Biodiesel from Microalgae - WordPress.com · 2014. 6. 11. · Sustainable Biodiesel- Mustafa Hafez 1 Table of Contents Section Page 1. Executive Summary 2 2. Introduction 4 2.1- Statement

2014

Mustafa Hafez

Master of Science in Biotechnology-

University of Wisconsin- Madison

4/18/2014

Biodiesel from Microalgae

Sustainable Biodiesel- Mustafa Hafez

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Table of Contents Section Page

1. Executive Summary 2

2. Introduction 4

2.1- Statement of the Technology and its Significance 4

2.2- Overview of the Opportunity and Risks 4

2.3- Working Hypothesis for Research- Creative and Original Ideas 5

2.4- Identification of the Strategic Challenges Faced 6

2.5- Identification of an Ideal Company Positioned to Implement this Opportunity- Algal Scientific

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3. Technology Overview 8

3.1- Review of the Basic Underlying Science 8

3.2- Practical Applications- Current 10

3.3- Practical Applications- Future 11

3.4- Intellectual Property Summary 12

3.5- Technical Analysis of Existing and Emerging Competing Technologies 15

4- Analysis of the Market Opportunity 18

4.1- Market Size and Growth Potential 18

4.2- Competing Companies and Their Capabilities 20

4.3- Industry Attractiveness Based on Potential for Profitability 21

5- Analysis of Strategic Opportunity 23

5.1- Value Chain and Market Competitive Analysis 23

5.2- Required Resources and Capabilities 25

5.3- Sustainable Competitive Advantage 26

6. Opportunity and Company Complementation 27

7- Critical and Original Recommendations 28

7.1.1- Rejected Technical Applications 28

7.2- Recommended Corporate Strategy 31

7.3- Acquiring Resources 32

7.4- Leveraging Differentiators 34

8- Implementation Considerations and Challenges 35

8.1 Considerations Involving Manufacturing 35

8.2- Regulatory Challenges 36

8.3- Regulatory Implementation Challenges 37

9- Global and International Considerations 38

9.1- Political Considerations 38

9.2- Summary of Relevant International Patents 38

9.3- Global Similarities 39

9.4- Societal Practice and Consideration 39

9.5- Ethical Concerns 39

10- Summary and Conclusion 41

11- Methods- Resources Used for Research 43

12- References 44

13- Appendix 47


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1- Executive Summary

This paper offers a technical, marketing, legal, and ethical overview for the proposal that Algal

Scientific should adopt the production of biodiesel derived from microalgae. The scope of the

paper is focused on biodiesel as a transportation fuel.

Biodiesel is a renewable fuel that has the potential to displace the reliance on fossil fuels. The

reliance on fossil fuels is a global problem as availability is scarce and consumption leads to

negative environmental impacts.

Biodiesel is not a novel fuel and has been around for many years. However, the traditional

method of production from crops is inefficient and unsustainable. The paper describes an

alternative method of production using microalgal biomass as feedstock. This hypothesis has

been debated for several years; however, technical and political challenges have often

prevented the adoption for large scale production. As a result, the leading biodiesel

manufacturers in the United States are still relying on crops. This includes companies such as

Imperium, FutureFuels, and Delta American.

In general, bioethanol is the most common biofuel consumed in the United States, despite its

lack of efficiency. This is mainly due to government mandated blends. Unfortunately, no

government mandates are imposed for biodiesel. This is no surprise, as the biodiesel production

capacity of the United States represents only 3% of annual diesel consumption. The aim of this

project is to increase the production capacity to 10%; there by, providing governmental officials

with the opportunity to implement a mandated blend.

The method of production described is composed of four phases; microalgal growth, biomass oil

extraction, oil conversion into biodiesel, and recycling. The growth phase involves culturing of

Euglena gracilis species in photobioreactors. Euglena gracilis is selected due to the ability of

this organism to grow in the presence or absence of light. This compensates for seasonal

fluctuation in natural light intensity due to seasonal variation. Euglena gracilis also possesses

autotrophic properties that facilitate the extraction of the biomass from the photobioreactor. This

process is within scope of US patent number 8,308,944. However, this does not represent

issues as the patent is assigned to Algal Scientific.

The oil extraction process involves the introduction of a virus that is capable of rupturing the

microalgal cells and releasing the oil content. The biomass is then centrifuged and the oil

content is extracted. The collected oil is then subjected to direct hydrogenation using palladium

on carbon as a catalyst; which results in the conversion into biodiesel composed of pure

hydrocarbons in the form of alkane chains. This process is within the scope of US patent

number 8,636,815. An IP licensure agreement is required for this phase of production.

To reach the 10% goal, the production capacity for this project needs to reach 3.2 billion gallons

per year. In order to meet these demands, a method of recycling resources is required. This

includes the recycling of Nitrogen and Phosphorus by anaerobic degradation, water treatment,

and residual Carbon recycling. However, the majority of the Carbon used is incorporated into

the biodiesel and is not recoverable. For this reason, a partnership with PepsiCo is proposed to


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provide mutual benefits. This will involve obtaining wastewater rich in carbon and other

nutrients, in exchange for providing clean water for PepsiCo’s industrial requirements.

This method of production has a high potential of profitability as it reduces costs of production

by 67%. Moreover, the demand for biodiesel is not only within the United States. Global

commercialization is also appealing; as regions such as Europe, Asia, and Australia are

expressing high demands as well.

A patent search has been conducted for US considerations as well as globally. A summary of

the findings are presented within the paper. There have not been any patents identified for

which this method of production would infringe upon. A sustainable competitive advantage is

predicted, according to the VRINE analysis conducted. For competitive reasons, a comparison

between biodiesel to diesel is provided, along with comparisons with other renewable biofuels.

The market for transportation fuels is growing at exponential rates, however in order to

commercialize, biodiesel standards must comply with ASTM D 6751 for the US, and EN 14214

and EN 14213 for Europe.

The ethical debates for biofuels have been largely concerned with over usage of arable land,

water, and other environmental concerns pertaining to spills. The method of production outlined

in this paper does not utilize arable land, recycles waste water, and produces a biodegradable

product that is not only 95% degraded within 28 days, but also promotes the degradation of

petroleum diesel when used as a blend.

However, ethical concerns are predicted regarding the use of the residual slurry as fertilizer.

This is because the slurry contains remnants of the virus used during oil extraction. Studies

must therefore be conducted to evaluate the potential effects on crops.


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2- Introduction:

This paper covers a development plan for the large scale production of biodiesel, by utilizing

microalgae.

2.1- Statement of the Technology and its Significance

Due of the great quantity of fossil fuels that was used in the contribution to human development,

the twentieth century was dubbed “the hydrocarbon century”. Over millions of years, intense

heat and pressure have transformed the decaying remains of plants and animals into energy

loaded fuels; fossil fuels. For more than 100 years, fossil fuels in the form of coal, petroleum,

and natural gas have predominantly been the main source of energy utilized worldwide. This

has allowed fossil fuels to be the most valuable economic source of power for individual and

commercial use.

