Green Energy: Global Policy and Issues Affecting the Development of Algal Aquaculture for Biofuel

Megan Bettilyon Capstone Project to Satisfy the Completion Requirements for a Masters Degree in Marine Biodiversity and Conservation Center for Marine Biodiversity and Conservation Scripps Institute of Oceanography 0202 University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093-0202 COMMITTEE MEMBERS Committee Chair: Dr. B. Greg Mitchell, Research Biologist, (SIO) Dr. Steve Kay, Dean of Biology (UCSD) Ben Gilbert, PhD Candidate in Economics (UCSD)

TABLE OF CONTENTS

ABSTRACT.3 I. INTRODUCTION..4 II. POLICY OVERVIEW..5 III. ALGAL BIOFUEL....6 METHODS OF CULTIVATION...6 BENEFITS OF ALGAL BIOFUEL..8 PROBLEMS WITH ALGAE PRODUCTION FOR FUEL.14 POTENTIAL DEVELOPMENT SOLUTIONS FOR ALGAE PRODUCERS.17 IV. POLICY PERSPECTIVES.19 US POLICY.19 EUROPEAN POLICY23 V. CONCLUSION...25 ACKNOWLEDGEMENTS.27 REFERENCES...28

ABSTRACT As the global population continues to grow, the corresponding increase of demands upon natural resources will present special challenges. Problems involving the scarcity of fresh water and arable land, additional requirements for energy, and accumulating pollution may all reach critical tipping points in the near future. In anticipation of such crises, governments worldwide are regularly convening to discuss possible strategies intended to mitigate these issues. High on the list of considered solutions is the enactment of biofuel development policies. To gain a broad perspective on the benefits and risks any biofuel policy/program faces, I examine the approaches taken to date by the US Government and the European Commission - the two prominent regulating bodies now involved in biofuels. Careful dissection of the two different approaches taken by these parties, with their successes and failures, reveals lessons broadly applicable to all biofuels and sustainability policy in general. U.S. and European policy trends have increasingly encouraged renewable fuel use in recent years. Many of these mandates and incentives have favored corn-based ethanol because of its existing market presence, infrastructure, and political influence. However, corn-based ethanol does not align with many of the social objectives that motivate renewable fuels policy. Algal biofuels are better united with these objectives along several dimensions, but economics continue to pose obstacles for large-scale production. This paper evaluates the role for algal biofuel in the context of modern policy and is intended to be a resource for policy makers, investors, and researchers interested in evaluating the political landscape associated with renewable energy for transportation and the potential for algal biofuel as a preferred feedstock.

I.

INTRODUCTION Data from the US Census Bureau provides an estimate that global population will

increase roughly 34% by 2045, to a staggering number of 9 billion people. Competition for arable land and fresh water has the potential to ignite a firestorm of human conflict not yet seen in human history. Moreover, increasing levels of pollution and scarcity of raw natural resources could further decrease the environments carrying capacity and lead to additional strife (Sagar A. D. 2005, Sagar Ambuj D. and Kartha 2007). As nations struggle to come to terms with the issues facing the world over the next 35 years, potential solutions such as biofuel development are receiving the full attention of governmental policy makers. Certainly, the recent oil spill in the Gulf of Mexico has made biofuels an even more attractive option. Both Europe and the US have biofuel programs designed to mitigate some of the more pressing concerns associated with providing adequate energy for the growing population, however some biofuels under consideration compound the already tenuous issues of available land, water, food supply, and providing energy security. Biofuel feedstocks, such as algae, could prove to be environmentally and socially beneficial; however, the economic issues surrounding commercialization of algal biofuel could relegate the feedstock to relative fuel obscurity. Competition with subsidized fuels such as corn, or traditional fossil fuel, makes it difficult for algae to compete economically. In the next few sections I will discuss the cultivation of algae, the benefits algal biofuel can provide, and the economic factors surrounding the development and commercialization of algal fuel in general. I will then present the policies guiding biofuel development in the US, such as the newly enacted Renewable Fuels Standard 2;

followed by those policies enacted in Europe that have been met with criticism from environmental activists concerned about energy crops competing for land with food crops.

II.

