Costs of Algae Biofuel
* By: Larry Walker, Jr. *
Detective Thorn: It’s people. Soylent Green is made out of people. They’re making our food out of people. Next thing they’ll be breeding us like cattle for food. You’ve gotta tell them. You’ve gotta tell them! ~ Memorable quotes from Soylent Green *
The U.S. Energy Information Administration (EIA) reported that gasoline prices have risen from an average price of $1.61, in the week ending December 29, 2008, to $3.72, as of the week ending February 27, 2012 (see chart above). So with gasoline prices on a tear having risen by 131% just since December 29, 2008, biofuel enthusiasts have once again arisen from the sludge, this time proclaiming that algae biofuel is the answer to our energy needs.
According to Marine Corps Times, in 2009 the U.S. Navy paid $424.00 per gallon for 20,055 gallons of biodiesel made from algae, which set a world record at the time for the cost of fuel. Are you kidding me? In the midst of the worst recession since the Great Depression, the Navy thought that paying $424.00 per gallon for algae biodiesel while petroleum based diesel was selling for an average of $2.50 per gallon was somehow smart?
Then, in December of 2011, according to Defense News, the U.S. Defense Department signed a contract to buy 450,000 gallons of biofuel – the largest purchase ever by the federal government – to power the U.S. Navy’s “green” carrier strike group. The blend of used cooking oil and algae will be mixed with traditional fuels to help power the carrier strike group during military exercises this summer in the Pacific Ocean. The $12 million purchase works out to about $26.00 per gallon.
More recently, on February 27, 2012, House Armed Services Committee member Randy Forbes had harsh words for Navy Secretary Ray Mabus, saying he was focusing too much on alternative fuel development and not enough on sailors and ships. Forbes says biofuel costs four times as much to manufacture as fossil fuel, and that’s something the Navy can’t afford now. “That’s why I said ‘Mr. Secretary, with all due respect, you’re not the Secretary of Energy, you’re the Secretary of the Navy,'” stated Forbes.
Although, in the second purchase, no breakdown was provided for the cost of algae biofuel by itself, it’s obvious that the cost per gallon has dropped dramatically over a two year period. But it’s doubtful that this would have occurred without massive government stimulus through agency purchases such as by the U.S. Navy, as well as loan guarantees and grants from the U.S. Department of Energy. But with the price of petroleum based diesel fuel currently selling at around $4.00 per gallon, does it make sense for our military to be purchasing fuel which costs six-and-one-half times more? Well, let’s just hope we don’t get involved in major war anytime soon.
A peek at the algae biofuels production process. [Image Source: Solix Biofuels]
The Cost of Converting to Algae Biofuel
In his paper entitled, “Widescale Biodiesel Production from Algae,” Michael Briggs, of the University of New Hampshire, Physics Department, lays out some of the costs of replacing our dependence on oil with algae biofuel.
“First, consider if you will, a treaty between the United States and Mexico, where Mexico grants the U.S. a permanent right-of-way to the Gulf of California for the purpose of building a seawater canal that will transport a large and continuous flow of seawater from the Gulf of California into the USA. For the sake of discussion, let us assume that a canal has already been built between the Gulf of California and the Salton Sea; and that the Salton Sea will serve as a transfer reservoir.
Now, visualize a large aqueduct between the Salton Sea and Death Valley where a second inland sea has formed, approximately the size of the Salton Sea. From these two inland seas, several aqueducts extend out into the deserts of the Southwestern United States; Reaching into Arizona and Nevada.
Of the many and various desert farms, ranches and communities served by the aqueducts, there will be forty-thousand algae farms, having a total water surface area of 250 acres each. Two-hundred and fifty acres multiplied by forty-thousand farms equals a total of ten million acres of shallow water algae ponds, dedicated for the purpose of growing non-food renewable biomass for the production of transportation fuels.”
Sure Mr. Briggs, I am trying to envision the federal government building a canal from the Gulf of California to the Salton Sea, but I’m having a little trouble because I’m wondering why it hasn’t been able to secure our Southern border, and I’m also pondering the $16 trillion federal debt, pending construction of California’s $53 billion Bullet Train to nowhere, and the government’s unwillingness to move forward with the privately funded Keystone XL pipeline.
Note: The costs of constructing the necessary seawater canal, aqueducts and reservoir outlined above are not included in Mr. Briggs’ cost estimates which follow.
- 1 hectare = 2.47 acres. Michael Briggs gave an estimate of $80,000 per hectare for the construction costs to build the algae ponds.
- $80,000 divided by 2.47 = 32,390 rounded. We will say $32,500 per acre.
- $32,500 times 250 acres = $8,125,000 construction costs for a 250 acre algae farm.
- $8,125,000 times 40,000 farms = $325,000,000,000 to construct ten million acres of algae ponds.
Note: That’s a total of $325 Billion to construct the required 10 million acres of algae ponds. This does not include the costs of building a seawater canal from the Gulf of California to the Salton Sea, or the costs of constructing an aqueduct from there to an inland reservoir in Death Valley. Neither does it include the costs of constructing the many distributed biorefineries that will be needed to process the algae into biodiesel.
Mr. Briggs also provided an estimate of $12,000 per hectare for operating costs (including power consumption, labor, chemicals, and fixed capital costs).