The deception that fossil fuels are infinite has resulted in extensive utilization, starting with the

industrial revolution. While natural gas and coal are being used for electricity production, as well

as, internal heating systems, petroleum is extensively used for the production of transportation

fuels and plastics. By the year 2005, 75% of the global energy consumed was derived from

fossil fuels.

In general, fossil fuels need to be burned in order to release this stored energy. During this

burning process, several forms of emissions are released into the atmosphere. A main

component of this combustion process is carbon dioxide; this gaseous chemical is believed to

be the main source of concern for global warming. Furthermore, sulfur dioxide and nitrogen

dioxide fumes can dissolve in water vapor and lead to acid rain.

Moreover, coal mining and oil extraction are processes that can damage the landscape;

exposing nearby ecosystems to a considerable amount of salt water causing hazardous

consequences. There are currently laws that attempt to minimize such risks. However, experts

believe that the word has reached its limits of extraction and reliance on fossil fuels, especially

petroleum oils. The concern of increasing demand and decreasing supply has led to the

initiation of development of alternative energy sources.

The United States utilizes about of 25% of the world’s resources, thus, becoming the largest

consumer of fossil fuels. Considering that nearly 45% of fossil fuels used are petroleum based,

and the majority of which is used for transportation purposes, a decrease in supply represents

an incredibly large market niche. For this reason, the focus of this paper is for an alternative

energy source for transportation fuels.1, 2

2.2- Overview of the Opportunity and Risks

A technology that has the potential to decrease the reliance on fossil fuels through sustainable

means represents an opportunity for a clean burning alternative that can reduce US

dependence on foreign petroleum. Several fuels have been recently developed, the most

common of which has been bioethanol. However, this project is focused on biodiesel. A detailed


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comparison and justification for the scientific preference of biodiesel over bioethanol is provided

in section 3.1.

Biodiesel is a renewable source of clean burning diesel. It is usually made from a mixed variety

of feedstock; comprising recycled cooking oil, soybean oil, and animal fat. Biodiesel is not a

novel technology. In fact, over a decade of commercial production has increased the annual

production from 25 million gallons of biodiesel to 1.1 billion gallons in 2012. This makes

biodiesel the first biofuel to reach one billion gallons of annual production.

Still, the annual use of diesel on US roads is approximately 54 billion gallons. Realistically, the

use of oil crops for the production of biodiesel cannot satisfy such demands. However, the use

of microalgae for the production of biodiesel represents a renewable source that has the ability

to meet global demands. Some species can double biomass yields within 36 hours and have a

potential of over 80% oil content by dry weight.3

However, it is important to note that while biofuels are being produced in large quantities, the

adoption of these fuels has not been very promising. This can be attributed to the ability, or lack

thereof, of transportation vehicles to run purely on biofuels. The major success with bioethanol

is largely due to federal law mandating all gasoline sold in the United States to comprise of at

least 10% bioethanol. A similar regulation that mandates a minimum percentage of biodiesel in

diesel fuel may be required for considerable marketing success.

The attractiveness of biodiesel lies in its ability to be used in conventional diesel engines that

are currently on the road. No modifications are required for engines and the majority of

manufacturers’ warranties would not be voided when using blends ranging from 5% all the way

to 100% biodiesel.

2.3- Working Hypothesis for Research- Creative and Original Ideas

Microalgae are photosynthetic organisms; they utilize sun light as the main source of energy.

This dependence on sunlight can cause variations in the growth rate as the duration and

exposure of sunlight is seasonal.4 Sun light is supplied through solar collecting tubes and the

heterotrophic nature of Euglena gracilis offers to compensate for light variations. Moreover, light

sensors are able to detect the decrease in light intensity and relay the activation of artificial light

sources.

Microalgae also provide a method of Carbon dioxide (CO2) fixation. This is valuable as it

reduces greenhouse gases’ contribution to global warming. However, in order to grow

microalgae on a large scale, a source and method of supplying CO2 to the growth medium is

required. Another valuable resource required for sustainable growth of micro algae is water.

The hypothesis of this project relies upon the growth of microalgae using photobioreactors. In

order to maintain the indoor temperature of the facility, boiler heaters will be used to provide

heat energy. Traditional boiler heaters have the disadvantage of producing high levels of CO2

emissions. However, these emissions will be utilized as a CO2 source required for the growth

chambers. The main source of CO2 is provided in wastewater.


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As for the water supply, numerous food manufacturers utilize substantial amounts of water

during processing. Much of this water gets contaminated and is wasted. Developing a method

for the purification of this water and its utilization for the growth medium will offer an additional

benefit of recycling and reducing the amount of water waster.

2.4- Identification of the Strategic Challenges Faced

2.4.1- Technology

This project is focused on reducing waste and recycling resources. While several ideas

concerned with the growth stages are novel, microalgae produced biomass still requires a

means of converting into biodiesel. This process is dependent on enabling patented

technologies. Intellectual property rights are therefore required and essential for the production

of biodiesel. Fortunately, there are several patented methods available that provides for the

analysis and selection of the most appropriate one.

2.4.2- Company

For the success of the project, a crucial set of skills is required to ensure a smooth flowing

process. Attaining IP rights for the technology would provide permission for the use of the

technology, but not a thorough understanding of the working science. It is, therefore, crucial for

the implementing company to attain staff that has the required expertise to carry out the

operational processes.

Furthermore, the production of biodiesel in sufficient amounts to meet demands would require a

considerable amount of capital. Fund raising and capital investment is required. On the bright

side, this project offers a means of reducing fossil fuel consumption, reducing greenhouse

gases in the environment, reduces the waste of water, provide fertilizers for agriculture, provide

high protein animal feed, and attempts these benefits while attaining a carbon neutral footprint.

These goal are directly in line with the current goals of the United States Government and is a

good candidate of attaining federal grants and funding.5

2.5- Identification of an Ideal Company Positioned to Implement this

Opportunity- Algal Scientific

2.5.1- Company Description: http://www.algalscientific.com/

Algal scientific was founded in 2009. The company utilizes algae for the treatment of water

produced as a waste product from industries such as food and water production. The aim is to

reduce costs of water treatment. The company also utilizes its secondary benefit, a source of

algal biomass that can be utilized as high protein animal feed, as well as a fertilizer. Experts

forecast revenues to exceed $40M by 201534.

Algal Scientific utilized two core technologies. Sterile fermentation is used for the production of

high value algal bio-products for the pharmaceutical industry. Open fermentation is then used to

reduce the cost of water purification.

http://www.algalscientific.com/


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2.5.2- Current Portfolio

Table 1

Product Description

Algamune AM Highly digestible animal protein meals

Algamune ZPC This is a zinc polysaccharide complex. This provides an increased bioavailability of zinc nutrition.

