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Turning turning algae into fuel, i.e. algal oil, on a commercial scale, could become one of the most significant technological and economic events of the early 21st century. If this feat is accomplished, and it’s not certain it will be, it will have dramatic, disruptive consequences to oil producers, oil refiners, ethanol, biodiesel, jet fuel and other biofuels producers, biotechnology companies, agricultural producers, consumers, motor vehicle makers, regulators, R&D activities and investors, among others. However, from this change will come enormous opportunities, including less dependence on petroleum oil, more geopolitical independence, reductions in CO2 and global warming, technological advancements, very large, new industries and markets, and huge profits. This is according to a recent report from Amadee+Company: Algae For Fuel, Algal Oil, Biofuels, Biodiesel, Ethanol And The Future Of Petroleum And Green Energy: Global Markets, Technologies, And Opportunities: 2009-2020 Analysis and Forecasts.

Algae for fuel is an emerging, third-generation biofuel, which is still several years away from commercialization. Both the concept of algal oil, the amount of investment in the space, the news on the subject and public interest have grown dramatically over the last year. To date, there has been no significant production of algal oil, however, it is moving from the proof of concept phase into commercialization.

The challenge for algal oil is not technological, but process driven: the science of making algal oil is well understood, how to make it cheap enough to compete with existing refinery products is not. But, algal oil is at an inflection point similar to that seen in the past with the wind and solar industries, where scale and ongoing technology improvements led to large cost reductions.

Since algal oil offers a direct potential replacement for petroleum and plant-derived oils, the market opportunity is tremendous. Global petroleum oil production is estimated at 4.73 trillion liters, worth $1.94 trillion, in 2009. By comparison, global production of biofuels in 2009, now primarily biodiesel and ethanol, is estimated at approximately 100 billion liters, worth $166 billion. Biofuels, currently represent about 2% of the petroleum oil market on a volume basis and 8.5% on a value basis. By 2020, they are forecast to equal 3.6% of the oil market in terms of volume and 14.7% in terms of value. By comparison, algal oil production in 2009 is so small it’s not meaningful in terms of ethanol and biodiesel production. However, it’s clear the opportunity for algal oil is huge.

Already, more than 200 companies are trying to commercialize algae for fuel. Most are small, private companies without much capital. But there are many large ones as well including: ExxonMobil (joint venture with Synthetic Genomics), BP (JV with Martek Biosciences Corp.), Dow Chemical, Shell Oil, Ingrepro B.V., SAIC, and UOP LLC (Honeywell) among others.

The report provides a review of algae in terms of biology, classifications, photosynthesis and applications and discusses algae for fuel in terms of its history, applications, cultivation technologies and R&D. Analysis of the algal oil market in terms of its advantages, challenges, production costs, scale-up, market opportunity and sector investments is given. The biofuels market in terms of technology generations, market drivers, industry consolidation, next generation technologies, fuel standards, winners/losers, government policies, the oil majors, capital costs and future outlook is discussed. An analysis of the biodiesel market as regards production technology, end use, global production, addressable market, feedstocks, market conditions, environmental controversies, jatropha oil and major players is given. An analysis of the ethanol market in terms of first, second and third generation technologies, food vs. fuel, global production, risks and opportunities, government incentives and major players is provided. Profiles of 56 major players in the algal oil market are given and 175 biofuels, ethanol and biodiesel companies and organizations are discussed. More information.