Remember when biofuels from algae were supposed to save the world? We at TriplePundit do, as earlier this decade we frequently received announcements boasting, “This renewable algae biofuel will change the world in six months!”
Unfortunately for that industry, several limitations affected algae-based fuels’ ability to scale, including the space such facilities require and high upfront capital costs. Renewables have scaled, but in the form of solar and wind power, not biofuels. Many airlines have operated token flights with a mix of algae-based and conventional jet fuel to show their sustainability street cred, but this is an industry that has a long and tortured path ahead if it will ever have a foothold within the global energy sector.
But it turns out that algae may still have an important role in helping another industry mitigate its environmental impact and become more sustainable.
TerraVia, formerly known as Solazyme, announced that it is entering the aquaculture sector with an algae-based feed product. The company claims this development will help alleviate the overfishing that plagues the world’s oceans due to the annual demand for omega-3 fish oils, which the company says has reached 1 million tons annually for both animal and human consumption.
These omega-3 oils, or DHA (docosahexaenoic acid), are especially coveted as fish feed because of the surging global aquaculture market, which is estimated to be valued at $200 billion by 2020. To offer more details about this new venture, TerraVia’s global sustainability director, Jill Kaufman Johnson, spoke with TriplePundit by telephone from the company’s offices in San Francisco, California.
TerraVia is manufacturing these omega-3 oils, branded as AlgaPrime, from algae in a partnership with the agribusiness conglomerate Bunge at a plant in greater São Paulo, Brazil. TerraVia says these oils were ready for full commercial production late last year, and that it has reached an agreement to sell the oils to an undisclosed supplier that produces feed for aquaculture companies raising salmon, trout and other species.
Rather than impose further stress on the world’s oceans, TerraVia says this “renewable oils” processing center can create an alternative omega-3 product while requiring lower carbon, water and land inputs. “Fish in the ocean are already eating micro-algae rich in omega-3s, so what we’re doing is taking the middleman out,” Johnson said as we began our conversation.
Sugar produced by Bunge allows algae to thrive and grow in tanks. In turn, the feedstock that provides the energy required to churn out algae-based omega-3 oils is waste from Bonsucro-certified sugar cane — which has long been used to create ethanol for automobile fuel in Brazil. And the big difference, Johnson said, is how the company’s algae is produced.
“The algae we are using is heterotrophic, which means it grows in the dark,” Johnson explained, “and since it can be grown in enclosed tanks, we don’t have the problems of contamination unlike other algae oil producers.”
Contamination risks have long bedeviled algae producers, which have generally relied on species that required photosynthesis, e.g., sunlight, in order to grow in open ponds or tanks. One bird flying over a pond, or a gust of wind, can spoil a batch of such algae.
But that risk is averted within the massive tanks at Bunge’s facility. They are eight stories high, which allows TerraVia to produce 100,000 metric tons (30 million gallons) of oil annually. That oil then becomes raw material from which a bevy of products can be extracted. Raw materials are also not hauled over long distances, as Bunge has already been operating the site’s nearby sugar mill for a few years.
“What’s different about us from other algae oil producers is that by growing this strain of algae through this fermentation process, we can produce products that are pure and consistent,” Johnson told us, “and this also allows us to scale in the way that other companies have not gotten to yet — and I don’t know if they will.”
TerraVia is following the trend of other algae-based oil producers, which have shifted away from developing the oil for fuel and instead now focus on food and consumer products. Instead of concentrating on energy companies and airlines, TerraVia instead has found business opportunities by creating products that could disrupt global supply chains.
For example, the company has found that algae-based oils can be a viable alternative for palm oil, the demand of which has wreaked havoc across rainforests in Indonesia and Malaysia. TerraVia also launched a business unit that will develop algae-based food products, which the company insists can replace the consumption of animal fats and protein.
Over the years, a bevy of startups have long tried to commercialize algae products such as spirulina, long touted for being rich in protein and antioxidants. But it has been difficult for companies to incorporate these ingredients into food products that consumers will actually eat, and many nutritionists and scientists will tell you these ballyhooed health claims should be taken with a grain of salt.
But for TerraVia, this bet on the commercial scale of algae is one worth taking. The company’s financials are a mess, and its stock price, which was over $25 a share in 2011, is barely over $2 a share as of press time, although the company’s recent announcements have given its stock price a bump.
“We want to chip away at the amount of fish used to process these omega-3 oils,” Johnson explained, “and what’s exciting about our process is that the process in which sugar can turn algae into oil only takes a matter of days.”
A similar process to harvest these oils has long been underway in oceans. But it can take several weeks, even months, for nature to create omega-3s, and it is clear that the global fishing industry has severely disrupted the environment throughout the world’s oceans.
If the aquaculture sector buys into TerraVia’s technology, and that of other companies in this space, this algae oil pioneer could manage to turn around its financial performance and help restore our oceans and seas at the same time.
Image credits: TerraVia