Policy Overview Finding alternative sources of transportation fuel, in the wake of the oil crises in

the 1970s, became a pressing concern for governments worldwide. In the US, different feedstocks for biofuels were investigated at both the academic and national levels, and in Europe, community action plans were developed to meet the growing energy challenges. Investigation of each type of feedstock brought individual subsets of benefits and challenges, and world leaders began to choose different paths for securing new sources of renewable energy. The United States chose to focus on transportation fuels separately from creating energy for other uses such as household electricity. In Europe, however, the question of renewable energy was approached as one encompassing issue, and was more responsive to lobbying from environmental groups as opposed to us policy which responds to industry groups. Algae are one feedstock that the US chose to investigate for transportation biofuel. The results were promising, but the technical and economic challenges were great. Here I present some of the benefits and challenges of algal biofuel production, in the greater context of biofuel policy.

III.

ALGAL BIOFUEL

3.1 Methods of Cultivation Both macro and microalgae have been investigated as feedstocks for the production of fungible (drop-in) biofuels. There are many different algal strains and methods of cultivation currently being investigated, each with its own set of benefits and drawbacks. Microalgal strains, such as Chlorella and Dunaliella tertiolecta, are grown using aquaculture methods in a variety of systems with varying results; the three most widely-investigated methods being Open Pond (Raceways), Closed-Loop, and Photobioreactors. Each type of production method presents unique benefits and challenges, with no one method yet proven as the most effective or efficient way to produce commercial-scale algal biofuel (Benemann 2009).

Open Pond Method Open Ponds, also known as Raceways (Fig. 1), are large oval shaped aquaculture facilities wherein algae is cultivated using a system of paddles to continuously circulate the algae around the pond for maximum exposure to sunlight, with minimal

outside energy input. Ponds tend to use only one strain of algae (monoculture) and their exposure to the elements makes them more susceptible to invasive algae or contamination from external sources.

Closed-Loop Method Closed-Loop systems house the algal cultivation facility in a sterile environment thereby protecting the crop for outside contamination. The costs of building such large facilities is, however, much more expensive than open ponds and a lack of direct, intense sunlight inhibits the growth (yield) of the algae being cultivated.

Photobioreactors Photobioreactors (Fig. 2) are usually a series of long, clear tubs or bags where algae are grown in a contained environment, while still being exposed to sunlight. Yields are reduced due to the natural constraints of the tube/bag growth chambers, but contamination is generally kept to a minimum.

Although we can see that different aquaculture technologies are being investigated one fundamental issue that producers face is the permitting process for their facility. Most microalgae strains used in biofuel production are marine resources and are technically protected under federal guidelines for US Aquaculture production (USDA 2010); however algal biofuel facilities have not yet been officially recognized as an aquaculture by NOAA, the USDA , or the EPA so permitting and regulatory compliance can become a daunting undertaking for new companies to pursue. At a recent algae development conference in Del Mar, a representative from the USDA indicated that algae for use in products intended for human consumption were being treated separately from algae grown for use as a biofuel feedstock in regard to how the aquaculture facilities are being regulated. As part of a 10-year investigation into the development of a comprehensive US Aquaculture policy, NOAA may soon have jurisdiction over the algal biofuel facility permitting, an effort that may help to streamline the regulatory process as part of the Presidents Biofuel initiative (House 2010, NOAA 2010). Permitting and regulatory compliance is just one aspect that potential algal biofuel companies currently have to face; however many feel that the benefits of algae in the long term outweigh the start-up concerns.

3.2 Benefits of Algal Biofuel Fresh Water Use Avoidance: Fresh water will continue to become scarcer as nations around the world continue to deplete their natural water resources in an effort to provide potable water for drinking, farming, and other critical activities (Berndes 2002, Edwards 2008). Algae is one of very few biofuel feedstocks that can be grown in saline

water, often from recycled sources (see Wastewater Remediation), or in naturally occurring salt lakes, ponds, and coastal areas. This avoidance of using fresh water to grow an energy crop leaves more water that can be used for farming food or urban communities.

