Quotes of the Day

Paul Woods didn't blindfold me as we drove through the overgrown plantations outside West Palm Beach, Fla., but he looked as if he was considering it. Woods is the brash 46-year-old CEO of biofuels start-up Algenol — and he takes his company's secrecy seriously. Aside from officials from the U.S. Department of Energy, I was the first outsider ever to visit Algenol's modest testing facility. We turned off a country road opposite a llama ranch, and stopped at an unmarked circle of trailers in the middle of a clearing in the palm trees. There, sitting on a section of concrete half the size of a basketball court, was what Woods has been hiding from the world: several rows of long white tubs fitted with plastic windows that let in sunlight, each filled with a liquid the dark green of moss. The mixture was water and algae — microscopic plantlike organisms that feed off sunlight and carbon dioxide. With the proprietary algae happily multiplying, Woods explained that he and his partners intend to produce a biofuel greener and cheaper than oil or corn-fed ethanol: "We want to do 20 billion gallons eventually, and we will compete on price. We're a year away from sales."

This sort of audacious prediction used to be commonplace in the biofuel industry, but 2008 was not kind to those who want to replace petroleum with plants as delegates gathering at the World Future Energy Summit in Abu Dhabi on Jan. 19 are sure to discuss. The U.S. corn-ethanol industry, which had grown fat on government subsidies, crashed last year. Perhaps worse, a series of influential studies argued that, far from being a green alternative, corn ethanol drives food-price inflation and produces higher levels of greenhouse-gas emissions than gasoline, because biofuel subsidies encourage forest-clearing. "If anything, traditional biofuels like ethanol and biodiesel are moving us in the wrong direction," says Nathanael Greene, an analyst at the U.S.'s Natural Resources Defense Council (NRDC).

But it would be a mistake to abandon the biofuel option now. The fact is that cars, trucks and planes contribute 13% of the world's greenhouse-gas emissions — the rates are far higher in developed countries — and there are no immediate solutions capable of breaking the planet's dependence upon jet aircraft and internal-combustion engines for transportation. Even promising technologies like electric vehicles remain years away from reaching critical mass, and would require vast changes to transportation infrastructure in the form of recharging stations and cleaner electricity. "The bottom line is that it is simply premature to rule out any option," says John DeCicco, senior fellow for automotive strategies at the U.S.'s Environmental Defense Fund. "The problem is too big." Fortunately, firms in the U.S. and Europe are exploring alternatives to food-crop biofuels, using everything from switchgrass to algae. Each technology has drawbacks, and none is fully ready, but in a warming world of finite oil supplies, we have little choice but to pursue them.

Applying the Science
Corn and sugarcane were the first crops to be turned into biofuels because it's easy to ferment the sugars in the plants' starches into ethanol. But there's more to plants than just edible starches and sugars. Take cellulose, the tough, abundant organic molecule that composes the cell walls of all plants. Nature provides enzymes — in the stomach of a cow that chews grass, or in a termite that eats through wood — that turn cellulose into sugar. But on an industrial scale, converting cellulose to a usable form to make fuel "is currently too expensive," according to Lee Lynd, an environmental engineer at Dartmouth College in the U.S. and co-founder of Mascoma, a biofuels start-up that's experimenting with cellulosic technologies.

Progress in the field is slow. Now, however, several American companies are vying to become the first to market cellulosic ethanol, aided in part by a new U.S. tax credit worth $1.01 per gallon for makers of such biofuels. That state aid will help defray high initial costs, and make cellulosic more competitive with oil. At Mascoma, Lynd is focused on finding and using bacteria that can digest cellulose and spit out ethanol in a single step — he calls it consolidated bioprocessing. It could reduce production costs so dramatically, he believes Mascoma will eventually be able to churn out ethanol more cheaply than gas, even without government subsidies. Big players are interested (Mascoma recently signed a deal to develop cellulosic fuel for General Motors), and the company plans a commercial facility in Michigan.

Others are also forging ahead. Verenium, a two-year-old firm based in Cambridge, Mass., has almost completed a demonstration plant in Louisiana — the first on American soil — that will produce 1.4 million gallons (5.3 million L) of cellulosic ethanol a year, chiefly from sugarcane residue. Verenium hopes that a recently formed partnership with energy giant BP can speed up the process. "You can do something in a lab and it will be perfect," says Verenium's CEO, Carlos Riva. "But what happens in the real world is quite different. You have to learn by doing."

