A L G A L B I O D I E S E L E C O N O M Y

All the notions we thought solid, all the values of civilized life,
all that made for stability in international relations,
all that made for regularity in the economy...
in a word, all that tended happily to limit the uncertainty of the morrow,
all that gave nations and individuals some confidence in the morrow...
all this seems badly compromised.
- Paul Valery, “Historical Fact” (1932)

PROJECT NAME: Sequester-C - Developing an international manufacturing and dis-

tribution infrastructure for algal biodiesel production on an industrial scale. 1

OBJECTIVES: Develop the analytics, technology, manufacturing, and distribution

capacity that will enable the following: (a) establishing algal biodiesel as a viable al-
ternative to traditional fossil fuels, (b) demonstrating algal biodiesel industrial manu-
facturing as a best-practice to achieve sequestration of carbon emissions from coal-
fired thermal electricity generating plants, and (c) setting algal biodiesel fuels as an
international standard for national economies to achieve timely carbon reduction
targets. 2

PROPOSITIONS:

Human-induced abrupt climate change is caused by the emissions of carbon di-

oxide (CO2) and other greenhouse gases (GHGs)3 that have accumulated in the
atmosphere since the industrial revolution;4

The primary source of anthropogenic GHG emissions to the earth’s atmosphere

from all the industrial processes that make up the modern economy of much of
the world; 5

Presently, short-term economic drivers tend to support the maintenance and con-
tinuing proliferation of GHG’s. Reversing the trend of ever higher carbon emis-
sions to the earth’s atmosphere requires an urgent, world-wide shift towards a
lower-carbon global economy; 6

The systemic risk of GHG emissions is not costed and is not currently being
priced into market decisions;7

The present regulatory approach to encourage international abatement of carbon

emissions is often piecemeal, disjointed, and/or dis-economic; 8

Ultimately carbon emissions abatement is an international economic security is-

sue that, by nature, is cross-jurisdictional, multifaceted, and multi-level. In order
for a reasonable level of international economic security to be attained and main-
tained in a definite time period, only a heretofore exceptional collaborative
public/private partnership is necessary and sufficient.

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APPROACH:

The objectives of this business development initiative include the following:

Achieve an EROEI of 10:1 from algal carbon conversion process technologies for
biodiesel production from carbon streams originating from thermal coal-fired
electricity production; 9

Develop the technology scaling necessary to implement carbon capture from

existing thermal coal-fired electricity production facilities;

Develop the market mechanisms that would enable rapid adoption of this new
carbon capture technology in 7-10 year technology adoption cycles rather than
the more typical 15-30 year adoption cycles of the electric utility industry;10

Work with the auto industry to scale biodiesel production vehicle manufacturing;

Work with fuel distribution industry to enable the distribution of biodiesel fuels
form algal carbon conversion process technologies;

Scale-production process technologies, and high triacylglycerols (TAGs) algal cul-

tures countries of the world that provide incentives for rapid market penetration
of this new technology for carbon capture.11

MECHANISMS:

INITIATIVE ESTIMATED TIMEFRAME

COST

Bletchley Park-type effort to develop the technol-

ogy scaling necessary implement carbon capture
for thermal coal plants

Establish public/private partnership for studying

potential market mechanisms for rapid market
adoption of algal carbon capture technology

Establish business relationships with auto indus-

try and fuel distribution industry to utilize pro-
duction from algal carbon conversion processes

From initial national production scaling, expand

to international markets using pilot model devel-
oped

Total

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ENDNOTES

1High oil-producing algae can be used to produce biodiesel. “Algal biodiesel is one of the only
avenues available for high-volume re-use of CO2 generated in power plants. It is a technology
that marries the potential need for carbon disposal in the electric utility industry with the need
for clean-burning alternatives to petroleum in the transportation sector.” See National Renew-
able Energy Laboratory, A Look Back at the U.S. Department of Energy’s Aquatic Species Program:
Biodiesel from Algae, U.S. Department of Energy’s Office of Fuels Development (July 1998), 7.