Wastewater Remediation: A number of large and small scale studies are currently underway to investigate algaes potential to recycle wastewater in farms, sewage facilities and industrial plants. To varying degrees of success, microalgae has been shown to reduce nitrogen, ammonia and phosphorus (Shi et al. 2007, Travieso et al. 2008), as well as certain heavy metals such as Chromium (Han et al. 2008). Restoration of the Salton Sea, in the Imperial Valley of Southern California, could potentially be accomplished through building an algal facility nearby, using the water to grow algae for use as a biofuel, and then recycling the water back in to the sea (Prakesh 2009). While it has been proven that algae can use wastewater as a growth substrate, more research is needed to find a balance between successful production of algae as a biofuel, while properly mitigating chemicals and metals in the recycled water (Schenk et al. 2008).

Reduction of Greenhouse Gas Emissions: Climate change is a topic that has come to the forefront of many political agendas and concerns over greenhouse gasses (GHGs), especially those emitted during transportation activities, has become a focal point of policy discussions worldwide. When compared to gasoline, many biofuel feedstocks provide a net reduction in GHG emissions, although no standardized metric

currently exists for measuring emissions during biofuel production (Scharlemann and Laurance 2008). Algae have been shown to have a significant reduction in GHG emissions, estimated at a 36% net reduction over fossil fuel (Brune et al. 2009). Although a recent study conducted by researchers at the University of Virginia (Clarens et al. 2010) states that algae may, in fact, increase greenhouse gasses due to the high requirements of CO2 and fertilizer. Many algal researchers found that the Virginia study utilized outdated methods and references and that the basis for their lifecycle assessment is now obsolete (ABO 2010, Baum 2010). There is currently no standardized metric that researchers agree upon for calculating the reduction of greenhouse gasses from any one feedstock. Some include the full life-cycle emissions including planting, harvesting, transport, and refining of a feedstock and some only look at the tailpipe emissions. As part of the 2007 Energy and Security Act, the Environmental Protection Agency has undertaken a well-to-wheels life-cycle analysis of every potential feedstock considered to be a renewable fuel (ICF 2009). The results have not yet been released so, for now, most estimates are based on synthesizing large amounts of published data, like I have done here. It is expected that the EPA analyses will have a large impact on future policy decisions, subsidies and incentives.

Applied CO2 Fixation: Algae produces oil through the process of photosynthesis wherein it intakes sunlight and CO2 and turns them into biomass. This biomass contains ca. 30% lipids (oil which can be refined into biofuel) and 70% non-lipid material which can be used for secondary products (see Secondary Products). This requirement for CO2 is both a benefit and problem for algae producers in that naturally

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occurring CO2 is difficult to sequester in a form that can be fed to into ponds requiring that condensed CO2 be delivered to the production facility by an outside company. The potential exists for flue gasses from industrial plants to be piped directly to the algal facility where it is then sequestered and fed to the algae (Brune et al. 2009, Pulz and Gross 2004, von Blottnitz and Curran 2007). The amount of CO2 produced by an industrial plant compared to how much CO2 the algae needs to grow varies widely depending on the nature of other chemicals in the plants flues and the size and method of harvesting of the algal capture facility. For purposes of a general calculation it is safe to say that algae require approximately 1.5 to 2 tons of CO2 for every ton of biomass, and that one ton of algal biomass equates to roughly 100 gallons of biofuel (Bionavitas 2010, CCS 2010). Reducing CO2 emissions from industrial facilities could go a long way to mitigating airborne pollution.

Figure 3. Cartoon depicting problems with energy crops competing with food crops. Source: Washington Post Writers Group

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Avoidance of Arable Land Use: Biofuels have created a media backlash in recent years in that land that would normally be used to grow food is being diverted to energy crops (Bento 2008, Foley et
CASE STUDY: Mexico In 2006, rising crude prices led domestic fuel blenders to use more corn-ethanol in gasoline production (13). This resulted in a huge increase in corn-prices domestically and exported to other countries (10). Mexico imports around 10 million tons of corn from the United States per year. As a result, corn-prices in Mexico doubled and tripled in some areas leaving many Mexicans unable to afford to buy tortillas, a basic staple of their diet, and the source of about 40% of their protein (10, 14). Mexicos president, Felipe Calderon, responded to the crisis by capping tortilla prices at $0.78 per kilogram, but many shops ignored the edict and continued to sell the tortillas at an average of $0.06 more than the cap. This story illustrates how the demand for ethanol for US domestic use, has far-reaching implications and, in some cases, can cause food prices to skyrocket. Some have argued that even biofuels derived from non-food crops still place a large demand on land and water resources which could lead to higher food prices in general (8-10). As I have demonstrated, algal biofuel development is exempt from arable land and freshwater use concerns.
Modified from Bettilyon (2009) Algal Aquaculture for Biofuels