Algaamune BC This is a highly purified beta glucan for use in human food, nutraceuticals, and drug applications.

Algapro This is a ground mixture of biomass that is used as a digestible single cell protein.

Algagro This is an organic slow release fertilizer.

2.5.3- Rationale for Selection:

Algal Scientific is dedicated to provide efficient and diverse environmentally friendly

solutions via patented technologies.

Algal Scientific possesses the technology, expertise, and large scale equipment required

for the growth of microalgae. The incorporation of oil producing microalgae for the

production of biodiesel is aligned with the company’s operations.

Engineering capabilities of research scale, pilot scale, and large scale bioreactors can

leverage the production of the necessary equipment required for the quantity of biomass

needed to produce biodiesel.

Water purification technology can be utilized for supplying the water needs of large scale

microalgae growth.

The technical expertise of Algal Scientific’s scientists can trained to handle the

conversion of biomass to biodiesel.

Biodiesel production can provide more raw materials for the increased production of

Algal Scientific’s animal feed and fertilizer products.


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3- Technology Overview

3.1- Review of the Basic Underlying Science

This paper and the following calculations are based on the average composition of microalgae

of CO0.48H1.83N0.11P0.01, provided by J.U. Grobbelaar.6

Utilizing this formula, Nitrogen and Phosphorus requirements for the growth media can be

calculated per unit area per year. Microalgae production will require large amounts of both

Nitrogen and Phosphorus, such demands might not be feasible or sustainable without a method

or recycling. The extraction of microalgal oil from algal waste water leaves behind a rich source

of these nutrients and can serve as a source for recycling. In natural aquatic environments, algal

cells die and lyse once they sediment at the anoxic zone. In this oxygen derived zone,

nutritional demineralization occurs through anaerobic degradation. This recycles the nutrients in

the aquatic environment in the form of ammonia and phosphorus; which provide a favorable

environment for phytoplanktonic organisms.4, 10

This natural degradational process occurs over a prolonged period of time, and in most cases is

incomplete; as cell structural can still be identified in sedimentary kerogen rocks years later. The

main rate limiting factor for the anaerobic degradation is the composition of the cell wall. The

structure and composition of the cell wall might contain chlorophycae; a parietal structure that

provides resistance to decomposition. It is, therefore, crucial to select the appropriate species of

microalgal for growth, and maintain a pure line of microalgal cells to prevent product variation.

Development of anaerobic digestion techniques of algal waste mimics the natural degradational

process and results in the mineralization and release of phosphorus and ammonia; both of

which can be used as substrate for consecutive microalgal growth. A by-product of this

biotechnological process is methane; which can further be utilized as a source of energy.

However, mimicking this natural process is the number one technological obstacle in the

production of biodiesel from microalgae.

3.1.1- Anaerobic Degradation

In order to realistically determine the potential for anaerobic degradation, the composition of

microalgae must be determined. The composition of the microalgae nutrients must complement

the nutritional requirements of the anaerobic microflora. As stated earlier, the composition of

microalgae can lead to variations in the performance of the anaerobic organisms. Variations in

compositions vary considerably between freshwater microalgae and terrestrial variants. The

ratio between protein and carbon/nitrogen components averages from 10.2 in fresh water to 36

in terrestrial environments. Table 2 summarizes the degree of composition variations among

microalgae. 10


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Table 2

Proteins Lipids Carbohydrates

6-52% 7-23% 5-23% Nutritional properties of microalgae for mariculture

Aquaculture, 151 (1997), pp. 315–331

Angelidaki and Sanders (2004)7 have proposed a method for the theoretical determination of

ammonia and methane production when the composition of microalgal content is unknown. The

following equation suggests the stoichiometric conversion of organic matter into Methane,

Carbon dioxide, and Ammonia:

CaHbOcNd+(4a−b−2c+3d4)H2O→(4a+b−2c−3d8)CH4+(4a−b+2c+3d8)CO2+dNH3

This equation allows the approximate estimation of the maximum yield potential. Yields can be increased after the extraction of lipids for biodiesel through cell disruptions, as this allows the enhanced anaerobic decomposition of remaining intracellular components.8 Furthermore, the addition of oligo nutrients such as Zinc, Cobalt and Iron can stimulate an increased production of methane.

3.1.2- Species Selection

Becker (2004)9 has provided the following findings on different species of microalgal composition:

Table 3

Species Proteins (%) Lipids (%) Carbohydrates (%) CH4 (L CH4 g VS− 1) N–NH3 (mg g VS− 1)

Euglena gracilis 39–61 14–20 14–18 0.53–0.8 54.3–84.9

Chlamydomonas reinhardtii 48 21 17 0.69 44.7

Chlorella pyrenoidosa 57 2 26 0.8 53.1

Chlorella vulgaris 51–58 14–22 12–17 0.63–0.79 47.5–54.0

Dunaliella salina 57 6 32 0.68 53.1

Spirulina maxima 60–71 6–7 13–16 0.63–0.74 55.9–66.1

Spirulina platensis 46–63 4–9 8–14 0.47–0.69 42.8–58.7

Scenedesmus obliquus 50–56 12–14 10–17 0.59–0.69 46.6–42.2

A. Richmond (Ed.), Handbook of microalgal culture, Blackwell Publishing, Oxford (2004), pp. 312–351

Lipid content is directly related to biodiesel and methane yields, Chlorella vulgaris possess higher lipid content than Euglena gracilis. However, utilizing Angelidaki and Sanders’ equations reveals that Euglena gracilis’ decomposition results in a significantly higher yield of ammonia upon anaerobic decomposition due to high protein content; this provides for a more efficient and sustainable supply of recycled nutrients that is important for the continuous growth of microalgae. On the other hand, too much ammonia production may result in ammonium toxicity and the inhibition of the anaerobic microflora. The analysis of these findings leads the project in favoring Euglena gracilis as the main species of microalgae to be grown due to; high lipid content, rich source of nutrients upon decomposition, and more importantly, compatibility with Algal Scientific’s current protocols (See 3.2).


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3.2- Practical Applications- Current

This section covers the practical application of microalgae culturing in bioreactors currently

being used by Algal Scientific.

Algal Scientific treats high strength wastewater with high levels of nitrogen, phosphorus and

biological oxygen demand, by utilizing microalgae as opposed to conventional methods that rely

on bacteria. This application results in the permanent removal of these substances from

wastewater and produces valuable biomass as a by-product.

This wastewater treatment system (Figure 1) uses a bioreactor with a population of

heterotrophic microorganisms (algae) that remove nutrients from that water and convert organic

carbon into biomass that is further processed for the production of fertilizers, high protein animal

feed, and nutritional pharmaceutical ingredients (Section 2.5.2 Table 1).

