Introduction to Biofuels
Of the multiple silver bullets that have contributed to the shape and standard of modern society (petrochemicals, PFAS, and nitrogen fixation via the Haber-Bosch process), petrochemicals are one of the most visible catch-all solutions that will be hard to replace. Our dependency on fossil derived liquid fuels is not going to disappear anytime soon, especially in low- and middle-income regions. Whether applied to transport, energy, or the production of plastics, weening society of this abundant and varied material is going to take a whole range of solutions.
Biofuels are fuels produced from biomassBiomass is organic material derived from natural sources like plants and animals. It contains stored and biological systems. They’ve been investigated for over 100 years and encompass everything from fermenting agricultural waste to make alcohol using naturally occurring microorganismMicroorganisms are living beings that cannot be seen with the naked eye. ‘Micro’ is a prefix tha, to the use of advanced genetic engineeringGenetic engineering is a broad term that refers to the manipulation of an organism’s genetic (DNA) to make high-performance aviation fuel using photosynthesisPhotosynthesis is the biological process by which light energy, usually from the sun, is converted t. They are one of the few renewablesRenewable is a term used widely in the energy sector. It essentially refers to something that can be that offer a route to produce energy dense substances required for long-haul transportation and, in many cases, offer a direct replacement for fossil fuelsFossil fuels are energy sources formed from the remains of ancient plants and animals that lived mil without the wholesale infrastructural changes that would be required for full electrification.
Contents
Algal Biofuels
Algal biofuels offer a renewableRenewable is a term used widely in the energy sector. It essentially refers to something that can be alternative to fossil fuelsFossil fuels are energy sources formed from the remains of ancient plants and animals that lived mil. They are produced from photosyntheticPhotosynthesis is the biological process by which light energy, usually from the sun, is converted t algae, which is particularly well-suited for biofuelBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu production as it grows rapidly and can accumulate large amounts of oil that can be converted into fuel. Algal biofuels are broadly classified as advanced biofuels and are grown in either low-cost/lower-yield open ponds, or high-cost/higher-yield closed photobioreactors. One of their major advantages over other biofuels is the non-reliance on feedstocksFeedstocks are the raw materials used in a manufacturing process to produce a final product. The typ, as photosyntheticPhotosynthesis is the biological process by which light energy, usually from the sun, is converted t energy sources don’t create additional competition for arable land, nor are as affected by fluctuations in cost of commodity goods. Advanced biofuels derived from non-food biomassBiomass is organic material derived from natural sources like plants and animals. It contains stored are also likely to be favoured with ongoing food vs fuel debates.
Figure 1. Process of biodieselBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu, bioethanolBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu, and biogas production from algae biomassBiomass is organic material derived from natural sources like plants and animals. It contains stored.
Investment trends
Investment into algal biofuels saw a steep rise in the late 2000s driven by advances in genetic engineeringGenetic engineering is a broad term that refers to the manipulation of an organism’s genetic (DNA) technology, combined with rising oil prices and concerns about energy security. The sector attracted funding from venture capital and strategic investors, including carmakers and petrochemical companies, as well as public funders, such as the US Department of Energy. Unfortunately, this high was short-lived, with total investment peaking in 2011 at over $150M. Technical challenges and a fall in oil prices affected the whole biofuels industry and led to several high-profile failures as biofuelBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu start-ups (including those that used algae) failed to reach cost parity with fossil fuelsFossil fuels are energy sources formed from the remains of ancient plants and animals that lived mil. Some companies reached profitability at a smaller scale, while many others entered administration or pivoted to produce higher products (e.g. Amyris).
Figure 2. Investment and deal count in algal biofuels between 2004 and 2022 and commercial activity of algal biofuelBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu companies.