al. 2005, Galbraith 2008, Runge and Senauer 2007, Sagar A. et al. 2000, Sagar A. D. 2005, Sagar Ambuj D. and Kartha 2007, Tilman et al. 2009, Waltz 2009). For algae, this may be the single most important factor in weighing its long term benefits to society. Algae are cultivated on marginal (non-arable) land using less fertilizers than terrestrial plants. Unlike feedstocks such as corn and timber, algae does not need to displace farm land or rainforests to be produced and in fact grows best in areas where direct sunlight is generally too strong for other crops.

Avoidance of arable land use has led many developing nations to investigate algae as a feedstock that could provide not only transportation fuel, but biofuel for household use as well (See Case Studies: Mexico, India). Displacing food crops for energy in the face

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of a rapidly growing global population has become a great concern for policy makers and has the potential to create even more interest in using algae as a primary biofuel feedstock under many governmental policies.
CASE STUDY: India India is facing an energy crisis that is very multi-faceted. Although they have some oil and natural gas resources they are not enough to support the countrys burgeoning population. Refineries in India are antiquated and cannot run at full capacity due to a constant need for repairs. Some do not even have the ability to extract kerosene, one of the major energy sources for household lighting. Although about 48% of India is considered to be arable land, Indias population density based on arable land is 488.84 people/km, and has averaged a 2% growth rate in that number since 1961 (NationMasters 2005). Furthermore, Indias inland waterways and coastlines are highly polluted and providing clean water has been a long-standing issue. For all of these reasons and more, India has begun to heavily investigate the use of microalgae for transportation and household biodiesel use, as well as flue-gas sequestration, and wastewater remediation. By the year 2050, India is projected to be the most populous country in the world with a total population of 1.7 billion people (CNN 2009). As India looks toward the future their researchers hope that algae will perhaps make us self-reliant and improve our economy many folds (Khan et al. 2009).
Modified from Bettilyon (2009) Algal Aquaculture for Biofuels

Arable Land Use Comparison The Renewable Fuels Standard, which I will go into more detail later in this paper, calls for a total of 21 billion gallons of non-corn-based biofuel by the year 2022. Table 1 represents seven major feedstocks and the arable land each would require to meet that mandate. The data are based on an average of reported figures for each feedstock from multiple sources (Benemann 2009, Bionavitas 2010, Brune et al. 2009, Chisti 2007, 2008, Clarens et al. 2010, EurActiv 2009, Kanes 2010, McMartin and Noyes 2010, National Agricultural Statistics 2009, Pienkos and Darzins 2009, Schenk et al. 2008, Tilman et al. 2009). Corn is included to give a general idea as to how that feedstock compares with other examples. These numbers are predicated on the USDAs 2009 report that 321 million acres of principal crop land were planted in that
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year. In my example, soy, a low-yielding feedstock, would require over 362 million acres of land to fulfill the RFS2 mandate. This is to say that if we used soy for all 21 billion gallons of fuel required, we would have to plant almost 113% of the total US crop land to meet the demand. Whereas algae would only require 1.3% of total US cropping land, and thats only if arable land, and not marginal land, was utilized.

