The Greenest Green Fuel

Looking for a clean fuel that grows anywhere, needs only sunlight and water, and could produce enough oil to free the U.S. from its petroleum addiction? Here´s one start-up's plan for converting oil from algae-yes, algae

Take a peak inside the Solix labs to see their oil-from-algae operation up close in our photo gallery and video

"Here it is!" Jim Sears says with a tour guide's come-see enthusiasm. I stop, my feet stuck in six inches of fresh powder outside the Old Fort Collins power plant, but the contraption before us doesn't exactly inspire awe. Two parallel tracks, each about 60 feet long, protrude from the snow like the twin runners of a giant upended sled. A washing-machine-size box studded with dials and blank displays sits at one end. Nothing moves, nothing glows, nothing hums. The future of alternative energy sits silent before me. This is what's going to make gasoline obsolete?

Sears chuckles at my confusion. "Nothing's really set up at the moment," he explains. "The bags aren't hooked up. We don't want to damage the equipment by letting it sit in the snow." My eyes drift to the only spot of color in the entire crystalline scene: a wide acrylic tank off to the side that looks like an aquarium left to ferment in the windowsill. The water inside is seaweed green and so opaque it's almost milky. I run my finger over the top, brushing off snow as I go. "What's in here?" I ask. Sears eyes the tank fondly. "This is the first step," he says. "This is where the algae starts to grow."

Little Giants

Algae seems a strange contender for the mantle of World's Next Great Fuel, but the green goop has several qualities in its favor. Algae, made up of simple aquatic organisms that capture light energy through photosynthesis, produces vegetable oil. Vegetable oil, in turn, can be transformed into biodiesel, which can be used to power just about any diesel engine. (There are currently 13 million of them on American roads, a number that's expected to jump over the next decade.)

Algae has some important advantages over other oil-producing crops, like canola and soybeans. It can be grown in almost any enclosed space, it multiplies like gangbusters, and it requires very few inputs to flourish-mainly just sunlight, water and carbon dioxide. "Because algae has a high surface-area-to-volume ratio, it can absorb nutrients very quickly," Sears says. "Its small size is what makes it mighty."

The proof is in the numbers. About 140 billion gallons of biodiesel would be needed every year to replace all petroleum-based transportation fuel in the U.S. It would take nearly three billion acres of fertile land to produce that amount with soybeans, and more than one billion acres to produce it with canola. Unfortunately, there are only 434 million acres of cropland in the entire country, and we probably want to reserve some of that to grow food. But because of its ability to propagate almost virally in a small space, algae could do the job in just 95 million acres of land. What's more, it doesn't need fertile soil to thrive. It grows in ponds, bags or tanks that can be just as easily set up in the desert-or next to a carbon-dioxide-spewing power plant-as in the country's breadbasket.

Sears claims that these efficiencies will allow Solix Biofuels, the company he founded, to create algae-based biodiesel that costs about the same as gasoline. But like any start-up trying to carve a niche in the post-oil age, Solix must struggle for answers before it can sell a thing: Which species of algae will produce the most oil? What's the best way to grow it? And not least, how do you extract the oil from the algae once it's grown? The research and debate at Solix is so fierce that it has already claimed one casualty-my guide, Jim Sears.

A Fresh Start

Sears, an engineer-turned-inventor, started developing his algae-fuel technology in 2004, but the events that inspired his venture stretch back to the last time the U.S. faced an energy crisis. In 1978 President Carter established the Aquatic Species Program (ASP), a research initiative charged with developing biodiesel from algae as a clean, homegrown alternative to gasoline. Yet some two decades and $25 million later, the team had failed to produce any significant amount of oil from algae, and in 1996 the Clinton administration axed the program. Still, the researchers hoped their work would not go to waste. "The directors were adamant that we make available a detailed summary of what we'd done, because they knew that in the future someone would be interested," says John Sheehan, a former ASP project scientist. Sheehan and his colleagues compiled a 328-page report on their work and uploaded it to a Department of Energy Web site.

At the time, Sears was working on a smorgasbord of projects in his garage, including a cattle "hump-o-meter" (his term) intended to tell farmers when their animals were mating. He had spent time as an engineer with the Navy in the 1980s, designing, among other things, sonar equipment that helped SEAL divers find pieces of the space shuttle Challenger wreck. During this stint he made an unforgettable nighttime dive off the coast of Florida. As he treaded water, streams of phosphorescent algae drifted past him, tracing trails of light in the murk as far as he could see.

