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Seeing Purpose and Profit in Algae

Algae Systems uses giant bags made by Nike that are filled with sewage and algae in Mobile Bay, Alabama.Credit...Tad Denson

Entrepreneurs have been trying for years to get something valuable out of algae.

It has not been easy, and not just because algae are an unsightly nuisance (and sometimes dangerous, as is the Lake Erie bloom that has endangered drinking water this month).

Although algae grow prodigiously and contain potentially useful molecules — especially lipids, which can be turned into high-energy fuel and other products — extracting those molecules has proved complicated and expensive. So far, virtually the only marketable products based on algae have been high-end skin creams.

But a Nevada company, Algae Systems, has a pilot plant in Alabama that, it says, can turn a profit making diesel fuel from algae by simultaneously performing three other tasks: making clean water from municipal sewage (which it uses to fertilize the algae), using the carbon-heavy residue as fertilizer and generating valuable credits for advanced biofuels.

If it works, the company says, the process will remove more carbon from the atmosphere than is added when the fuel is burned.

“We think it is a really elegant solution,” said Matt Atwood, the chief executive. At its heart is a “hydrothermal liquefaction” system that heats the algae and other solids in the sewage to more than 550 degrees Fahrenheit, at 3,000 pounds per square inch, turning out a liquid that resembles crude oil from a well.

The company sent the liquid to Auburn University, where scientists added hydrogen (a common step in oil refining) to produce diesel fuel. An independent laboratory, Intertek, confirmed that the diesel fuel met industry specifications. The thermal processing has caught the attention of independent scientists. The Department of Energy recently awarded a $4 million grant to a partnership led by SRI International for further work on Algae Systems’ hydrothermal processing system.

Engineers hope the system could dispose of a variety of unwanted or hazardous materials. It also destroys pathogens in sewage.

At the University of Texas at Austin, Halil Berberoglu, an assistant professor of mechanical engineering who is conducting research in the area and is not affiliated with Algae Systems, said the process had the potential to eliminate a key bottleneck in working with algae.

Earlier processes for extracting lipids have been “very energy-intensive,” he said, adding, “You have to dewater the algae, poke holes in cell walls and do all kinds of separation technologies.”

But with high-temperature processing, he said, a factory could get useful products out of not only the lipids but also the proteins and the carbohydrates.

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At the pilot plant, Algae Systems converts the waste and algae into clean water and biocrude oil.Credit...Tad Denson

“It is a great way to break those molecules up,” he said, and the presence of extra water in the reactor helps reassemble the elements into long-chain hydrocarbons, which are basically crude oil.

Challenges remain, because such crude oil sometimes incorporates heavy metals, nitrogen and sulfur. But “it is by far the most promising approach,” Dr. Berberoglu said.

And it has attracted a wide variety of employees. John Perry Barlow, a former lyricist for the Grateful Dead and a founder of the Electronic Frontier Foundation, an Internet civil liberties group, is a vice president; he was in charge of finding a site for the pilot plant — in Daphne, Ala., on Mobile Bay — and is looking for a spot for the commercial plant that the company hopes will follow.

The general manager of the Daphne municipal water and sewage utility, Rob McElroy, announced this month that he had been so impressed with the pilot plant that he was quitting his job to work for Algae Systems.

Company executives say their pilot plant consumes pollutants like phosphorus and nitrogen, which are blamed for the algae bloom in Lake Erie and the “dead zone” near the mouth of the Mississippi in the Gulf of Mexico.

The installation in Mobile Bay takes clever advantage of natural characteristics. It uses giant plastic bags made by Nike that are filled with sewage and algae. The bags float on the water, moored at each end like a sailboat. The bay water keeps the algae at the right temperature, and the waves stir the mix.

Some companies have tried gene-altered algae, but Algae Systems uses naturally occurring forms drawn from the bay. Whichever strain flourishes in the bags is what the company uses. “We call it the Hunger Games,” Mr. Atwood said.

The early results were promising enough for IHI, a Japanese conglomerate, to invest $15 million.

Biofuel plants, like hope, spring eternal but have mostly ended in grief. KiOR, which spent more than $200 million to produce a synthetic fuel from wood, recently shut down; Ineos Bio, the offspring of a major Swiss chemical company, produced commercial quantities of ethanol from wood waste a year ago, but now says it has “unexpected start-up problems.” In many high-tech start-ups, the problem is to get from the pilot stage to the commercial stage, but even some biofuel companies that have lined up the financing to build a commercial-scale factory have been unable to make the process work.

Algae Systems says it hopes it can make a profit by producing potable water as well as fuel, and by charging fees to municipalities for treating their wastewater.

Another potential source of income is the generous renewable fuel credits that the Environmental Protection Agency offers for companies producing “advanced” biofuel, those with small carbon footprints. The credits are purchased by oil companies that are obligated by law to blend in renewable fuels — or, more practically, to complete a paper transaction showing that they have supported such fuels.

Still, Algae Systems estimates that it will cost $80 million to $100 million to move from the pilot plant to commercial-scale production. So far it has not made that leap.

A version of this article appears in print on  , Section D, Page 6 of the New York edition with the headline: Seeing Purpose and Profit in Algae. Order Reprints | Today’s Paper | Subscribe

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