Yesterday was a good news day for the rapidly growing algae biofuel industry in San Diego.  Local TV station KPBS produced a comprehensive video segment, 2012 Could Determine Future Of Algae As Fuel.  Click here for the video.  

La Jolla-based Sapphire Energy announced a breakthrough via a white paper, “An exogenous chloroplast genome for complex sequence manipulation in algae.”  

“With this breakthrough, Sapphire Energy has shown that it is possible to make algae–the world’s most efficient photosynthetic organism–even more efficient,” said Jason Pyle, Sapphire Energy founder and CEO.  “This work represents the first steps toward a novel approach for creating genetic diversity in any or all regions of a chloroplast genome, and may have applications in other plants.”  

Click here for the full report.   

Grants for up to $7,000 are available for biofuels training for 55 students.  Classes will be held at UCSD Extension and Mira Costa College starting in March 2012.  Details here.

Agriculture Secretary Tom Vilsack announced today that USDA has issued a loan guarantee that will allow biofuels firm Sapphire Energy to construct a facility in New Mexico to produce “green crude” oil from algae which can be refined into transportation fuel.  The project is intended to advance American efforts to provide renewable commercial-scale biofuels, increasing energy security and reducing dependence on foreign oil.  The project is expected to create 60 jobs in the community of Columbus, NM.

“The Obama Administration is committed to providing support for renewable energy production which will safeguard national security and create jobs in rural America,” said Vilsack. “This project represents another step in the effort to assist the nation’s advanced biofuel industry produce energy in commercial quantities from sustainable rural resources.”

La Jolla-based Sapphire Energy intends to design, build and operate a $135 million integrated algal biorefinery (IABR) in Columbus, N.M., for the production of advanced biofuel that is a “drop-in” replacement for petroleum derived diesel and jet fuel.  The IABR will be capable of producing 100 barrels of refined algal oil per day, equivalent to at least one million gallons per year.  The oil will be shipped to the United States Gulf Coast to be refined by Sapphire’s refinery partner, Dynamic Fuels, located in Geismar, LA.

The funding is provided through USDA’s Biorefinery Assistance Program. On December 3, 2009, USDA issued a conditional commitment for an 80 percent guarantee on a $54.5 million loan.  The loan closing and issuance of the Loan Note Guarantee for this project took place on October 21, 2011.

Today’s announcement is in concert with the objectives of the Renewable Fuel Standard, known as RFS2, which reaffirmed the goal of producing, by 2022, 36 billion gallons of biofuels to include 21 billion gallons of advanced biofuels.

Producing fuel from algae is seen as one way to provide for domestically produced fuel for commercial and military use.  USDA is partnering with the Department of the Navy as it embraces a biofuel future.  USDA has also signed a Memorandum of Understanding with the Federal Aviation Administration (FAA) to help the commercial airline utilize biofuels as jet fuel.  Under the MOU, the USDA and FAA are working together with the airline industry to develop appropriate feed stocks that can be most efficiently processed into jet fuel.  Doing so will decrease the industry’s current dependence on foreign oil and help stabilize fuel costs in the long run.

Sapphire Energy Video

The road to affordable alternative fuel for your car may be at 36,000 feet.  Aviation fuel from non-petroleum feed-stocks will be the first big win for alternative transportation fuel.  This success will bring a wealth of tech experience, concept proofs and scale which will jump start the introduction of new fuels for ground and water transportation.  Here are the five top reasons why jet fuel will be biofuels’ first big win.

Motivated buyers with concentrated demand

Of the more than ¾ billion vehicles on this planet the vast majority are owned by individuals or small businesses.  Most share my annoyance with the ever elevating price at the pump, but my annual expenditure for fuel is a small portion of my total budget.  In contrast, jet fuel is consumed by a limited number of commercial carriers and militaries.  Their fuel costs are a significant portion of their operating budgets. 

