Algae Shell announced an investment in a Hawaii-based plant to make biodiesel from algae. Algae are the most promising route to low-cost fossil fuel replacements. Yields per acre will eventually be a multiple of other sources of liquid fuels, such as maize, wheat and palm oil. The other key advantage of algae is that they can be used to sequester carbon dioxide from fossil fuel combustion.

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The world’s resources of petroleum originated as algae. For several years, small US start-ups have been pushing these simple organisms as the best replacement for fossil diesel. Shell’s investment in Cellana looks like the first major validation of the large amounts of VC money that have gone into algae.

There are many, many different types of algae. The percentage of oil varies enormously by type. Specialists expect that we will use specially bred forms that yield about 50% oil by weight. When the algae is harvested the oil can be extracted by drying the organism and then compressing it. When the technology is mature, processing costs will be lower than other potential sources of biodiesel oil.

Yields of algae will be high. Estimates of the eventual maximum output per hectare vary enormously, but few doubt that algae will perform several times better than any conventional plant. Some estimates suggest that algae may eventually produce oils at a rate per hectare more than ten times better than oilseeds.

Algae are good at photosynthesis and probably produce over three quarters of all atmospheric oxygen. (Algae also use mechanisms other than photosynthesis as routes for turning CO2 into free oxygen.) Their ability to absorb CO2 has encouraged entrepreneurs into examining their ability to scrub CO2 from power station smokestacks. Small pilot plants now extract flue gas and run it across algae beds. The signs look good but it will be several years before we can be confident that algae will provide a cost-effective form of carbon capture. If they are successful as some of the proponents expect, algae will enable us to produce 'carbon negative' diesel.

In any list of the most interesting approaches to reducing fossil fuel dependency, and cheaply sequestering carbon, algae deserve a high ranking.