Figure 1

United States Patent No.: US 8,308,944 B2

The Euglenoids species are selected as they are able to grow heterotrophically utilizing the

organic carbon in the wastewater, independent on light. This allows biomass of higher density to

accumulate in the bioreactor; which is more efficient for harvesting. Euglenoids offer the

advantage of growing at a much higher rate heterotrophically than is usually observed

autotropically. The phototactic properties of Euglenoids cause the microorganism to move

towards or away from the light; this offers a natural compacting mechanism.11

Cells are grown in large, deep aerated bioreactors; to which wastewater is added continuously

to supply nutrients. The production of 100kgs of biomass usually represents 5-10kgs of Nitrogen

and 0.5-2kgs of phosphorus removed from wastewater. With a hydraulic retention time of 1-2

days, biomass generated reaches over 0.05% dry weight. This solid needs to be concentrated

to at least 20% in order to be considered economical in shipping as valuable source of biomass.

The bioreactor effluent is then removed from the bioreactor and enters a light clarifier, promoting


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phototactic self -concentration. The light clarifier uses light with a specified intensity and

wavelength that forces the high-solid to the bottom forming a valuable biomass paste, while the

top low-solid effluent provides the treated water system. The biomass paste is then removed

from the clarifier and re-introduced to the bioreactor. This ensures the dominant state of

microalgae in the bioreactor and increases the rate to water purification.11

To reduce overall energy and carbon source, a variation of this method involves growing the

microalgae phototrophically during sunlight and heterotrophically at night. An artificial light

source is used in another variation to promote photochemical growth. This light source is

configured to generate light with the intensity and wavelength to promote microalgal growth,

while not being sufficient to promote the self-concentration of the biomass by autotrophic

properties.11

3.3- Practical Applications- Future

The future application of this technology will utilize a modified version of Algal Scientific’s growth

culture techniques, as well as, combining this technology with an enabling technology to convert

biomass into biodiesel.

Euglena gracilis will be grown in photobioreactors using artificial lightning. Water requirements

will be provided through wastewater rich in nutrients. The scale of this project will require

nutrients that exceed that which can be provided through wastewater. The limiting factor for

nutrients are nitrogen and phosphorus, both of which will be supplied to the growth medium

through recycling via anaerobic degradation, as discussed in section 3.1.1. The carbon source

will be supplemented by providing the aeration pump with fumes and emissions produced by

boiler heaters used to heat the plant.

Mixing and aeration of the photobioreactor effluent will cease after a period of growth. The

intensity and wavelength of the light used in the photobioreactors will be modified to promote

negative phototactic stimuli forcing high-solid effluent to the bottom of the photobioreactor. The

biomass slurry at the bottom of the photobioreactor is then removed and a virus is introduced to

70% of the slurry volume. This virus ruptures the oil vesicles within the cells, as well as, the cell

wall of the microalgae; releasing the oil content of the biomass. The extracted oil is separated

by centrifugation and is then converted into high quality biodiesel using direct hydrogenation

with palladium on carbon as a catalyst. The process of converting algal oil into biodiesel

requires an enabling technology; this is discussed further in section 3.4.

Once oil has been extracted from the slurry, the residual slurry is pretreated and subjected to

anaerobic degradation. The residual slurry may also be utilized as animal feed or agricultural

fertilizer. Anaerobic degradation releases demineralized nitrogen in the form of ammonia, and

phosphate. Oil remaining in the slurry produces methane. Methane is used as an energy source

for boiler heaters which supply Carbon dioxide to the air pump, at which point the air pump is

reactivated and aerates the photobioreactors containing the low-solid effluent. The

demineralized nitrogen and Phosphorus are reintroduces to the low-solid effluent in the

photobioreactors. The remaining 30% of the high-solid effluent is also reintroduced to the


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photobioreactor as a seeding source to accelerate microalgal growth. Heterotrophical growth is

initiated followed by autotrophical growth. The cycle is then repeated.

3.4- Intellectual Property Summary

This section summarizes the US patent search conducted. It includes enabling patents required

for the operation, as well as, patents that could be attained in the future to improve growth rate.

A brief explanation of patents that may seem to block the use of the technology is included,

along with justification of why the scope of the patents should not interfere with the project’s

operation. Validity of patents is usually 20 years starting from the date of patent.

3.4.1- Enabling Patents and Current Status

This section offers an explanation of the process outlining the requirement of obtaining rights for

using these methods.

United States Patent No.: Date of Patent: Inventor

US 8,308,944 B2 Nov. 13, 2012 Geoff Horst

This patent is assigned to Algal Scientific. It involves the growth culture technique using

wastewater as a source of nutrients and organic carbon. It is essential for the project’s growth

phase of microalgae.


US 8,636,815 B2 Jan. 28, 2014 James R. Oyler

This patent covers the enabling technology required for the liberation of algal oil from the

biomass via rupturing the cell wall and oil vesicles of microalgae. The patent also covers the

direct hydrogenation process selected for converting the oil into biodiesel.

The algal oil is in the form of triglycerides. Direct hydrogenation of algal oil results in liberation of

alkane chains, propane and water. The resulting alkanes are a form of pure hydrocarbons free

of oxygen. This produces biodiesel with high energy content.12

3.4.2- Blocking and Competing Patents

This section offers a summary of competing patents.


US 8,658,414 B2 Feb. 25, 2014 Andreas Hornung

This patent focuses on implementing a pyrolysis reactor within the microalgal biomass growth

container. The aim of the pyrolysis bioreactor is to promote microalgal growth, thus increasing

the biomass yield. The growth of microalgae without the use of pyrolysis processing does not

infringe on this patent. However, an option to license this technology is available if current

biomass rates need to be accelerated.13


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US 8,647,849 B2 Feb. 11, 2014 Javier Velasco Alvarez

This patent covers the processing of algal biomass containing 20% or more oil content by

weight, and its conversion into biodiesel. However, the scope of the patent is limited to culture

techniques utilizing glycerin as a carbon source, and therefore the current project does not

infringe on this patent.14


US 8,598,378 B2 Dec. 3, 2013 Michael J. Cooney

This is a competing patent that has a similar approach for converting algal biomass into

biodiesel. This method uses a transesterification process instead of the proposed direct

hydrogenation. It is a form of preference whether to use direct hydrogenation or

transesterification. However, the decision for direct hydrogenation was selected for several

reasons.15

Transesterification of algal oil produces free fatty acid alkyl esters and glycerol. The use of acyl

acceptors, such as alcohols, may lead to saponification, and the resulting glycerol must be

dried. Biodiesel produced by this method has slightly lower energy content, degrades at a faster

rate, and causes the attraction of water.12


US 8,569,050 B2 Oct. 29, 2013 John D. Ericsson

This patent covers the growth of microalgae in photobioreactors that utilize internal artificial

light, as well as, exterior solar energy capturing devices to improve sunlight exposure for

photosynthesis.16

The selected species of microalgae for this project are of the Euglenoids family. They are

heterotrophic autotrophs, and, therefore, have the ability to grow in the presence or absence of

light. In fact, the growth rate in the absence of light has been reported to be more accelerated.