In the last decade over 25 airlines have ceased operation strangled by an ever tightening fuel hose.  For the survivors the risk of fuel price increase is greater than the opportunity to increase revenue.  Passenger-carrying flights with jet biofuel from a variety of non-petroleum feed-stocks have been flown by Continental, Quantas, United, Iberia, Air New Zealand, British Airways, Northwest, KLM, Japan Air Lines and a host of others.  American Airlines signed with 14 other carriers to purchase alternative fuels.  This week Sir Richard Branson of Virgin Atlantic announced the development of a world-first low carbon aviation fuel with just half the carbon footprint of the standard fossil fuel alternative.  The technology from New Zealand-based LanzaTech represents a breakthrough in aviation fuel technology that will see waste gases from industrial steel production being captured, fermented and chemically converted using Swedish Biofuels technology for use as a jet fuel. The revolutionary fuel production process recycles waste gases that would otherwise be burnt into the atmosphere as carbon dioxide.  Boeing is supporting the effort.  A $3.5 million Series A funding was led by billionaire Vinod Khosla.  In June an award from the Defense Advanced Research Projects Agency (DARPA) was made to LanzaTech to perform research focusing on novel, low cost routes for the production of jet fuel (JP-8) from carbon monoxide (CO) rich sources.   Click here for Branson’s video presentation.  And here for the release. 

Concentrated distribution infrastructure 

Ground transportation is characterized by over 300,000 filing stations world-wide.  There are only 1700 airports (excluding military) of which about half are international.  Access to just 500 of the top airports represents a significant portion of jet fuel consumption. 

No competing innovations for foreseeable future

Boeing does not have an electric plane on the drawing board.  There is no Airbus Leaf or Volt.  No CNG, nuclear, solar or long-life batteries.  Biofuels are the drop-in alternatives to the dead dinosaur derivative. 

The scale is doable and significant

Boeing says the world’s airlines burn 60 billion gallons of petroleum based jet fuels each year.  If alternative fuels were to capture 15% or 20% of this market the industry would achieve a scale which would spill over onto other fuel markets. 

An effective military trumps a dysfunctional government

Twenty years ago it would have been difficult to foresee a future in which treehuggers would be obstructionists to alternative energy projects and career militarists would be the driving force for prioritizing our society’s clean energy goals.  A Congress which cannot pass a budget and an administration which cannot articulate a national energy policy are impotent to nurture innovation.  Fortunately the military is responsive and undeterred by the dearth of leadership from our elected officials.

The U.S. military consumes more energy than any other consumer in our country.  About 84% goes for aviation fuel.   Dollars wasted on rising fuel costs are at the expense of other critical needs.  The threat of supply interruptions increases with our growing dependence on oil shipped from half a world away.  The military’s response is clear and unequivocal.  Clean energy is a matter of national security.  All services branches are moving forward on plans with specific goals and time targets.  Click here to read the commitment of four retired top ranking officers to our military’s clean energy objectives. 

Navy Secretary Ray Mabus has directed the Navy and Marine Corps to generate half of their energy needs from renewable sources, including biofuels, by 2020.  San Diego’s rapidly growing cluster of biofuel companies and research institutions is an integral part of the response to the opportunity.  General Atomics and SAIC have been awarded contracts by DARPA to develop the technical capability and affordable production of military JP-8 surrogate fuel from algae feed-stocks.  Sapphire Energy, Synthetic Genomics, S.G. Biofuels and other San Diego-based biofuels companies are all a part of this important transformation of our energy driven economy. 

Biofuels Digest provides additional insight on the role of aviation biofuels, Quick Win: aviation biofuels offers breakout for clean energy.

To learn more about the local burgeoning biofuels cluster go to the San Diego Center for Algae Biotechnology (SD-CAB).  SD-CAB along with UCSD, SDSU, CleanTECH San Diego, and BioCOM collaborated to launch Educating and Developing Workers for the Green Economy (EDGE) focused on educating a next-generation workforce in green technology.