- $12,000 divided by 2.47 = 4,860 rounded. We will say $5,000 per acre for operating costs.
- $5,000 times 250 acres = $1,250,000 annual operating costs for a 250 acre algae farm.
The University of New Hampshire Biodiesel Group also provided the following information on their Algae ponds:
“Micro algaes present the best option for producing biodiesel in quantities sufficient to completely replace petroleum. While traditional crops have yields of around 50-150 gallons of biodiesel per acre per year, algaes can yield 5,000-20,000 gallons per acre per year. Algaes grow best off of waste streams. Agricultural, animal, or human. Some other studies have looked into designing raceway algae ponds to be fed by agricultural or animal waste. We are now pursuing funding to investigate redesigning wastewater treatment plants to use raceway algae ponds as the primary treatment phase. With the dual goal of treating the waste and growing algae for biodiesel extraction. We also plan to investigate the possibility of using the algae mush (what is left after extracting the oil) as a fertilizer.”
An estimate of 5,000 to 20,000 gallons per acre per year is a rather wide discrepancy. Apparently seawater doesn’t provide enough nutrients to grow micro algae. Algaes grow best off streams of human, animal and agricultural waste. Wait; did he just say human waste?
In his paper, under the section titled: “How much biodiesel,” Mr. Briggs concluded that 140,800,000,000 (140.8 billion) gallons of biodiesel could replace 100% of the petroleum transportation fuels consumed in the United States annually, without requiring a big change in driving behavior or automotive technology. Although he did assume everyone would switch to diesel engines because of the superior efficiency of diesel compared to gasoline engines.
- 140.8 billion gallons divided by ten million acres = 14,080 gallons per acre (per year). We will say 15,000 gallons per acre (per year).
Note: The costs of converting all gasoline powered engines to diesel were also omitted from Mr. Briggs’ cost estimates.
Operating and Capital Costs
Based on Michael Briggs’ estimates, an algae farm with 250 acres of pond surface area would have $1,250,000 in annual operating expenses.
- 15,000 gallons per acre times 250 acres = 3,750,000 gallons per algae farm per year.
- $1,250,000 divided by 3,750,000 gallons = 33.3333 cents per gallon in operating costs.
How much will it cost to pay off the $32,500 per acre loan for the initial construction costs (the $80,000 per hectare)? That is: $32,500 times 250 acres = $8,125,000 construction costs for a 250 acre algae farm.
Let us assume a zero Interest federally insured loan spread over 20 years with a single payment of 1/20th of the principle due each year.
- $8,125,000 divided by 20 years = $406,250 cost of debt per year per 250 acre algae farm.
- $406,250 divided by 3,750,000 gallons = 10.8333 cents per gallon cost of debt (at 15,000 gallons per acre).
If the annual yield is 15,000 gallons per acre, then the cost of producing algae biodiesel feedstock would be .442 cents (10.8333 + 33.3333) per gallon. Multiplying this by 42 = $18.56 per barrel of oil equivalent.
Finally, if each farm earned .10 cents per gallon profit, then:
- 15,000 gallons times 250 acres times 10 cents = $375,000 per year net earnings.
This would bring the total cost of algae crude to .542 (.442 + .10) cents per gallon, or $22.76 per barrel of oil equivalent.
Although a cost of $22.76 per barrel of oil equivalent sounds great, it doesn’t include the following costs:
Building a massive seawater canal from the Gulf of California to the Salton Sea, and then constructing a series of aqueducts from there into a reservoir in Death Valley. How much will that cost, and who will foot the bill?
Constructing the many distributed biorefineries that will be needed to process the algae into biodiesel, without which this scheme is all for naught. How much will this cost? Who’s going to put up the capital?
Converting all gasoline powered engines to diesel. Who’s going to cover this?
Aside from the above omissions, who will front the $325 Billion initial capital expenditure for construction of the algae farms? And what’s going to happen if production estimates per acre fall short of the required 15,000 gallons?
Since the federal government is officially broke, and unable to fund construction of a massive seawater canal, system of aqueducts, and the necessary reservoir, it sounds like the least costly and most efficient scenario for algae biofuel lies in finding a way to pump all of our raw sewage – human, animal and agricultural – directly to the proposed algae farms.
It turns out that using raw sewage is the best way to ensure the most bang-for-the-buck out of each algae farm. But won’t raw sewage attract rodents and create other ecological problems? Perhaps, but who cares about that? Just toss the looming hordes of tadpoles and sewer rats into the refining vats as well.
While everyone has been focusing on the means of the green agenda, don’t its ends lead to the recycling of all things, including eventually human beings? That’s been pretty clear since the 1972 production of Soylent Green. Anyways, for now, Green energy enthusiasts may have to settle for converting renewable human waste into algae biofuel.
I can imagine, sometime in the near future, a Charlton Heston type (Detective Thorn in Soylent Green) crying out with his last breath, “It’s poo-poo. Algae Biofuel is made out of poo-poo. They’re making our fuel out of poo-poo. You’ve gotta tell them. You’ve gotta tell them!” Yeah, yeah, we know, just follow the sewer rats.
In the meantime, for me anyway, a little more gasoline production will suffice. Can we please, please, exhaust America’s God-given natural resources before we start breaking out the Soylent Green? And no Mr. Obama, Step one is “Drill”, Step two is “Baby”, and Step three is “Drill”. You got that?