The use of solar capturing devices is sufficient for growth and does not infringe on this patent

since artificial light is not used for growth. However, the artificial light is used for activating the

negative phototactic effect. This represents a different method of production than outlined in this

patent.


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3.4.3- Options and IP Strategy

The intellectual property strategy involves searching patents through USPTO.gov, identification

of applicable patents pertaining to the project, determining the scope of freedom to operate, and

acquiring licenses to enabling technologies.

Patent number US 8,308,944 is required for the microalgal growth phase of the process. This

patent is assigned to Algal Scientific. Since the project would be implemented by this company,

it is within their legal scope to operate.

Patent number US 8,636,815 is assigned to Genifuel Corporation. This is a company founded

by the inventor of the patent, James R. Oyler. As of the present time, Genifuel does not utilize

the patent in any of its technologies. The use of a virus to rupture oil vesicles and microalgal cell

walls, as well as, the direct hydrogenation process for converting the oil into biodiesel is within

the scope of this patent. Intellectual property rights should be obtained for this process.

While Genifuel does not use the patented technology in its processes, this is a recently issued

patent and it is illogical to wait for the patent to expire for acquiring freedom to operate. It is also

possible that Genifuel is developing a process to utilize this technology in the near future, and

might not be willing to provide legal rights to operate.

However, an attempt to seek intellectual property rights to this patent through a licensure

agreement is attempted. Furthermore, the assistance of Mr. Oyler would be very beneficial as a

consultant.

In the event of refusal of intellectual property rights to operate, there are several other methods

that can be utilized for the extraction of the oil as well as conversion to biodiesel. Among which

is utilizing transesterification as opposed to direct hydrogenation. Transesterification should be

performed using ethyl acetate instead of alcohol to prevent saponification. As stated, this may

produce biodiesel with slightly lower energy content and may require the use of a biological or

chemical catalyst. However, transesterification would provide a source of glycerol; which can be

dried and offered as a product. In this event, care must be taken not to use glycerol as a carbon

source for microalgal growth to prevent infringement on patent no. US 8,647,849.


15

3.5- Technical Analysis of Existing and Emerging Competing Technologies

There are advantages and disadvantages among different forms of biofuels. However, it is

important to note that, for economical purposes, several forms of biofuels are likely to co-exist

for supplying different needs. Biofuels, in general, will need to replace fossil fuels in the future;

due to scarce resources and increasing fuel demands.

Most biofuels tend to be more environmentally friendly and are, more or less, carbon neutral.

While fossil fuels are of limited supply, biofuels are sustainable. Some processes can be used to

co-produce more than one type of biofuel, such as biodiesel and biomethanol.

This section covers a comparison of biodiesel and other alternatives. For the purposes of this

comparison, only biofuels are included as fossil fuels and other alternative sources of energy,

such as hydrogen cells, have a different market and are outside of the scope of this paper.

However, a comparison between biodiesel and petroleum diesel is included for completeness.

3.5.1- Diesel vs. Biodiesel

Combustion of microalgal biodiesel results in the release of carbon that was previously removed

from the atmosphere during growth. Thus, the process is atmospherically carbon neutral.

Emissions released are also lower in sulfur, as microalgae contain almost no sulfur content. The

resulting emissions have lower sulfur content than even ultra-low sulfur petroleum diesel.

Furthermore, the combustion efficiency of biodiesel results in approximately 20% reduction in

carbon monoxide production.

Biodiesel has a higher cetane number than petroleum diesel, and burns for efficiently. This

results in a smoother running engine with a reduction in noise. The higher lubricating factor of

biodiesel also ensures a longer life for engine components. Biodiesel can be mixed with

petroleum diesel during implementation and does not require modifications to current engines to

run on 100% biodiesel. Biodiesel is also a solvent and can dissolve accumulated rust and

sludge, thereby, cleaning the fuel system.12

Petroleum diesel engine exhausts are usually associated with soot and black smoke. Biodiesel

produces less soot and reduces particulate emissions by nearly 75%, nearly eliminating the

familiar black smoke. Moreover, the absence of the petroleum carbon rings and aromatic

hydrocarbons in biodiesel results in a cleaner exhaust, nearly eliminating the familiar diesel

aroma.12

Storage of biodiesel is also safer, with a flash point of 150˚ C, compared to 70˚ C of petroleum

derived diesel. This means that there is a lower possibility of unintentional combustion during

storage and handling. Due to the accelerated environmental breakdown of biodiesel,

consequences of spills are not long lasting. Biodiesel produced by this method of hydrogenation

can be stored as long as petroleum diesel.12

On the other hand, methyl esters of biodiesel can produce approximately 5% less power than

petroleum diesel. However, due to the smoother running engine, this is not noticeable.


16

Furthermore, the use of ethyl esters improves mileage and makes power comparable to

petroleum diesel.12

3.5.2- Biofuels vs Biodiesel

The following section includes a brief comparison of biodiesel to bioethanol, biomethanol, and

bioDME, with emphasis on why microalgal biodiesel is a more favorable technology.

3.5.2.1- Bioethanol

The most widely implemented biofuel used in commercial applications is bioethanol. Bioethanol

is used as a transportation biofuel. The use of bioethanol in this sense is possible; however it is

far from ideal. The use of bioethanol provides energy content that is approximately 30% lower

than that of fossil fuels12. Ethanol naturally absorbs water. Thus, storage and handling of

bioethanol must be handled in way that avoids exposure to water or humidity. The production

process requires a lot of energy for the fermentation process; this reduces the efficiency of

bioethanol.

Sugarcane is the most common substrate used for the production of bioethanol. This process

requires expenditure similar to that used for gasoline. Bioethanol contains approximately 64% of

the energy content of biodiesel. The requirement of the United States for biodiesel is estimated

at 0.53 billion m3. If the energy supplied by biodiesel was supplied by bioethanol, the required

sugarcane planting area needed would be close to 111 million hectares to produce an

equivalent 0.83 million m3 of bioethanol. This represents 61% of the total cropping area

available in the United States. This is simply not feasible.17

Furthermore, microalgal biomass is produced at 158 metric tons per hectare, compared to only

75 tons of total dry matter produced for bioethanol17. As outlined in this paper, biodiesel can be

produced using non-feed stock and, therefore, does not interfere with food supply.

Biodiesel can be used in current automotive diesel engines without modification. However,

unless vehicles are optimized to run on flex fuel, this is not possible with bioethanol. In general

biodiesel burns cleaner than bioethanol. Diesel engines are also known to produce about 25%

improvements in fuel economy18.

3.5.2.2- Biomethanol

Biomethanol is the biological derivative of methanol and it is chemically identical in structure.