Few companies have more experience in the practical work of breaking down cellulose than Denmark's Novozymes, the world's leading maker of industrial enzymes. Novozymes has traditionally manufactured enzymes for bio-industrial purposes like waste-water cleanup, but for the past several years the company has moved into biofuels — an initiative that is now the fastest-growing slice of its business. Novozymes employs enzyme hunters who scour the world to find the best bugs to digest cellulose. (It's messy work — compost piles are among the best places to search.) But why settle for what nature gives you when you can use the tools of biotechnology to build a better enzyme in the lab? At its research facility in Davis, Calif., Novozyme scientists are tweaking the genetic structures of selected enzymes to improve their ability to break down cellulose, a process called directed evolution. "Cellulose has evolved to resist degradation," says Lars Hansen, president of Novozymes North America. "But biotech is rising to that evolutionary challenge."

The Hope for Biotech
Even more promising, biotech may be able to manufacture a better biofuel. One of the disadvantages of ethanol is that standard automobile engines need to be retrofitted to burn it. What's more, ethanol is too corrosive to be transported through the pipelines that carry petroleum to market. But Amyris, based in Emeryville, Ca., is using genetic engineering to produce yeasts that can yield custom-designed, renewable fuels that have all the advantages of hydrocarbons — like ease of transport and high energy density — without the environmental drawbacks. "We want something that can drop into the existing infrastructure tomorrow," says Neil Renninger, Amyris' co-founder. The company opened a new pilot plant in November capable of producing 2.4 million gallons 
 (9 million L) of renewable diesel a year, and aims to manufacture 200 million gallons (900 million L) of fuel commercially by 2011.

There's just one problem: Amyris' designer fuels still depend on a food crop (right now it's sugarcane) as a feedstock. Although sugarcane is a much more efficient source of fuel than corn, it's still a food crop, and it's hard to see how Amyris could truly scale up its technology without impacting food supplies. But there could be a cheap, abundant alternative, one that has none of the inherent drawbacks of agricultural feedstocks: pond scum. Unlike even cellulosic ethanol, which requires farmland of some sort, garden-variety algae can be grown anywhere warm and sunny, and it can thrive in saline water rather than precious fresh water. Not only that, algae eats carbon — a lot of it. So algae-growing facilities could, theoretically, do double duty, as the source of a renewable biofuel and as an elegant answer to the question of where to sequester the carbon emitted by fossil-fuel plants. "We're looking at a product that spares land and water, and has an excellent energy-to-CO2 ratio," says Jason Pyle, CEO of San Diego-based company Sapphire Energy, one of the best funded start-ups in the biofuel field.

Nobody is more bullish on algae than Algenol's Woods, who founded the company in 2006 but has been pondering algae's potential since he came up with the basic idea behind Algenol's technology as an undergraduate in 1984. Most algae firms harvest the organisms and squeeze them to extract oil that's then processed into a fuel, but Algenol's strains essentially sweat oil in a gaseous form that can be condensed into a liquid. Woods says his system can yield 6,000 gallons (22,700 L) of ethanol per acre annually, compared to 370 gallons (1,400 L) per acre for corn ethanol. At his Florida test facility, Woods kneels and taps on one of his holding tanks. Clear droplets cling to the inside of the lid. "This is it," he says. "That's what we've learned here — this really does work."

Woods will soon get a chance to test his idea on a massive scale. With a group of partners that includes a scion of the Corona beer family, Algenol is poised to break ground on a commercial-scale facility in the Sonoran desert of northern Mexico. The plant's seaside location enables the company to use seawater to grow the algae, and a nearby coal plant could provide concentrated CO2 to turbocharge production. But not everyone is convinced that either algae or Algenol is ready for prime time. "I would say the hype is well ahead of the reality," says John Benemann, an expert in algae biofuels, who notes that no commercial method yet exists to capture CO2 from power plants and deliver it to algae facilities.

Of course, the hype exceeds the reality in nearly every facet of advanced biofuels, as it does throughout the world of alternative energy. The good news is that the technology to produce truly sustainable biofuels is advancing quickly. The bad news is that for now the business more closely resembles a science-fair project than Big Oil. Fixing that will require smart government policies — like favoring fuels based on their carbon footprint, not where they come from or who grows them. Says NRDC's Greene: "Biofuels might be the worst thing we can do — except for nothing."

• BRYAN WALSH / WEST PALM BEACH
• As criticism of corn-based ethanol grows, companies are at work on the next generation of biofuels