2 Biodiesel works in many vehicle engines as well as petroleum diesel, while reducing emis-
sions of particulate matter, carbon monoxide (CO), hydrocarbons, and SOx relative to petro-
leum diesel fuels. However, by tying biodiesel production to CO2 emissions from coal electric-
ity production sequesters carbon from this source while burning it in higher efficiency vehicle
engines that produce lower carbon emissions produces a significant savings in the economy’s
overall carbon budget.

3 GHGs include heat-trapping methane, nitrogen compounds, low-level ozone and soot emis-
sions that are responsible for almost half of the man-made emissions accused of driving cli-
mate change.

4“The scientific evidence that abrupt climate change is a serious and urgent issue is now com-
pelling. It warrants strong action to reduce greenhouse gas emissions around the world to re-
duce the risk of very damaging and potentially irreversible impacts on ecosystems, societies
and economies.... Climate change will affect the basic elements of life for people around the
world – access to water, food production, health, and the environment. Hundreds of millions
of people could suffer hunger, water shortages and coastal flooding as the world warms.” See
Stern Review on the Economics of Climate Change, HM Treasury (2206), iv. Available at
http://www.hm-treasury.gov.uk/stern_review_report.htm (accessed 2/25/09)

5 Human activity adds ~8.2 billion tons of carbon into the atmosphere annually from human
industrial activities. Of this amount, the seas presently absorb 40%; therefore 4.4 billion tons
are added to the atmosphere annually. Presently, there are ~880 billion tons of carbon in the
atmosphere. Scientists believe that 935 billion tons may be the tipping point beyond which the
earth will experience runaway warming as it has in past climate cycles during the earth’s his-
tory.

6Accounting for both direct and indirect annual CO2 produced from consumption no matter
where products were produced: U.S. accounts for 50% of annual anthropogenic CO2; Europe
35%. The breakdown of carbon accountability by region is as follows: U.S. and Australia = 5.5
tons of carbon/year per person; European countries = 3 tons per person; China = 1 ton per
person; India = 0.5 ton per person.

7Identifying and managing systemic risk post-2008 Wall Street CDO market meltdown that
resulted in a asset value loss of $50,000 billion globally is high priority. See
http://www.scribd.com/doc/19772476/Costing-Systemic-Risk-from-Doomsday-Machines.

8This deck, although not specific to algal biodiesel market development provides an overview
of behavioral economic regulatory mechanisms
http://www.scribd.com/doc/20881933/Thinking-Strategically-About-Regulations.

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9 In 1930, EROEI of oil, natural gas and coal was 100:1; today EROEI of oil, gas, wind is 15:1;
large hydropower 11:1; conventional coal 10:1 (when add cost of CO2 emissions); newly found
oil, photovoltaic solar 8:1; “clean” coal 5:1 (better emissions control but coal ash and heavy
metals pollution); fuel cell, geothermal, nuclear 4:1; oil shale and Alberta tar sands 3:1; LNG
2:1; ethanol (from corn) 1.3:1; hydrogen 0.8:1; nuclear fusion (unknown). See, Charlie Hall,
“Balloon Graph;” The Oil Drum (www.theoildrum.com); Thomas Homer-Dixon, The Upside of
Down: Catastrophe, Creativity, and the Renewal of Civilization (Washington, DC, Island Press,
2006).

10Some of the advantages to managing technology adoption cycles so newer technology is

continually being introduced into the marketplace: (1) technology innovation is rewarded in
the marketplace. This tends to increase further technology innovations in a beneficial positive
feedback loop that builds on itself; (2) the reallocation of labor and capital to activities that
decarbonize the economy is assured. As a positive ROIC (return on invested capital) is
achieved from this reallocation, this tends to attract more capital and labor to these activities,
producing economic growth; (3) by addressing directly the present externalities of climate
change due to anthropogenic carbon emissions to the earth’s atmosphere, there is a higher
probability that future economic growth will be sustainable and that these activities over time
will produce a sustainable economic recovery from the present depressed national and global
economic conditions that exist during 2009 and are projected to continue through 2010.

11By transesterification of TAGs, we can create alkyl ester (biodiesel) whose chemical properties
are similar to those of petroleum diesel fuel.

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