Biomethanol can be produced from the by-product of biodiesel production; glycerin. However, it

is most commonly produced from feedstock and landfills. Similar to bioethanol, the high heat of

vaporization of biomethanol makes it difficult to start engines on cold weather. Current

transportation engines cannot run on biomethanol without modifications to both engines and fuel

stations.

Furthermore, another disadvantage of biomethanol is exhaust fumes produced from burning as

it produces formaldehyde. Formaldehyde is highly toxic to humans and animals. As the concept


17

of biofuels is to be environmentally friendly, this chemical by-product is, therefore,

counterproductive.19

3.5.2.3- BioDME (Biologically derived dimethyl ether)

DME is obtained through catalytic dehydration of methanol. BioDME has been commonly used

as a common aerosol propellant. Recently, studies have shown potential for BioDME to be used

as alternative transportation fuels, possibly in diesel engines. DME is a good candidate is it has

low toxicity potential.20

Several disadvantages of BioDME make it a less favorable choice then biodiesel. Among which,

DME is a gas in normal conditions and would require pressurization above 5 bar under standard

condition for storage as a liquid. Moreover, DME has a slower combustion rate when compared

to biodiesel, and usually requires Nitrogen Oxide as an additive. This also results in production

of high carbon dioxide emissions.21

The current technological aspect of BioDME is not advanced enough for practical applications.

A source of methanol for substrate, supplementation with Nitrogen Oxide, and high CO2

emissions make BioDME an unfavorable biofuel.


18

4- Analysis of the Market Opportunity

It is important to determine the market size for transportation fuels. In particular, the diesel

market segment is one that offers a significant potential for the growth of the biodiesel market.

4.1- Market Size and Growth Potential

According to the U.S. Energy Information Administration, total energy consumption for 2013 was

95.1 Quadrillion British thermal units (Btu). The United States ranks number one worldwide for

petroleum consumption, with 18, 490.21 thousand barrels consumed per day. At an average

price per barrel of $110, this equates to over $2 billion of expenses per day, and $742.4 billion

annually. Road transportation utilizing diesel and gasoline accounts for 72% of consumed

petroleum fuels. This represents a market size of $535 billion annually for transportation

petroleum fuels (Figure 2).22

Figure 2

http://www.eia.gov/totalenergy/data/monthly/pdf/flow/css_2012_energy.pdf

As of 2011, the consumption of diesel in the United States is 3.5 million barrels per day,

and is expected to increase to 4.3 million barrel per day by 2040. Diesel currently

represents a US market size of $16.6 billion.22


19

It is also important to note that cost of crude oil represents only 57% of the price of

diesel, while the remaining portion is expended on refining, distributing, marketing, and

taxes; as demonstrated in figure 3.

Figure 3

Figure 4

Source: U.S. Energy Information Administration, AER Energy Perspectives and MER.

It is also evident, from figure 4, that in recent years the reliance on petroleum fuels has seen a

slight decrease that is complimented with an increase in renewable energy sources. This trend

is very evident with biodiesel (Figure 5).

http://www.eia.gov/totalenergy/data/annual/perspectives.cfm

http://www.eia.gov/totalenergy/data/monthly/index.cfm


20

Figure 5

As of December of 2013, biodiesel sales represent approximately 1.8 billion gallons annually. At

an average of $3.5 per gallon, this represents a biodiesel market of $6.3 billion. 135 million

gallons of biodiesel were produced in December of 2013; this is 7 million higher than November

of 2013. This represents a 5.5% increase in demand within one month. Given this level of

demand, this market size is not only substantial, but is also growing at an exponential rate.

Furthermore assuming that all 115 biodiesel plants in the United States produce their maximum

capacity, 2.2 billion gallons of biodiesel can be produced annually, with soybean representing

the largest feedstock source22. This barely meets the demands of the market, let alone the

forecasted increase. It is, therefore, evident that more biodiesel production plants are required

to sustain this logarithmic phase.

4.2- Competing Companies and Their Capabilities

Mainly, the targeted market area for this project is the biodiesel market of $6.3 billion. Therefore,

this section will offer a briefing of the major biodiesel manufacturers in the United States.

Imperium

Washington State’s Imperium Renewables is currently the largest biodiesel manufacturer in the

United States, with the capability of producing 100 million US gallons per year. Imperium utilizes

vegetable oils for the production of biomass. Mainly, canola and soybean oils are used.23

In 2009, Imperium suffered a net loss of $2.8 million and was forced to shut down due to an

explosion of a highly pressurized 10,000 gallon heated glycerin tank. However, three months

later the company has resumed operations.24

Imperium has plans to go public and raise $240 million for building biodiesel plants in Argentina,

Hawaii, and the east coast. The company also plans on trading in Nasdaq and raise up to $345

million.25


21

Furthermore, as of Jan. 2014, Imperium has established an agreement with Legumex Walker

Inc.’s Pacific Coast Canola. The agreement involves supplying Imperium with degummed

canola oil for conversion into biodiesel.26

FutureFuel Corporation

The company is based in Arkansas with a current biodiesel production capacity of 59 million

gallons per year.

FutureFuel produces B100 and B99.9 using soybean oil, beef tallow, and pork lard as

substrates for biomass. The company has both, batch and continuous processing capabilities.

Furthermore, it supports its spot and contract sales through transportation using truck, rail, as

well, as barge mediums.27

Fuel Bio

Fuel Bio Holdings, based in New Jersey, is currently the largest biodiesel firm on the northeast

United States, with a production capacity of 50 million gallons per year. The company

predominantly uses soybean oil as its biomass substrate; however, palm oil is also used.

Transportation methods include truck and rail.

Delta American Fuel LLC

The company has an annual production capacity of 40 million gallons of biodiesel, and is also

based in Arkansas. The substrate sources for biomass are various feedstock, focusing on virgin

vegetable oils.28

Clinton County Bio Energy

The company is based in Iowa and has a production capacity of 10 million gallons per year.

Soybean oil is used for production of biodiesel B100. The company also produces 97% pure

glycerin.29

4.3- Industry Attractiveness Based on Potential for Profitability

The cost process of extracting oil from biomass and converting this oil into biodiesel is constant,

regardless of the source of biomass. This process has been estimated at $0.158/liter31.

However, the methods of production of biomass vary widely in costs.

As evident from section 4.2, major biodiesel manufacturers utilize vegetable oils as substrates

for biomass. A combined market size for biodiesel and petro-diesel approximates requirements

of 57 billion gallons per year. Biodiesel represents only 3% of that market share. A large market

is definitely present. However, using vegetable oil for the production of biodiesel is simply not a

sustainable fuel as an alternative to diesel; as noted earlier this would require the majority of the

United States vegetative land.

On the other hand, microalgae are capable of producing biomass at a sustainable rate with a

fraction of the required land area, as demonstrated in table 4.