Two decades later, Sears, looking for a new project, found himself reliving that one sublime dive. He wondered if algae like that could create enough energy to help solve the fuel crisis. A little online research turned up the ASP report.

It was a revelation. Sears pored over the "Algae Bible," as he now calls it, for weeks, determined to find the reason for the gap between the program's potential and its results. "I started thinking, "Well, if this is as great as it sounds, why aren't we all driving around with algae fuel in our tanks?'" He noticed that ASP researchers had tried to grow the unique oil-producing algae in open ponds, which were far cheaper to maintain than closed systems like a sealed aquarium. But wild algae quickly invaded these open ponds and took over, outcompeting their obese counterparts.

Sears's solution was inspired by the most humble of kitchen implements, the Ziploc bag. Clear plastic sacks, he realized, would let in enough light to help the algae thrive yet prevent unwanted species from invading. The crux of his innovation is his design for a full-scale algae "reactor." Two 350-foot-long parallel tracks about three feet apart hold the bags in place. Custom-built rollers occasionally squeeze them like tubes of toothpaste, circulating the algae; a current gives them the intermittent sun exposure they need to flourish. Once the algae is grown, a refinery extracts its oil and converts it to biodiesel.

Sears tried to sell his idea to venture capitalists and found them skeptical at best. In an effort to shore up his credibility, Sears approached Bryan Willson, the director of Colorado State University's Engines and Energy Conversion Laboratory. The first time Sears visited the lab-housed in the converted Old Fort Collins power plant-he knew he had found a kindred spirit. When they sat down together to go over the Algae Bible, Sears recalls, they each produced their own well-worn copy. "I had tons of yellow stickies on mine, and he had tons of yellow stickies on his." Sears convinced Willson (along with his gaggle of graduate students) to sign on to the project and join his fledgling company.

Money, Power, Politics

Nowadays, no one questions the need to quickly develop viable alternatives to petroleum. The U.S. vehicle fleet pumps 1.3 billlion tons of carbon dioxide into the atmosphere every year, and we pay foreign governments and corporations $820 million a day for the oil needed to do so. As gas prices rise and the public becomes increasingly attuned to the unpleasant realities of global warming, even once-reluctant politicians are beginning to take action. In January's State of the Union address, President Bush announced his "Twenty in Ten" plan to reduce American gasoline usage by 20 percent in the next 10 years. The plan sets mandatory standards to raise production of renewable fuels to 35 billion gallons per year by 2017.

With the political tides changing, investors smell money in the water. No one knows for sure if the alternative-fuel economy will be led by ethanol, plug-in hybrids, biofuel or none of the above, so venture capitalists are betting on everything. It's a good time to be in algae. Heavy hitters like biotech's big backer Craig Venter, Bob Metcalfe of Polaris Venture Partners and Steve Jurvetson of Draper Fisher Jurvetson have distributed millions of dollars of seed money to an assortment of green-ooze-growing firms, including GreenFuel, Aurora Biofuels and Solazyme. Doug Henston, the former investment banker and real-estate manager who Sears brought on board as chief operating officer of Solix in 2006, recently secured $2 million in funding from Bohemian Investments.

One advantage algae start-ups have over other alternative-fuel companies is that, by feeding carbon dioxide from power plants to the algae, they could help utility companies manage their emissions as well. The European Union already regulates carbon dioxide emissions, and there are currently four bills being considered in the U.S. Senate that would impose similar restrictions. Another start-up, GreenFuel, which originated at the Massachusetts Institute of Technology, has used CO2 from a power plant to grow its algae. "Our experiment was a success," says Ray Hobbs, a senior consulting engineer at Arizona Public Service, one of GreenFuel's utility partners. "We've only produced a very small amount of fuel so far-we were just out to verify the concept-but we now know that this is doable."

Ultimately, though, the success of algae biodiesel, like every other alternative fuel, will rely on whether the market price of fossil fuels reflects their environmental costs. "The real unknown is, what is the future of carbon going to be?" Sheehan says. "Will it have a cost in the marketplace?" Martin Tobias, a venture capitalist at the Ignition Partners firm, is more direct about how important carbon regulation is. "The success of this industry will depend on the price of oil," he says. "If oil drops back down to $20 a barrel, you're going to see all the wind come out of these companies' sails."