Since 1987, the CONNECT Most Innovative New Product (MIP) Awards have been San Diego’s “Oscars” for local technology innovation.  The 2011 finalists in the Clean Technology category include Genomatica for Process for High-Volume Chemicals from Renewable Feedstocks, Noble Environmental Technologies Corporation for ECOR and Wildcat Discovery Technologies for 5V Cathode (CM1) and Electrolyte (EM1).  Winners will be announced on Friday, December 9th before an audience of more than 800 of San Diego’s top executives, entrepreneurs, VCs and academics.  Click here to register for the MIP exhibition and awards luncheon. 

San Diego’s 18th Annual TechAmerica High Tech Awards finalists in the Clean Technology category include EcoATM, Hadronex, Juice Technologies and Sapphire Energy.  Click here to register for the October 28th event. 

The regional cleantech cluster in San Diego continues to receive national recognition.  On Wednesday the Global Cleantech Cluster Association announced the semifinalists for the 2011 Later Stage Award competition.  This best-of-the-best recognition includes four San Diego cleantech companies, Genomatica, PowerGenix, Achates Power and EcoATM.  In another forum Sapphire Energy was honored as a “Game Changer of the Year 2011” in Clean Technology by Grow-California for their impact on California’s green industry.

I am reading Mark Stevenson’s book, An Optimist’s Tour of the Future.  He quotes Ray Kurzweil, “Our intuition is linear and I believe it’s hardwired into our brains.”  This linear bias bangs hard against the “Law of Accelerating Returns”.  Technological innovation feeds upon itself.  Innovative growth is not 1+1+1+1, but rather 1+2+4+8.  Although the ubiquitous iPhone is a reminder of the how explosive innovation can be, we look to the future dreading that positive change will be too little, too late.  Our linear bias leads to judgments influenced by static inputs rather than future values which will be determined by innovation replicating exponentially.  The commercialization of algae biofuels is an important example.

The algae business is basically farming.  The output of the algae agricultural system will be used to produce “drop-in” biofuels as well as animal feed and a myriad of other products.  If all technological innovation were frozen at this moment, the algae biofuel business would most likely not be commercially viable.  However, just like corn and pigs, improvements are being made over time. 

In my lifetime the yield per acre of corn has tripled due to improved genetics and production technology.  What took years and decades to happen with grains and livestock is happening over weeks and months with algae.  The algae industry is not only benefiting from the explosive technological innovation of the past decade, but also from the huge universe of algae being screened to identify commercially viable strains.

There are over 800 breeds of cattle.  The gestation period for cattle is about the same as humans.  Heifers can be bred at about 12 to 14 months.  Now imagine a breeding program with cattle drawn from over 5,000,000 different species which can produce a new generation every 30 days.  With existing technology, genome engineering and capital, the accelerating refinement of super strains is rapidly advancing the algae industry.  The algae of the very near future will be as dramatically improved as the pig of 2011 compared to his scrawny ancestor of the 1950s. 

La Jolla is at the center of the global algae Petri dish.  Greg Mitchell, director of the Photobiology Group at the Scripps Institution of Oceanography, has a global reputation as an algae pioneer.  The San Diego Union Tribune wrote about his exciting life, “Algae visionary imagines a future that’s green — literally”.   Click here to read.

The two largest equity fundings for algae biofuel development were done in the La Jolla zip code (Synthetic Genomics and Sapphire Energy).  On Wednesday I attended a press conference for California Assemblyman Nathan Fletcher who was named chair of a new committee that will focus on creating a climate for jobs.  Sapphire Energy was selected as the site for the event to showcase the importance of innovation for job creation.  After the remarks we toured Sapphire’s labs.  Their time line is clearly stated.  “We expect to be at demonstration scale in three years and at commercial scale by 2018.”  Sapphire Energy has received $54.5 million in loan guarantees from the USDA Biorefinery Assistance Program to build a plant to turn algal oil into jet fuel.