3.3 Problems with Algae Production for Fuel Cultivation of algae for biofuel is not without its own unique subset of problems. Issues with funding, harvesting,economics, and commercialization are at the forefront of challenges that algal biofuel producers and investors are facing right now. As I have presented, there are a number of ways which algae can be cultivated using aquaculture methods. Open Ponds present issues of potential contamination, and
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closed systems and photobioreactors experience problems with developing costeffective technology and infrastructure, as well as attempts to increase yield. All methods face one very daunting challenge and that is procuring enough CO 2 to feed the algae. Costs for delivering CO2 to algal biofuel producers ranges widely based upon the amount required and location of the facility. Estimates to build even simple, openpond algal biofuel facilities have been estimated at $40,000 per acre inclusive of land, and construction costs, with an additional 20% capital cost for CO2 and operating expenses (Benemann 2009). Finding the correct location to build can also be an issue as algae grown in Open Ponds tends to do best when in an area with direct, intense sunlight. These areas, however, tend to be less populated, with reduced infrastructure (highways, etc.) and could lead to the requirement to transport the oil some distance to the nearest refining facility. At a recent conference, Martin Lambert, a representative for Shell Oil, discussed the need for oil companies and biofuel developers to work together to strategize ways that biofuel could be delivered to refining plants using the existing network of oil pipelines. Recent public and private funding of algal biofuel projects has helped to progress the technology needed to bring these costs down significantly. Companies like Sapphire Energy, Solazyme, and Algaenol each have received funding from the Department of Energy for pilot facilities and aim to be producing algal oil at $60 - $80 per barrel by 2014 (Gardner 2008, Jaquot 2010). The general consensus among investment and Venture Capital firms, however, is that without the large federal funding grants that some companies have received, smaller start-up firms should look for new

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ways to decrease the amount of time it takes to be become profitable (Edwards 2008, Kanes 2010). At the Algae World Summit in May 2010, a panel of investors implored would-be biofuel producers to look into more profitable algae-based products that could be brought to market more quickly while buying that company time to work on their biofuel producing technology. Co-products such as synthetic polymers, nutraceuticals and animal feed were generally regarded as viable products within the algae value chain that could be vertically integrated with a companys biofuel production process. Some even suggested that companies apply for funding for these products to be the primary form of profit, with biofuel being a co-product somewhere down the line. Indeed, the remaining 70% of biomass, after the lipids have been extracted, represent huge potential for commercialization. The following is a brief overview of the algae products currently produced.

3.4 Potential Development Solutions for Algae Producers Food, Nutritional, and Beauty Co-Products: Products made from algae for the nutrition and beauty markets have been around for a very long time. Both micro and macroalgae have been utilized as natural alternatives to chemical thickening agents and stabilizers for in many foods (Edwards 2008, Liang et al. 2004, Pulz and Gross 2004). Many believe that some strains of algae possess heightened nutritional benefits and can now be found in everything from protein shakes, to frozen foods. Properly extracted algae for use in human-food nutraceuticals can fetch as much as $10,000 per ton (Kanes 2010); although generally required only in smaller quantities. Some algae

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contain high levels of Omega3, 6, & 9 which can average a price of $1,200 per ton (Kanes 2010). Cyanotech, a large-scale algae production company in Kona, Hawaii, produces a popular nutraceutical known generically as Astaxanthin and has reported a Q3 2010 12% increase over 2009 primarily based upon its BioAstin and Hawaiian Spirulina Pacifica
Figure 5: Products made with algae.

sales (Cyanotech 2010). It

should be noted that Cyanotech provided the cultivated algae to Sapphire Energy that was used, along with a jatropha-derived biofuel, in a successful Continental Airlines biofuel test flight in 2009 (John 2008).

Animal Feed: One of the most potentially lucrative products to be derived from algae is animal feed for both aquatic and terrestrial uses. Just like it makes sense to avoid the use of arable land for energy crops, so too does it figure that we should not deplete our oceans of foraging fish for the sake of feeding carnivorous fish grown in aquaculture environments. Algaes high Omega oil content makes it particularly attractive to aquaculturists and dairy farmers. Currently, high protein fish food sells for about $1300 - $1600 per ton with many millions of tons required to feed a variety of

