Investing in Algae: The Next Form of Renewable Energy

Could algae solve the global warming problem as well as reducing our dependence on oil by capturing and using CO2 from smokestacks.

The search for alternative and renewable energy continues and algae could be a good area to invest in.

The idea of using corn for ethanol has faded as food prices have gone up and planting so much corn has hurt farmlands. There is a lot of promise using algae as an alternative to petroleum and a renewable energy source, not to mention that algae doesn’t take up arable land or use edible food.

In 2009, the electric car is all the rage. GM recently announced they have a new car called the Volt that is supposed to get 230 miles per gallon (mpg). Current thinking is that the price of the Volt will be $40,000 and it doesn’t sound overly appealing with that price tag. Other companies have electric cars on the market and more will be ready to come out in the next couple of years.

Other negative talk about the electric car is that it still takes power that pollutes. The electric car is not a clean energy vehicle when you consider the electricity it takes to charge them. It could get the US to reduce its dependence on oil, but as far as pollution goes, it still takes coal to produce a lot of the electricity in this country.

Biofuel as a renewable energy source is an area of both research and ridicule, with stories of cars running cross-country on McDonalds French-fry grease. Algae is considered a biofuel and venture capitalists, large investment groups and the US military are taking algae seriously as a real alternative to petroleum. Research in turning algae into fuel isn’t new; it has been ongoing since the 1970s.

The public interest in algae has increased since Bill Gates’ investment company, Cascade Investments, sold their shares of the ethanol company, Pacific Ethanol (PEIX) and invested in a privately-held algae company called Sapphire Energy. Just because Bill Gates invests a small percentage of his money into a company that is researching turning algae into a usable fuel is not much of reason to start putting our money into algae; but people do pay attention to where the so-called smart money goes, and that includes people like Bill Gates. Another large group that has begun to inquire about algae as a fuel for their fighter jets is the United States Air Force.

The US Air Force wants its entire fleet of aircraft to have the ability to fly on a 50-50 mix of oil and synthetic fuel by 2011 and to be entirely “carbon zero” in a decade. The US Defense Advanced Research Projects Agency (DARPA) has awarded a $25 million contract to Science Applications International Corporation to help develop an algae-based jet fuel for the US military.

The research doesn’t only concern turning the algae into fuel; it has to do with making enough algae. There are different ways each of these companies grows its algae, some in tanks indoors and using sugar instead of sunlight. Others use outdoor facilities and the sun. These companies are coming up with new and interesting ways to use carbon dioxide (CO2) for their projects. An Israeli company is using the CO2 from the electric company’s smokestacks for their algae growth.

Privately Funded Companies

Many of these companies are not publicly traded at this time. That doesn’t mean that they won’t decide to go public at some time in the future, so it would be a good idea to watch and read about all of these companies and what they do. These companies could make good investments in renewable energy at some time.

Sapphire Energy. In 2007 they successfully made a product, named Green Crude, which yielded 91% octane gasoline from algae. Sapphire Energy appears at this time to be one of the leaders in the algae-to-fuel field.

Solix Biofuels, Inc., is another privately-held company, with a long list of investors including companies in China. Founded in 2006, it is backed by Colorado State University’s Engine and Energy Conservation Laboratory.

Solazyme has a deal with Chevron. In 2008, Solazyme announced they were within 24 to 36 months of creating cost-competitive fuel.

Cellena is a company in Hawaii that is mostly owned by Shell Oil.

Seambiotic is a company in Israel that uses flue gas from coal burning smokestacks to create the CO2 in its algae production. They clean up an environmental problem and use it to grow their algae.

Publicly-Traded Companies

There are publicly-traded companies, but most of these are penny stocks and are more speculation than investments. Some ethanol companies are now including algae in the production. Remember that some penny stock companies trade in very low volumes, which means you might have a hard time selling your shares, and the spread between the bid and the ask price can be very wide. Watch these companies as a renewable energy source you might want to invest in.

OriginOil (OOIL) has patents and is employing several next-generation technologies to greatly enhance algae cultivation and oil extraction.

Global Green Solutions (GGRN) has operations in North America, Europe and South Africa.

PetroAlgae Inc. (PALG) in Melbourne, FL. is focused on commercializing technologies to grow and harvest oil from algae.

BioCentric Energy Holdings (BEHL) just announced that they have developed an improved processing formula that accelerates algae growth.

Green Plains Renewable Energy (GPRN) is a large ethanol producing company and has recently announced they too are getting into the algae business.

Exxon Mobile (XOM) has plans to invest $600 million and partner with Synthetic Genomics (SGI). SGI is a privately-held company.

DOW Chemical has partnered with Algenol Biofuels, which will use algae to convert carbon CO2 into ethanol.

Other companies worth looking into are Green Star Products (GPSI), Valcent Products (VCTZF), International Energy (IENI) and PetroSun (PSUD).

Algae has a lot of promise and interest in being the next real alternative to oil and renewable energy source. Could algae be the perfect answer to the oil dependency problem and the global warming problem by using CO2 emissions to grow algae and then turning algae into fuel? Investing some speculative money into one or more of these companies could turn out to be a smart move. This is an industry worth watching and investing in.

© 2009 Sam Montana

Other helpful articles:

Investing in renewable energy companies

Guide to Personal Finance and Investing


National Renewable Energy Laboratory (NREL)

NREL Biomass Research Papers


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