Although commercial interest in agal biofuels declined, several academic institutions persisted in developing algal strainsWithin biology, a strain refers to a distinct variant or subtype of an organism. For example, flu st and engineering systems offering increased productivity. Combined with the renewed interest in reaching net zero, these improved systems offer a route for algal biofuels to fill gaps in energy infrastructure where liquid fuels are currently essential (e.g., aviation fuel), especially if supported by subsidiesA subsidy is a financial aid or support given by a government or other public institution to individ and regulation.
Technological maturity
In high sunlight geographies, algal biofuels have the potential to reach or exceed production efficiency of other biofuels, particularly if increased feedstockFeedstocks are the raw materials used in a manufacturing process to produce a final product. The typ prices continue to rise. However, challenges remain to reach full economic competitiveness and broader adoption. In particular, advancements are required to maintain cell fitness and productivity, and reduce the costs and energy intensity of the drying and extraction of algal biomassBiomass is organic material derived from natural sources like plants and animals. It contains stored. In addition, few algal facilities have been developed to commercial scale, increasing the likelihood of scale-upScale-up refers to the process of taking a small-scale experiment or model and adapting it for large challenges, such as reduced productivity due to light loss and micro-organismMicroorganisms are living beings that cannot be seen with the naked eye. ‘Micro’ is a prefix tha contaminationIn a laboratory setting, contamination refers to the presence of an undesired living organism or oth. Finally, better downstream processing approaches are required to meet stringent fuel standards particularity in higher-value markets such as aviation.
Figure 3. Sector maturity of algal biofuels in 2023. Based on analysis of companies under due dilligence and Revena expert opinion.
Outlook
BiofuelBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu demand has doubled since 1980 and reached a record high in 2022. Several legislative structures in the EU, US and China, and major players including the United States Department of Energy, Breakthrough Energy Fund, Maersk and Neste Oil, are striving to foster a more supportive environment for biofuels. While we have seen several company and project failures (Joule, Algenol, Solazyme), there remains positive momentum with investment into Viridos ($25M, March 2023), Swedish Algae Factory ($2.3M, April 2022) and Phycobloom ($455k, January 2023). Despite increasing demand and traction, the International Energy Agency (IEA) described the progress of biofuels as “not on track” in 2022 and highlighted the need for 11% average growth in biofuelBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu production per year to get on track with net zero emissions by 2050.
It is estimated that 36-60 billion gallons of additional fuel are required to replace petroleum-based transportation. Hence, there is a significant opportunity for transport infrastructure, as biofuels are currently the only widely implementable low carbon approach to trucking, ships, and aircraft. Expansion of advanced biofuels over those derived from food crops, as recommended by the IEA, will likely foster the growth of algal biofuels. A reduction in the fossil fuelFossil fuels are energy sources formed from the remains of ancient plants and animals that lived mil subsidiesA subsidy is a financial aid or support given by a government or other public institution to individ in the United States in conjunction with not-for-profit and strategic investment, suggests that the climate for biofuels may continue to improve. Especially if the proposed pilot scale plants from Neste and Reliance Industries help to address concerns regarding the scalability of production.
Revena’s opinion
Given the urgent global need for fossil fuel alternatives, the exploration of more sustainable fuels is a critical component of the path to net zero. Biofuels are an important piece of the greener energy puzzle, particularly in hard-to-electrify sectors with more reliance on liquid fuels, and in regions with increasing demand for petrochemicals. Petrochemical demand remains on the rise and, while the rise of electrification will eventually eat into this, liquid fuel alternatives are needed now. With a shift towards fuels made from biomass that could not otherwise be used for food or animal feed, and uncertain cost of commodity goods, algal biofuels may again see research and investor attention. Whilst it is unlikely that algae-derived fuels alone have the range of properties, cost-effectiveness and stability to replace fossil fuels entirely, technological advances make them a viable tool in the toolbox for future fuels. Particularly for marine and aerospace transport which present additional challenges for electrification.
Get in touch
If you are an investor looking to better assess a biofuelBiofuels are renewable fuels derived from biological materials such as plants or animal waste. Biofu investment, or a company developing a relevant technology, Revena can help.