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animals farmed for human consumption. The price per ton could soon enjoy a sizeable nudge upward when NOAA releases its final Aquaculture plan later this year which is expected to address the issue of the amount of fishmeal that can be used in fish food (NOAA 2010). Aquaculture suppliers are already anticipating that fishmeal will have to contain a much higher ratio of non fish-based feed to meet the new rules. Developing Nations: It would be possible for investors and NGOs to fund algae production on a village-scale basis in developing nations as part of a proof-ofprinciple operation, with very real social benefits. Traditional forms of household fuel can cause many different types of respiratory problems (Goldemberg et al. 2004, Khan et al. 2009, Utria 2004); algal biofuels could be used as a sustainable substitute. Reducing the amount of noxious emissions from fossil fuels could help to alleviate some of those issues. Furthermore, small-scale production could create jobs in economically challenged regions as well as provide practical field testing for new technological developments. Funding for these village-scale projects could potentially be obtained through world Development funds, federal grants, and private donors.

IV. POLICY PERSPECTIVES Issues surrounding the continued use of fossil fuels have prompted lawmakers world-wide to re-examine their energy needs and resources. Environmental impacts, energy security, and economics play a large role in the development of policies designed to face these challenges in near and long-term perspectives. New sources of renewable energy are currently being heavily investigated by nearly every developed and developing nation around the globe. Biofuels have the potential to alleviate some

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of the pressing concerns facing nations right now do to their ability to reduce greenhouse gas emissions compared to fossil fuels, and be grown locally providing energy security and green-collar jobs. The United States and the European Union are the two most prominent actors in the biofuel policy arena and for the purposes of providing a clear comparison this analysis of the current literature and mandates focuses on their efforts.

4.1 US Policy and Perspectives Following the oil crises in the early 1970s the National Renewable Energy Laboratories began an intensive study in 1978 into the feasibility of developing algal biofuels for transportation use (Sheehan et al. 1998). The program lasted until 1996 when it was closed-outdue to a lack of promising results with producing algal oil in regard to the costs of scaling-up production to meet commercial demands. NREL believed that the start-up costs of building an algal facility for commercial-scale production would be too prohibitive when faced with producing a non-subsidized crop that would have to directly compete with corn and cellulosic biofuel. This lack of policy parity has continued and is only now being addressed by lobbyists from multiple biofuel industries. Recent advances in technology has significantly reduced the costs of cultivating and harvesting algae in recent years so much so that NREL is now revisiting algal biofuel capabilities, though not at such an intensified level as of yet.. Corn-ethanol, already being used as a fuel additive to control carbon monoxide in cold-weather cities like Denver, Colorado, was in a prime position to act upon Congress newfound interest in renewable energy. In 1992, the US Congress enacted the Energy

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Policy Act which mandated that many government fleets would be required to run partially on alternative fuel sources (Solomon B. D. et al. 2007a). Corn was in a prime position to fill much of the requirements of that mandate as Farm Bill subsidies were already encouraging many American farmers to grow corn crops. Furthermore, corn ethanol was already well-studied and under production in a few Midwestern plants. The 2004 Jobs Creation Act contained an additional incentive US corn growers by providing a $0.51 per gallon tax credit to gasoline refiners for inclusion of ethanol. By 2006, corn-ethanol comprised nearly 95% of all US ethanol production (Quear and Tyner 2006, Saltone et al. 2009, Solomon B. D. et al. 2007a, Urbanchuk 2009). While corn-ethanol did provide a path toward reducing Americas dependence on foreign oil, the environmental benefits were beginning to come into question. The original estimates of a 19% greenhouse gas reduction were found to have not included the machine-intensive process of planting and harvesting the crops and that cornethanol actually accounted for an increase in net carbon emissions when emissions from cultivation were accounted for (Hill 2007, Hill et al. 2006, Pineiro et al. 2009). In 2005, the Energy Policy Act included a provision for the development of a Renewable Fuel Standard (RFS) which was primarily concerned with ensuring that refiners and gasoline importers had met the percentages requested to receive the ethanol subsidies. By 2007, concerns over greenhouse gas reductions and land use were beginning to make their way onto lawmakers desks. Under the Bush Administration, Congress enacted the 2007 Energy Independence and Security Act (EISA) which modified the Renewable Fuels Standard for transportation fuels beginning in 2008 and ramping up