Pick a Species, Any Species

If you tossed a Ben & Jerry's scoop shop and a Munich beer hall in a blender, you'd get a pretty close approximation of the New Belgium Brewery in Fort Collins. There are more cruiser bikes in the parking lot than cars, and bright colors and tie-dye are de rigueur attire for staffers and patrons alike. Our server greets us above the din and offers us tasting forms that we can use to request free samples-provided we also fill out a "personal expression" section featuring questions like "If you could be in any band, which one would you join, and what instrument would you play?" (Sears's answers: the Beatles, lead guitar.)

New Belgium is one of Sears's favorite places to unwind after an 80-hour workweek, so it's fitting that he decided to bring the brewery on board as a key part of Solix's future plans. As with a coal-fired utility, carbon dioxide is a copious by-product of the brewing process. Except, unlike a utility's, New Belgium's CO2 is nearly pure, perfect for injecting into the test reactor that Solix plans to build on an empty stretch of New Belgium land. If all goes as planned, within the next year New Belgium will begin to feed gas directly into the plastic baggies, nourishing the fatty algae as it multiplies. It's a testbed, a proof of concept for the partnerships that Solix is negotiating with power plants.

Key to the project is picking the right type of algae. There are thousands of types of algae that could potentially produce the right kind of vegetable oil, and there are times when Amy Boczon, a CSU graduate student in biology, feels like she has tried them all. Back at Solix's lab at the Old Fort Collins power plant, she swings open a refrigerator door to reveal test tubes crammed in like six-packs. Sears, Henston, Willson and I look them over. Each tube in the array is a slightly different shade of green, containing a distinct species of algae that Solix is evaluating for its fat-production potential.

Boczon's job is to manipulate the algae's environment to maximize the amount of oil it produces. "You need to make [it] think, "Gosh, am I going to go through a time when I'm not going to have a certain nutrient?' " she explains. Yet switching the algae into oil-production mode by removing nutrients like nitrogen can also slow its growth and endanger its health. The trick is to harvest the cells at their peak-after they've accumulated maximum oil stores but before they succumb to overstress.

I cut to the chase. "So, how much fuel have you produced so far?"

Everyone looks
askance at one another, as if I've violated some unspoken rule of conduct. Mark Machacek, another Solix employee, leaves the room for a moment and comes back with an Erlenmeyer flask. When he holds it up to the light, I can just make out a trace of brownish liquid, like the last drops of whiskey at the bottom of a tumbler. "That's it," he says. "That's all we've got."

It's Not Easy Being Green

The oil-smudged beaker is a vivid reminder of the challenges start-ups like Solix face. "Algae fuel is truly in the R&D stage, and to present it any other way at this point would be a mistake," says Jeff Probst, the CEO of BlueSun Biodiesel in Westminster, Colorado. BlueSun has expressed interest in using algae as a feedstock, but only if Solix can produce it in large enough quantities.

In theory, making fuel from algae should be straightforward. The government scientists who ran the Aquatic Species Program proved that it is possible to grow a whole bunch of green stuff and add chemicals to extract the oil and make at least a small amount of fuel. "This isn't cold fusion-it's not like nobody's done this before," Willson points out. But replicating and improving on 20-year-old results isn't all that easy. Out of the dozens of brash young algae-biodiesel start-ups, only one, Aquaflow in New Zealand, has managed to produce enough fuel to power a car engine.

This delay reflects the unique difficulties of engineering a biological system. Each algae-growing reactor is a miniature biosphere unto itself, built on the same delicate web of dependencies as a natural ecosystem. Change one element, and you can nudge others into disarray. "Algae is a holy grail because it can grow so quickly," says Cary Bullock, the CEO of GreenFuel. "But for it to reach its potential, you have to make sure all the algae gets just the right amount of light. If there's too much or too little, you won't get a good enough yield." Spurring the algae on to Herculean growth rates, he adds, creates its own set of problems. The swiftly multiplying cells decimate the carbon dioxide supply they use to make food, and in large numbers, they block out the very light they need to survive.

