Among next generation renewable fuel alternatives, algae
stands out as one of the most promising and scalable options
with the potential to supply key fuel and co-product markets,
according to a recent study from consulting firm Pike
Strong demand from aviation and military consumers,
technological breakthroughs in the production, cultivation, and
extraction of algae oil, and the development of large-scale projects will be critical to
widespread growth in the algae-based biofuels market, the group
Despite limited production to date, the scale-up potential
of algae is substantial compared to other non-food based feedstocks, the report said.
Although regulatory and policy uncertainty as well as
competition from co-product markets will inhibit algae-based
biofuels production initially, the cleantech market
intelligence firm projects that the value of renewable
fuels derived from algae will reach $1.3 billion by 2020.
Due to the high costs associated with producing crude
algae oil for the aviation, ground transportation, and other
fuel end-markets, most industry ventures have pivoted away from
a fuels-first approach to focus on the development of revenue
streams from high-value, low-volume co-product markets,
said industry analyst Mackinnon Lawrence.
Scale-up of algae-based biofuels will depend on the
realization of value in non-fuel end-markets. As key capital
and operating cost hurdles are overcome, algae-based biofuel
production should expand rapidly.
Lawrence said that the use of algae to produce crude oil for
renewable fuel production can deliver a number of environmental
benefits compared to other advanced biofuel feedstocks. Algae can be grown on
non-arable land, co-located with stationary CO2 emissions
sources, and utilize a wide variety of water resources
including wastewater and seawater.
A number of algae ventures are making headway with different
strategies for maximizing yields while capitalizing on pathways
to mitigate the externalities associated with fuel and chemical
production, analysts said.
Pike Researchs analysis predicts that the algae-based
biofuels market will be dominated by microalgae, which lends
itself to rapid growth and genetic modification.
Macroalgae will continue to generate interest in countries
with large coastal regions, but investment in harvesting and
conversion technologies is projected to lag behind microalgae
North America and Asia Pacific are projected to account for 82% of
algae-based biofuels production in 2020, representing at least
50mn gal/year of production.
A summary of the report is available for free on the