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through 2022. The act mandated that US transportation fuel requirements be replaced with 50% renewable fuels for a total of 36 billion gallons of biofuel by 2022 (Bento 2008, Davis 2009, Environmental Protection 2007, Solomon Barry D. et al. 2007b). By 2015, only 15 billion gallons could be corn-based ethanol, remaining at that level until 2022. The Food Conservation and Energy Act of 2008 (FCEA) reduced the ethanol subsidy from $0.51 to $0.45 per gallon of ethanol, although demand for corn-ethanol remained high because of the 2007 Energy Act . However, some of the language in the bill indicated a potential shift in policy away from favoring corn and recognizing the potential benefits of other feedstocks. Congress requested that a research team complete: a comparative analysis of corn ethanol versus other biofuels and renewable energy sources, considering cost, energy output, and ease of implementation (110th United States Congress 2008).

Based upon this mandate, the Interior Secretary, along with a team from the Department of Energy and the Environmental Protection Agency, began looking into alternative feedstocks more thoroughly to create a broader pool of eligible biofuels to meet modifications requested to the Renewable Fuels Standard. After receiving thousands of complaints, critiques, and suggestions during an extended commenting period, the EPA finally announced the final rule for Renewable Fuel Standards 2 (RFS2) in January 2010 (EPA 2010, McMartin and Noyes 2010). The new RFS2 rules are a complex web of regulatory guidelines, but do provide for a more

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even playing field in regard to feedstock selection. The EISA divides biofuel feedstocks into three primary categories: 1st Generation (Corn), Cellulosic (Switchgrass, Miscanthus, etc.), and Advanced (Algae, Sugarcane, etc.). The new RFS2 standards, which go into effect on July 1, 2010, are divided into four categories based on greenhouse gas reductions over fossil fuels. Type A Advanced Biofuels must meet various requirements including at least a 50% GHG reduction. Type B Biomass-Based Diesel must meet various requirements including at least a 50% GHG reduction. Type C Cellulosic Biofuels must meet various requirements including at least a 60% GHG reduction. Type R Renewable fuel must meet various requirements including at least a 20% GHG reduction (McMartin and Noyes 2010). The Final Rule published on May 10, 2010 is essentially the finalized framework for the RFS2 policy, but there is still room for public comment. According to Mary Rosenthal, Executive Director of the Algal Biomass Organization, algae industry representatives are still working to revise the wording in the regulations to remove the special section for cellulosic fuel and combine that category into Type A - Advanced Biofuel. This change would increase the total amount of required Advanced Biofuel to 36 billion gallons in the year 2022. Increasing the amount of Advanced Biofuel required for meeting the requirements stands to benefit all Advanced Biofuel feedstocks as the effort to meet those demands will most likely be collaborative.

4.2 European Policy and Perspectives Europe has taken an entirely different approach to the development of renewable energy programs. Environmental and social concerns led Europe to begin their

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transition to renewable energy much sooner than the US. The European Commission (EC) adopted a more holistic approach and began to look at substituting all of the energy requirements with renewable sources, not just biofuel for transportation. The Commission, which represents all member nations of the European Union, has primarily dealt with the issue of renewable energy with a series of broad mandates; as opposed to the US which tends to approach energy in a more piecemeal fashion. Europe began on its quest to replace fossil fuels with a White Paper issued by the European Commission in 1997 which called for 12% of each member nations energy utilization be replaced with renewable energy. The directive laid out in the White Paper was accepted in the 2001 Directive on the promotion of Electricity from Renewable Energy Sources as part of its obligation to the Kyoto Protocol (EurActiv 2007). In 2007, the EC rolled out a Renewable Energy Roadmap that dictated each member nation should strive to replace fully 10% of their transportation fuel needs with biofuel (CEC 2007). As a whole, each member nation was required to increase their share of renewable energy by 5.5%, over their individual 2005 levels, by the year 2020. A statistically based renewable credit scheme was created to enable member nations to sell or trade their renewable credits to another member. In December 2008, the EU Roadmap was adopted and Europe began to strive toward the 10% renewable Energy goal, although the directive was clear that the 10% should be defined as that share of final energy consumed in transport which is to be achieved from renewable sources as a whole, and not from biofuels alone (Council 2009).