22

Table 4

Crop Oil yield (L/ha)

Land area needed (M ha)

Percent of existing US cropping area

Corn 172 1540 846

Soybean 446 594 326

Canola 1190 223 122

Jatropha 1892 140 77

Coconut 2689 99 54

Oil palm 5950 45 24

Microalgae 70% oil by weight 136,900 2 1.1

Microalgae 30% oil by weight 58,700 4.5 2.5

Yusuf Chisti- Biotechnology Advances, Volume 25, Issue 3, May–June 2007, Pages 294–306

The cost of biomass per liter, derived from the most common source of feedstock, soybean oil,

is estimated at $0.539/liter, this represents an overall cost of $0.7/liter; including the refinery

process31.

Figure 6 provides an extrapolated chart using data obtained from Y. Christi (2007). At

production capacity of 10 million tons of algal biomass, the average cost is estimated at $0.075

per liter, representing an overall cost of $0.233/liter, including the refinery process. At this scale,

this represents a 67% reduction in costs.

Note that 10 million tons represents approximately 3.2 billion gallons; this is the estimated

proposed annual capacity required to meet biodiesel demands in 2016. Furthermore, the cost of

microalgal biomass production can be further reduced when by-products sales such as glycerin,

fertilizers, animal feed, and methane are taken into consideration.

Figure 6

0

0.5

1

1.5

2

2.5

3

3.5

1 10 100 1000 10000 100000 1000000 10000000

Do

llars

/Lit

er

Production Capacity in Metric Tons

Cost Forecast

MicroalgalBiomass


23

5- Analysis of Strategic Opportunity

The following sections cover the strategic analysis of Algal Scientific’s internal capabilities with

relation to this project, as well as, weaknesses that require attaining resources to ensure

success.

5.1- Value Chain and Market Competitive Analysis

5.1.1- Value Chain

Technology Development: While technology currently plays a minimal role in the development

of petroleum diesel, there are many different technologies available for the production of

biodiesel. The use of Algal Scientific’s patented technology for microalgae culture, coupled with

Mr. Oyler’s patented conversion method, offers an advantage for this project. However, capital

expenditure is required to combine these two factors.

Human Resources Management: Algal Scientific’s staff has acquired years of experience in

the field of growing microalgae using bioreactors. This can considerably reduce development

time for optimizing biomass growth with high oil yields. However, the extraction and conversion

of algal oil into biodiesel might require a different set of skills. Given the diversity of the Algal

Scientific’s products and the interlinked operational process, the company has proven

possession of adequate HR managerial skills.

Procurement: For the raw materials of the final product, the company possesses the required

procurement skills. For the past 5 years, Algal Scientific has been successful at obtaining

wastewater for purification and extraction of valuable resources such as fertilizers and high

protein animal feed. Fortunately this wastewater possesses the majority of the raw materials

required for producing biodiesel.

Infrastructure: The financing support and capital investment for Algal Scientific is provided by

several investors, including Invest Detroit, Michigan Pre-Seed Capital Fund, Michigan Economic

Development Corporation, Envy Capital, as well as private investors. The majority of the

investments so far are seed investments. Through the development of an appropriate staging

process, as well as, financial projections based on reasonable assumptions, it is rational to

believe that a second round of fund raising is capable of supporting this project. Most of the

company’s investors are interested in the development of green energy, and the project

involving microalgal biodiesel certainly counts as one. Furthermore, the reputation built by the

company has been awarded by several grants and awards, some of which reach up to

$500,000.

Services and Operations: The wastewater treatment service provided involves an initial

assessment of potential value. An initial cost/benefit analysis is performed for the client requiring

water treatment. A sample of the wastewater is then taken to the laboratory headquarters where

biological oxygen demand, nitrogen, and phosphorus are measured in wastewater before and


24

after treatment. The percentage of reduction varies from 60% to 90% reduction. This is based

on the source of water. An updated cost benefit analysis is then generated.

A small pilot scale continuous process is set up at the client’s facility. Finally, Tetra Tech is used

as an engineering partner to build the project based on Algal Scientific’s determined

parameters. The initial licensing fees, as well as annual fees, are based on a percentage on the

savings generated to the client through purifying the water supply. However, algal scientific

retains rights to the biomass generated, and is therefore, able to provide the service to the client

at low costs32.

The biomass is retained from clients and has been used for manufacturing of Algal Scientific’s

products. This biomass can then be converted into biodiesel. This method of operations is able

to provide savings to the client while providing mutual benefits to both companies. Furthermore,

the recycling process outlined in this project, is able to recycle both; carbon supplies, and

nutrient supplies for sustaining large scale production. However, partnerships with companies

producing wastewater, such as food processing manufacturers, can sustain a continuous

reliable substrate supply. This is discussed further in section 5.2.

Marketing: Marketing and research partners for the company include Alan Environmental and

D&L Water Control, Inc.; both of which are devoted to water technologies. This creates client

awareness of the offered wastewater treatment technologies. This can reduce costs for the

client, and more importantly, ensures the availability of the required substrate for microalgal

growth and biomass production.

5.1.2- Five Forces

Barriers to Entry: The major barrier of entry for the transportation fuels market is the

requirement for systemic change. It is not sufficient to develop a new sustainable source of

energy. Current transportation systems must be compatible with the new fuel. It is not

reasonable to expect over a century of transportation vehicles development to suddenly change

and adapt to the new product, especially considering the low production capacity. Fortunately,

microalgal biodiesel is compatible with all diesel run engines and does not require modifications

for use either as a blend or in the form of pure biodiesel. Microalgal production can also provide

more sustainable production capacities. Furthermore, the economies of scale require extensive

capital expenditure.

Substitutes: If we were to focus on mainly diesel operated machinery, the major substitute is

conventional petroleum derived diesel. Therefore, a differentiator must exist to make biodiesel

more appealing to customers. Porter’s analysis dictates two options to provide an advantage

over rivals. The first choice would involve developing a technology that qualitatively

differentiates the product over competitors. This is very difficult to attain without requiring engine

modifications. Furthermore, the choice of product has little impact on the quality of the final

output. The second option would be lower costs. Microalgal biodiesel offers a lower cost of fuels

and a sustainable method of maintaining this cost. Since petroleum derived fuels are scarce,

they are expected to increase in price over time, while microalgal biodiesel can maintain the


25

lower cost as it is a renewable energy. It is important to note that with transportation fuels,

buyers are very price sensitive.

Buyer Power: Buyer power is critical to the success of biodiesel. It is purely up to the

consumer’s preference whether to buy biodiesel or conventional diesel. Two factors that can

contribute to this are government intervention, such as mandated percentage blends in all

diesels purchased, similar to bioethanol’s regulations. The second factor is one that can be

implemented by the company through promoting buyer awareness outlining the benefits of

biodiesel for the individual customer (smoother running and cleaner), and environmental

benefits as well.

Industry Rivalry: The rivalry among biodiesel manufactures boils down to production capacity.

