Obama Promotes Pond Scum to Relieve Dependence on Oil Imports

Faced with the highest oil prices in nine months, President Barack Obama is backing pond scum as a path to energy independence, pitting the nascent algae-based biofuels industry against critics of his energy plan.

The administration yesterday announced as much as $14.3 million to support the development of biofuels from algae, as crude oil for April delivery rose to $107.83 on the New York Mercantile Exchange, its highest settlement price since May.

“We could replace up to 17 percent of the oil we import for transportation with this fuel that we can grow right here in the United States,” Obama said in Miami during a speech on energy policy.

The Energy Department is seeking proposals from small businesses, national laboratories and universities to create research “test beds” for algal biofuels research at existing facilities, according to a statement from the agency. The award money will be part of a $30 million investment in similar research this year, it said.

Algae, a plant-like organism, can be harvested from ponds near industrial sites, where it can grow from power-plant carbon emissions or wastewater substances, the White House said in a fact sheet. The Energy Department is backing more than 30 projects representing about $85 million in public and private investment to develop biofuels from algae, it said.

The Energy Department is investing in biofuel technology made from algae as a substitute for gasoline, jet fuel and diesel fuel. Photo: Qilai Shen/Bloomberg Close

The Energy Department is investing in biofuel technology made from algae as a... Read More

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The Energy Department is investing in biofuel technology made from algae as a substitute for gasoline, jet fuel and diesel fuel. Photo: Qilai Shen/Bloomberg

Soybean Fuel

An acre of soybeans can produce 60 to 70 gallons of biofuel, while an acre of algae can provide 2,000 to 5,000 gallons, said John Williams, a spokesman for the Algal Biomass Organization, a Preston, Minnesota-based industry group whose members include Boeing Co. (BA) of Chicago and Sapphire Energy Inc. of San Diego.

“It’s a huge shot in the arm to have the president talking about algae” as a fuel source, Williams said in a phone interview.

Unlike corn-based ethanol, fuel from algae can immediately be used as a substitute for oil-based products, according to Sapphire Vice President Tim Zenk. “We’re making drop-in replacement fuels,” he said in a phone interview.

Exxon Mobil Corp. (XOM) of Irving, Texas, and closely held Synthetic Genomics Inc. of La Jolla, California, in 2009 began a partnership to develop algae-based biofuels. Exxon Mobil may spend as much as $600 million on the program within the next decade if milestones are met, the company said in a July 2010 statement.

Significant Role

“It’s great to see increasing focus on advanced biofuels like algae,” said Jonathan Wolfson, chief executive officer of Solazyme Inc (SZYM)., in an e-mail. The San Francisco-based company delivered about 108,000 gallons (407,000 liters) of renewable diesel and jet fuel to the Defense Department, and its algal- derived oil helped fuel a United Continental Holdings Inc. flight from Houston to Chicago in November, he said.

“This is a budding industry that will play a significant role in helping the U.S.,” Wolfson said.

Critics said the subsidy is unwarranted.

“If algae is an economically viable product, then the market will determine that,” said Nick Loris, a policy analyst for the Washington-based Heritage Foundation, which says it promotes conservative political policies. “I don’t think it needs $14 million from taxpayers.”

While algae-based biofuels show promise, Obama has taken other revenue-generating energy proposals “off the table,” Thomas J. Pyle, president of the Washington-based Institute for Energy Research, said in a phone interview. TransCanada Corp.’s proposed Keystone XLpipeline to transport oil from Alberta to the U.S. Gulf Coast is a “no-brainer,” he said.

“Despite President Obama’s rhetoric, this administration has done little to address our nation’s growing energy crisis,” Representative Fred Upton, a Michigan Republican and chairman of the House Energy and Commerce Committee, said in a statement. “What we need is less regulation and more access to secure supplies.”

To contact the reporters on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net; Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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