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This holistic approach is perhaps one reason why European biofuel producers are looking to thermal-conversion technologies, instead of producing fungible fuels. At the 18th Annual European Biomass Conference, organizers scrapped one full day of the conference that they originally intended to devote to algal biomass related business due to a lack of submitted abstracts (Personal Communication). The option of creating one type of renewable source, such as pellets made from compressed feedstocks that can be burned for energy, seems to be a very compelling one. This may be due to Europes attempt to tackle renewable energy as a gestalt, instead of the more fragmented approach favored by the United States. Although algae still remains a good option within environmental circles for fulfilling Europes 10% replacement mandate, the costs for creating an infrastructure for algal biofuel are still too high. There are currently no subsidies for any energy crop, partly due to the nature of the EU being comprised of many member nations and not individual governments. The director of the European Biomass Association, Rafaello Garafolo, warned that "It will never be economically viable to produce biodiesel or bioethanol from algae biomass if we dont think about the co-products" (EurActiv 2009). Furthermore, whereas in the United States, most political action is urged and guided by powerful lobbying forces, Europe has a long history of responding to the social concerns set forth by Non-Governmental Organizations (NGOs). European NGOs originally favored renewable energy and biofuel production for their capabilities to reduce greenhouse gas emissions (Teske et al. 2007), but recent media reports on the increasing global food shortages have led these organizations to strongly urge the EU to choose a different path (Cendrowicz 2008). Europe covers a geographic region that

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is primarily at higher latitudes, with cooler temperatures, and less direct sunlight than would be considered optimal for algae production. The EU has often outsourced its biofuel production needs to areas in Africa more favorable to biofuel crops. This is an issue of great concern for the European NGOs. Greenpeace and the European Renewable Energy Council have issued a report wherein they claim that biofuels will take a 6% share of transportation in India and a 7% share in Asia by the year 2050. This share, combined with electricity from renewable sources will significantly reduce the amount of CO2 released into the atmosphere in developing nations (Teske 2008).

V. CONCLUSION As I have presented, algal biofuel has the potential to alleviate many of the worlds transportation energy concerns. The ability for algae to be cultivated on marginal (non-arable) land, using saltwater, greatly reduces its impact on the environment relative to other biofuels and fossil fuels. Moreover, algaes cultivation does not require that it compete with food crops, a social benefit that may be underestimated by many lawmakers. Algaes high-yield and reduced greenhouse gas emissions make it a good candidate for reducing transportation related pollution. However, the current economic climate makes development of algal programs quite costly. Without the benefit of the subsidies that other feedstocks such as timber and corn enjoy, algal producers must be able to scale-up production while still remaining economically competitive with other biofuels and fossil fuels. In that light, policy makers and investors should look for opportunities to match the currently available scale of production to existing markets for algal fuel, in order to achieve small scale

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commercialization in the near term while working on long-term innovations in scale. For algae to be truly competitive, it should receive its own share of the subsidies currently only allocated to feedstocks whose industries have long been subsidized as a whole. Moreover, producing algal fuel as a co-product to more lucrative products such as animal feed and nutraceuticals is a highly feasible way to continue biofuel development while remaining commercially competitive. Another option is to combine biofuel production subsidies with economic aid to developing countries by sponsoring villagescale fuel production projects in India. The political interest in developing algal fuel is still high, but clearly algal biofuel producers must prove that they can operate at a much higher capacity, with lower production costs, than what currently exists, while remaining commercially viable entities. Developing and maintaining close relationships with American and European NGOs could greatly aid in giving algae a more even playing field in the biofuel market. This should not be done merely for the sake of profit, but as an undertaking dedicated to bringing the world a truly remarkable renewable energy source that could revolutionize global energy consumption and mitigate the very real issues surrounding climate change for future generations.

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ACKNOWLEDGEMENTS I thank Dr. B. Greg Mitchell, Dr. Steve Kay, and Ben Gilbert for their guidance and support on this paper and for graciously serving as members of my Capstone Committee; Dick Norris, Russ Chapman, and Jane Weinzierl for their steadfast dedication to the students of CMBC; and Tom Driscoll for everything. This project was funded in part by the Center for Marine Biodiversity and Conservation.

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