These issues, Sears says, can be addressed with computer systems that limit growth rates by precisely controlling the amount of nutrients that are added to the tank. But making such refinements adds to capital costs, which threatens the bare-bones economic philosophy that algae fuel companies must embrace to make a product competitive with petroleum-based diesel.

After the harvest, another conundrum presents itself: how to get the oil out. Algae isn't fibrous enough to stand up to cold pressing, the standard way of extracting fat from plant matter. Processing the green slurry piped out of the bags by adding chemicals like methanol or hexane is the most obvious alternative-an efficient and relatively cheap means of removing oil. But some observers worry about the possible unintended consequences of the operation. "There are different schemes that are likely to affect land and water use and, if anything gets loose, there's a whole variety of possible impacts," says Dan Kammen, the director of the University of California at Berkeley's Renewable and Appropriate Energy Laboratory.

Sears also can't account for the other variables that will help determine Solix's fate. Will lawmakers see fit to subsidize algae fuel at the expense of other established alternatives, like ethanol? Will U.S. automakers ever manufacture cars that can run on biodiesel? "The tests that have been done so far show there's some promise," Probst says, "but it's not at the stage yet where you want to get people's expectations built up." It's a long way from a few drops at the bottom of a flask to powering America.

Hidden Casualties

Sears has learned firsthand how these challenges can affect more than the bottom line. Last November, Willson, Henston and a representative of investor Bohemian Investments, not wanting to be bound to the specifics of Sears's original reactor design, voted Sears out as CEO. Henston assumed CEO status and control over the company's future research plans, and Sears lost his sure grasp on building the baggie-and-roller reactor he had originally conceived.

"Jim is a visionary," Willson says, "but I don't have any emotional attachment to his plans." The clear implication is that Sears might have blocked any changes to his original design, even if they were shown to improve the growing process. (Indeed, although Sears plans to maintain a working relationship with Solix, he is in the process of forming a separate company to pursue his original, unadulterated dream.) Later this year, Solix will test a new prototype design that will not include rollers-which pose the risk of wearing out the plastic bags-to agitate the algae; instead, bubbles percolating through the green slurry will ensure that the mixture is sufficiently stirred. Additionally, new multitiered, triangle-shaped compartments inside the bags will reflect the sun's rays, illuminate the algae from multiple directions, and, ideally, bump up fuel yields.

It's been a long year for Sears, but he knows that Solix's future-like the future of algae biodiesel as a whole-depends on so much more than any one person can foresee. "Who knows," he says with characteristic equanimity, his ever-present smile playing around his lips. "Me being thrown out as CEO may turn out to be a great thing for the company."

If Elizabeth Svoboda could join any band, she would join They Might Be Giants.
She would play the cowbell.

by Matt Stubbington

What a future algae-powered filling station might look likeMatt Stubbington

How to Make Fuel From Algae

As the colonies mature, starve them of nitrogen [2]. The cells react to the low nutrient supply by entering survival mode and producing extra fats. When they´ve created enough fat, collect the cells and break them apart [3]. Filter out the large organelles and cell membranes, and then use solvents like methanol to separate out the fats from the water-soluble proteins and sugars [4]. Purify the collected fats, and evaporate the solvent [5]. Finally, put the fats in a chemical reactor to transform them into biodiesel (a process called transesterification) [6].Matt Stubbington

by Courtesy Dan Bihn

Researcher Keri MacFarlane tests various species of algae to find the one that can produce the most oil.Courtesy Dan Bihn

How to Make Fuel From Algae

First, grow colonies of Botryococcus braunii algae (a species especially prone to storing fat) in long, thin, transparent plastic bags in the desert.Barry Gutierrez

by Barry Gutierrez

Brian Willson, a professor of mechanical engineering at Colorado State University, helped found SolixBarry Gutierrez

by Courtesy Dan Bihn

This basin stands ready for the second-generation prototype biological reactor-that is, the bag filled with algaeCourtesy Dan Bihn

by Courtesy Dan Bihn

A view of the algae in a bioreactor just before the crop is harvestedCourtesy Dan Bihn

by Courtesy Dan Bihn

Inside Solix headquarters, the water-management system controls the flow of liquid to the algaeCourtesy Dan Bihn

by Barry Gutierrez

Doug Henston became CEO of Solix after an internal coup late last year displaced founder Jim SearsBarry Gutierrez