The challenge for most disruptive technologies is finding a deep-pockets customer that is sufficiently convinced to make a meaningful buying commitment.  The algae biofuels business has that in the U.S. military.  The military’s motivation is both financial and strategic.  They know that their greatest vulnerability is dependence on imported oil.  Their bill for fuel and electricity last year was $20 billion. The prospect of growing fuel in Hawaii and Southern California versus shipping oil half way around the world has a strong appeal.  Of greatest importance to the algae biofuel industry is a military making their decisions based on future economic and strategic plans unimpeded by the wrong-headed influence of politicians. 

The military’s impact on accelerating the growth of the algae biofuels industry will be enhanced if legislation is passed allowing the Pentagon to sign long-term contracts for up to fifteen years as opposed to the current five-year limit.  A long-term commitment from a highly-rated buyer makes deal financing substantially more doable.  Members of the aviation industry testified at a Senate Aviation operations, safety and security subcommittee hearing requesting legislation enabling the Defense Department to enter into long-term contracts for fuels.

To learn more about the local burgeoning biofuels cluster go to the San Diego Center for Algae Biotechnology (SD-CAB).  Greg Mitchell was one of the founders.  SD-CAB along with UCSD, SDSU, CleanTECH San Diego, and BioCOM collaborated to launch Educating and Developing Workers for the Green Economy (EDGE) focused on educating a next-generation workforce in green technology.

There is no place in the world where more people are working to advance the science and commercialization of algae biofuel than in San Diego.  Three announcements this week underscore the region’s standing in the quest to develop practical alternatives to fossil fuels. 

On Tuesday the California Department of Labor awarded the San Diego region a $4 million grant to implement new workforce training programs for jobs in the emerging biofuels industry.  The San Diego Biofuels Initiative, a collaborative effort including CleanTECH San Diego, BIOCOM, San Diego Regional EDC, San Diego Center for Algae Biotechnology (SD-CAB) and the (more…)

WEB 2.0 Summit, the by-invitation-only conclave of the internet intelligentsia was expanded this year to focus on “demonstrating proofs: showing how the founding principles of Web 2.0 have been put into practice to address the world’s most pressing problems”.  Cynthia Warner, president of Sapphire Energy, presented “High Order Bit: Burning Algae: The Green Crude Revolution”.  Her four bullet points for algae are: scalable, drop in fuel, low carbon and sustainable.  Click here for the 13 minute video of her presentation.

For the last few months the quest for biofuel derived from algae has been a hot headline.  San Diego’s prominence as the foremost algae R&D center will draw even more national attention when the 3^rd Annual Algae Biomass Summit comes to town October 7^th – 9^th.  The Algal Biomass Organization is a trade organization formed to facilitate commercialization and market development of microalgae biomass specifically for biofuels production and greenhouse gas abatement.  Attendance of about 1,000 is anticipated for the three day get-together which will include local algae heavy weights Sapphire Energy, Synthetic Genomics, General Atomics, Biolight, Kent Bioenergy and the San Diego Center for Algae Biotechnology among others. (more…)

Today was huge for the slimy green stuff in San Diego.  The United States’ two largest city newspapers, the New York Times and the Los Angeles Times, did in-depth reports about the burgeoning algae business in San Diego.  (See “Interest in algae’s oil prospects is growing” and “Algae as Fuel of the Future Faces Great Expectations — and Obstacles”).  Speculations about the commercial viability of algae as fuel, like any other scientific/business development, are purely speculative.  All the expert opinions on ESPN about the next Chargers game have no impact on the outcome of the game.  What we do know for certain about the Chargers and about algae is that the games will be played.  The question is will the championship game be played in San Diego?

Could it be that San Diego is approaching a tipping point (oozing point?) in its quest to become the world’s dominant algae biotechnology center?  At what state of maturation do we say, “now you are a cluster”? 

Minds and money work best when concentrated.  Concentrated brains and bucks are common attributes of all technology clusters.  (more…)