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Algae.Tec to Install C02-Eating Algae at Macquarie Power Plant

July 2 (Bloomberg) -- Macquarie Generation, owner of coal-fired power plants in Australia, will feed its carbon dioxide emissions to algae to produce oils that can be used to make cleaner transportation fuel.

Algae.Tec Ltd. will build a A$150 million ($138 million) algal oils plant to process emissions at Macquarie’s coal-fired power plant in the Hunter Valley north of Sydney, Roger Stroud, executive chairman of the Perth, Australia-based company, said by phone. The algae converts the carbon into oxygen and oil through photosynthesis.

The plant will help Macquarie reduce costs as Australia’s biggest polluters must pay about A$23 for each metric ton of carbon they emit under measures to discourage the use of fossil fuels and fight climate change.

The algal oils will be sold to a facility in nearby Maitland that will turn it into biodiesel that can be used in vehicles, Stroud said. Algae.Tec’s facility initially will produce about 50,000 tons of oil a year, rising five-fold over three years, he said.

“Once this formula is established there is no reason why we can’t expand it in Australia and get involved in an expansive development in North America and Europe, particularly the U.K.,” Stroud said. “We are also in talks in Brazil.”

Algae.Tec will fund the plant through a bond sale in Europe that it plans to start at the end of the month, Stroud said. It expects to start building the project by March. The facility should start producing algal oils by the end of 2014, he said.

The company in September agreed to work with Deutsche Lufthansa AG, Europe’s second-biggest airline, to build a plant that will turn algae into jet fuel. The companies are still deciding on where to build the production plant, and today’s news should help the negotiations move ahead, Stroud said.

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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