Bunyanesque Growth of Biofuels and Algae 2020 – 2030 – Future Investment Potential


1. WHY DO BIOFUELS HAVE HIGH GROWTH POTENTIAL? WHY DOES ALGAE FUEL HAVE HIGH GROWTH POTENTIAL?


WORLDWIDE POTENTIAL FOR ALGAE FUEL PRODUCTION IS RISING BECAUSE OF PRIMARY ENERGY CONSUMPTION: Generally-speaking, algae and biofuels have enormous potential in the global market place. Why? Because primary energy demand is still growing in most countries around the world. We do have plans on how to reduce carbon emissions, but fossil fuel consumption continues to be on an upward trajectory. Fossil fuel consumption mostly flat in Western countries, but continues to grow in industrializing nations. To meet global energy demand, companies will be looking for solutions how to turn algae into biodiesel and how to commercialize such a solution globally. I have previously written a post on this subject matter and investments in algae and biofuels in 2020.


CONVERTING THE SUN’S ENERGY INTO ENERGY-DENSE FUEL: Algae biofuel also has great potential because with it we can convert sunlight into energy-dense oil that is concentrated in the cell’s body of the algae, oil which is contained in the algae when it fattens up on the sun’s energy.


ALGAE FUEL DOES PRETTY WELL COMPARED TO OTHER BIOFUELS: Algae production is known to have certain advantages and disadvantages over other types of biofuels. Compared to sugarcane, algae can be grown in water, which is a huge advantage. Second generation biofuels are supposed to grow fast. Scientists and researchers still work on a solution how to fatten algae. There is a certain biological limit to how fast algae can grow. If algae cells divide too quickly, what happens is that the algae will contain less oil. If that happens, the EROI (Energy-Return-on-Energy-Invested) will not be as good. But the purpose of this exercise is to fatten the algae and for cells to divide quickly (high turnover rate while maintaining their metabolism). Assuming we have found a solution that works on a technical level, that still does not mean that we will be able to commercialize the solution. It is just the start.


SUGARCANE PRODUCTION IS WELL-SUITED TO BRAZIL’s ENERGY MARKET: Brazil is probably the exception when it comes to biofuels production. Due to the latitudinal zone Brazil calls home, the large land area, and tropical climate Brazil is able to exploit sugarcane for most of the year. Brazil has commercialized sugarcane successfully and turns sugarcane into biodiesel and does this in most parts of the country. Production can even grow further, but it will come at a cost. Sugarcane production competes with agricultural production. The land is also needed to produce fodder for animals. If interested in the particular subject matter, please read my post regarding Brazil’s energy policy which focuses on sugarcane production.

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2. BIOFUELS MARKET SHARE: THE FOCUS WILL LIKELY BE ON BIOGAS PLANTS – AT LEAST IN THE SHORT TO MEDIUM TERM


WE MIGHT SEE STRONG GROWTH IN THE BIOGAS INDUSTRY – IN THE MEDIUM TERM: In the short to medium term, most growth in the biofuels market could be in the biogas sector. Part of the reason is that biogas plants can be build in many locations across the world, including the United States, the European Union and the UK, India, southern Russia and China. India should experience significant growth in biogas production, which I have previously outlined in an article on India’s energy policy in the Indo-Pacific region.


BIOGAS HAS NOW REACHED ITS HIGH POINT IN GERMANY: In Europe – and in Germany especially – biogas plants have almost reached their zenith. Large biogas plants are most attractive to develop commercially. They are most profitable. But there are fewer and fewer places where large biogas plants can be built here in Germany. One could build many smaller biogas plants, but they will be less profitable. Their long-term prospects also depend on the continuity of subsidies.


BIOGAS PLANTS HAVE GREAT POTENTIAL WHEN THEY ARE USED IN COMBINATION WITH OTHER TREATMENT PLANTS: In most parts of the developed world, but particularly in Northern Europe, the growth of biogas plants is often associated with commercial agriculture. Biogas plants are being build adjacent to other technical installations such as mechanical biological treatment plants (MBT’s for short) or sewage treatment plants. There are other facilities such as breweries where biogas plants could yield some added benefit. If combined with breweries, biogas plants could play a major role. Biogas plants can be combined with breweries so as to make use of all waste products. Biogas plants should be particularly relevant to commercial-scale agriculture in Russia.


INTERESTINGLY, ENERGY-RICH NATIONS SHOULD ALSO HAVE A LOT OF INCENTIVES TO INVEST IN BIOFUEL TREATMENT FACILITIES: This is even true for Russia. Russia has abundant oil and natural gas reserves – but Russia also requires a decentralized energy infrastructure because of the enormous distances. If you wish to read more on this topic, I recommend you read the post on the future market potential of biogas CHP plants in the agriculture and energy sectors.  The interest of such market will probably be limited to decentralized energy solutions.


3. CERTAIN ENVIRONMENTAL BENEFITS USING ALGAE FUEL


BIOFUELS SHOULD HELP US FURTHER REDUCE OUR CO2-FOOTPRINT: We shouldn’t underestimate the importance of biofuels in reducing our footprint on the environment. Given the fact that algae fuel is taking carbon out of the environment it is generally regarded as carbon neutral. This could be an interesting side benefit. The same idea applies to other biofuels as well. With biofuels we take as much carbon out of the environment as we are putting back into the environment.


Many thanks for the shared interest in the energy world!



Disclaimer:


This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations.

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