Earlier this week, the Department of Energy released a road map for the commercialization of algae-based biofuels. During today's OnPoint, Paul Woods, CEO of Algenol Biofuels, gives his take on the report and explains why he believes algae-based fuels could be available as early as 2011. He also explains how Algenol's strategy for making fuel is different from those of other algae-based companies.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Paul Woods, CEO of Algenol Biofuels. Paul thanks for coming on the show.
Paul Woods: Thanks for having me.
Monica Trauzzi: Paul, the Department of Energy just released a roadmap on algae-based biofuels. They believe these fuels hold promise, but are a long ways away from commercialization. Based on the research and development happening at your company, are you in line with what DOE has released in this latest report?
Paul Woods: Well, I've read parts of the report that apply to Algenol and, Monica, I think what separates us from almost all the other algae companies is we are the only algae to ethanol company. So, all of the other companies in this space produce biodiesels or jet fuels or whatever and that is a much more complicated process than ethanol. So, our direct ethanol technology has the algae directly making the ethanol molecule and it naturally evaporates out of the culture. So the separation of ethanol from the culture is much, much easier and in our fashion it's a direct process. And so we are looking at commercialization of our technology in 2011, as opposed to years and years down the road.
Monica Trauzzi: And do you think because you are converting it to ethanol that it will then be a lot easier to have it blend into our fuel mix and be part of our energy policy?
Paul Woods: Right. Well, our two downstream partners are Valero and Dow Chemical and so Valero, we have a joint development agreement to take carbon dioxide and have it directly converted into ethanol. And then, of course, Valero already has the capacity to blend almost 2 billion gallons of ethanol into gasoline. And on the green chemistry side, Dow will be taking our ethanol and converting it into ethylene and then a whole host of plastics and products can be made from ethylene.
Monica Trauzzi: Talk a bit about the environmental aspects of the process itself.
Paul Woods: Right. Well, for the direct to ethanol technology algae requires a much, much smaller footprint than other ways to make ethanol, in our case about 6 percent of the land requirements of a terrestrial plant. So, for us, our footprint is much smaller. We make about 6000 gallons per acre. Corn ethanol does about 400. So, the efficiency of algae is really good and that's across all algae platforms. But for direct to ethanol, I think it's very efficient and that really affects the environment. We consume huge amounts of CO2 and those molecules of carbon are the backbone that becomes ethanol or ethylene.
Monica Trauzzi: When we were talking before the show you said you first had the idea for this company in 1984. How has the discussion changed since then to now about biofuels, ethanol ...
Paul Woods: Right.
Monica Trauzzi: And energy policy in general?
Paul Woods: Well, I am the slowest overnight success of all time. Clearly, 26 years isn't exactly speedy, but in 1984 climate change really wasn't understood or cared about in the way that it is now. Water use, indirect land use, a lot of the policies and concerns for 2010 are completely different than in the early and late 80s. And so for us now having domestic fuel made here inexpensively, Algenol is trying to make an under one dollar product and so for us having it be cost effective and environmentally friendly is very important. Our process provides fresh water from salt water that we make it from. We consume greenhouse gas. These things, these concerns now are a much greater focus than they were in the '80s.
Monica Trauzzi: How reliant is your company on government funding? I mean how much of your business depends on the amount of money you get from DOE?
Paul Woods: Well, I think there's a short-term concern and a long-term concern. I think the short term, Department of Energy gave us a $25 million grant and I think that that's very helpful in us building a pilot. It's a $55 million project. We're putting in $30 million and the government is putting in 25, so that really has gone a long ways to help us. In Lee County, Florida, the local government gave us $10 million to build an advanced lab there and that will cost around $40 million, so we are putting in $30 million towards that. These government grants don't cover all of the monies, but they certainly are a help and a stepping stone. I think though, in the long-term basis, we don't want subsidies for the direct to ethanol technology. I think help now getting these facilities built is really important, but a long-term subsidy is something that we, as a company, Algenol, we're not looking for.
Monica Trauzzi: What's your take on how the Obama administration has been focusing on biofuels?
Paul Woods: Well, for us it's been very important. The algae space got three very large grants, Sapphire, Solarzyme and Algenol, and we're very happy to have that help from the Obama administration.
Monica Trauzzi: So, what are you looking for legislatively going into the next year or two?
Paul Woods: Right. Well, considering we're trying to commercialize our technology right now, having tax parity with cellulosic biofuels is going to be absolutely crucial and critical for our business. Right now Algenol is at a dollar one deficit to all cellulosic biofuels. And I think that really was an oversight when they wrote the rules that were very technology specific. But now, if we have a little broadening and the leveling of the playing field, I think that would allow Algenol to go raise the money it requires in order to build these commercial facilities. Tax parity is going to be critical for us to have these facilities built on a commercial basis.
Monica Trauzzi: OK, we'll end it there. Thank you for coming on the show.
Paul Woods: Thank you very much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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