy Debate, Should Algae Green Up its Pitch?
by Jennifer Gorton

At least that was the consensus thinking over the past few weeks. Unfortunately, everyone forgot that this is an election year. Before the gusher in the gulf was capped, energy lobbyists were already singing the praises of the industry on national news, reminding everyone that 10% of the jobs in this country are energy related and that removal of precious subsidies will only be reflected at the pump in higher gasoline prices for the consumer.

Congress, sensing a needless vocal confrontation before November and not wanting to put buckshot in Tea Party muskets, decided to push the debate on energy reforms off until next year. The House had already adopted a comprehensive energy bill last year, but the Democratic majority Senate, where 60 votes are required to do anything these days, has shelved its watered down version of the bill until after election day, which translates to 2011 at the earliest. Cap and trade seems further away than ever, but the need for government support and standards in the renewable energy sector were to be the catalyst for new job growth at a time when this nation needs it most.

The rest of the world, however, is not sitting on their hands. The Chinese have been more proactive in this space than anyone to date. By necessity, they have learned to plan well over the past few decades, understanding completely the needs of their burgeoning population growth. The Obama administration can preach from the pulpit about expanding Cleantech investments, but the Chinese have already committed billions to developing its own renewable energy resources. They already have solar, wind and smart grid companies with excess domestic capacity searching beyond their borders for profits and returns. In the solar space, for example, Chinese companies have already achieved a 50% global market share. International investors may have to trade currencies to invest abroad, but they certainly do not wait for politicians to summon up their courage.

Private and public investment in the Green Revolution is not lacking in our market, but a focus has yet to emerge. In July, 2009, the oil giant ExxonMobil announced a significant shift in direction. Rather than drilling ever downward in an attempt to find more oil, the company announced that it would invest heavily, some $600 million, into the production of algae-based biofuels. The announcement came just a week after another industrial giant, Dow Chemical, declared its own investment in algae technology for the development of plastics.

Algae cultivation pundits claim that we currently have a leadership position in this sector of the renewable energy space. Company leaders profess that most basic research has been completed by academics and are quick to suggest that future grants must go to solving the necessary engineering problems to make processes both effective and cost efficient. While ExxonMobil scientists search for the best way to genetically modify oil-laden algae strains, refinements in photo-bioreactors and extraction methods are free ground for innovation and improvement.

Scientific studies consistently confirm that algae may be the most effective renewable energy resource for meeting the energy needs of tomorrow at a reasonable cost that does not damage the environment or increase global warming. Algae can be grown on marginal, desert-like land with minimal fresh water, and studies show they are the most efficient converters of sunlight to energy. Microalgae grow significantly faster, doubling in a matter of days, than do land crops used to make biodiesel, and oil per acre production is more than 30 multiples of its closest competitor. Fuels derived from algae have molecular structures that are similar to petroleum products, including gasoline, diesel and jet fuel, and would be compatible with the existing transportation infrastructure.

Why is investment lagging in algae production? Like other renewables, the fortunes of algae cultivation are inextricably tied to the price of oil, which is similarly correlated inversely with the strength of the U.S. Dollar. The recent crisis in Europe created a flight of risk averse capital to safe havens, thereby bolstering a heretofore weak Dollar. The Dollar has begun to weaken again, based on fundamentals. Perhaps, now is the time to “green up” the pitch for algae production investments.

Contact:

jennifer.gorton(at)forextraders.com

Jennifer Gorton is Content Manager at Forextraders.com