Biodiesel derived from microalgal sources offers higher rates of production while requiring a

smaller land area for production.

Supplier Power: This is another critical factor. The majority of biodiesel manufacturers rely on

crops from third parties for the production of biomass. The suppliers are in control of whether to

grow crops for fuel or for human food. On the other hand, biodiesel does not possess heavy

reliance on suppliers as most of the supplies required for growth are readily available and

recyclable. As demonstrated in 4.3, this vastly reduces the cost of production by up to 67%.

5.2- Required Resources and Capabilities

Substrate: As previously mentioned, wastewater supply is provided by Algal Scientific’s clients.

However, the current production capacity for biomass production is 100 tons33. For the

production at the 10 million ton capacity, a 100,000 fold capacity increase is required. The

recycling process is able to sustain nitrogen and phosphorus nutritional demands. However, a

carbon source is required. For this collaboration with the food industry is needed to provide a

sufficient amount of wastewater.

Storage and Supply Chain: Production of biodiesel from microalgae does not require more

than a fraction of the land area required using vegetable oils as a substrate. However,

production of 3.2 billion gallons of biodiesel annually will require a larger manufacturing plant, as

well as storage capabilities. Furthermore, partnerships with downstream suppliers and gas

stations are required.

Staff: Currently algal scientific is composed of 10 employees. This large scale project will

require more employees with a specific set of skills for the conversion process.

Awareness: As noted, buyer power plays a critical factor in the success of this project. Market

awareness is required to educate consumers on the benefits of biodiesel. Furthermore, the

majority of consumers are reluctant in using biodiesel as they could be concerned of using a

type of fuel that can damage their engines. Therefore, public education regarding biodiesel must

be implemented to emphasize that biodiesel does not require any modifications to current diesel

run machinery, and can improve the smoothness of engine while also cleaning out their fuel

systems and provide engine longevity.


26

5.3- Sustainable Competitive Advantage

For the determination of a sustainable competitive analysis, the VRINE analysis will be

conducted (Figure 7).

Value: The value of this product is evident to consumers, suppliers, and the environment.

Consumers can benefit from smoother running engines, less black soot and odor from the

exhausts, cleaner fuel systems operations, and lower price. The suppliers can rest assured

knowing that their fuel source is sustainable, as opposed to petroleum based diesel, as well as

crop produced biodiesel. Moreover, the storage conditions of biodiesel offers a safer profile as

the spark point is more than double that of conventional diesel.

Benefits to the environment are manifested in the form of cleaner air. As noted in section 3.5.1,

biodiesel offers a carbon neutral footprint, as well as, reducing carbon monoxide emissions by

20%, particulate emissions by 75%, and nearly eliminates sulfur emissions. These factors aid in

preventing global warming and acid rain.

Rare: The sustainable advantage and rate of production is far superior to the methods utilized

by major biodiesel manufacturers. The operational process of the project can provide a

continuous supply of biodiesel to meet market demands. This is not possible using traditional

crop based biodiesel.

Imitable & Non-Substitutable: The implementation of the operational process is highly

leveraged by Algal Scientific’s patented technology, as well as Mr. Oylers patented conversion

technique. Obtaining the rights to these patents ensures a minimum of 18 years of exclusivity.

This prevents any imitational operational production.

Exploitable: Algal scientific has a continuous supply of biomass that is being utilized for

production of other products. This project utilizes the same raw materials, possessed by Algal

Scientific, for the production of a more valuable product. The exploitable factor of this project is

expressed in the form of horizontal integration.

Figure 7

38


27

6. Opportunity and Company Complementation

Algal Scientific is dedicated to providing efficient and diverse environmentally friendly solutions

via patented technologies. The core values of the company are concerned with the two

principles viewed as society’s greatest current and future challenges; the supply of clean water,

and the conservation of natural resources. The company views business success as exploiting

technologies for the improvement of the environment, and prevention of hunger.32

This project directly fits into the mission statement of Algal Scientific. The use of microalgae for

the production of biodiesel offers a means of preserving natural resources through recycling.

The technology provides a neutral carbon footprint, as well as providing no waste; as the oil

replenished biomass can be used to provide animal feed, fertilizers, and methane. All of which

are recycled sources of energy. Furthermore, as the production of biodiesel increases, the

amount of water purified increases proportionally.

Moreover, the use of microalgae as a substrate offers a means of providing a renewable source

of fuel that does not require vegetable oil or crops. Thereby, the food vs. fuel debate is

eliminated with the project; aiding in the prevention of hunger.

From a technical point of view, Algal Scientific possesses the technology, expertise, and large

scale equipment required for the growth of microalgae. The incorporation of oil producing

microalgae for the production of biodiesel is aligned with the company’s current operation

methods, as the biomass source is readily available as a by-product of the water treatment

process.

The engineering capabilities for setting up research scale, pilot scale, and large scale

bioreactors can be used to for the necessary scale up procedures required for implementation

and staging the project. The technical expertise of Algal Scientific’s scientists is very familiar

with algae growth. Biodiesel production can provide more raw materials for the increased

production of Algal Scientific’s animal feed products, fertilizers, and nutritional portfolio.


28

7- Critical and Original Recommendations

7.1.1- Rejected Technical Applications

7.1.1.1- Raceway Ponds

Along with photobioreactors, microalgae

growth using raceway ponds is the only

other practical application for large scale

microalgae production3. A raceway pond is

typically a 0.3 meter deep closed loop

recirculation pattern that operates using a

paddlewheel for mixing. The paddlewheel

also operates continuously to prevent

sedimentation. The lining of the interior is

usually white plastic, with the channels

themselves being embedded in the earth, or

hard concrete. The flow begins through a

continuous feed of culture that is supplied in

front of the paddlewheel. After a complete

cycle, the broth is then harvested behind the

paddlewheel. (Figure 8)

Figure 8

Y. Chisti- Biotechnol Adv, 25 (2007), pp. 294–306

This technology has been rigorously evaluated by the United States Department of Energy39.

However, this method of implementation was rejected for this project. While raceway ponds are

low-cost, there are some aspects that are lacking. As evaporation is the only means of cooling,

this process fluctuates seasonally and results in the loss of large quantities of water. The

evaporated vapor also results in the loss of Carbon dioxide, making the process less efficient

than photobioreactors. The required set of skills for engineering and maintenance purposes is

also extensive. Moreover, this setup results in frequent contamination, this usually results in a

much lower biomass yield compared to photobioreactors.

7.1.1.2- Transesterification

Transesterification can be carried out on algal oil extracts for conversion to biodiesel. This

process can be done either biologically or chemically. Chemical catalysts employ either an acid

of a base. Biological esterification uses lipases. The biological method is the preferred method

of transesterification as it is a simplistic approach that produces high yields without employing

harsh chemicals. Additionally, ethanol used during esterification can result in dehydration and

damage to the biological enzymes. However, this problem is over come with the use of acetyl

derivatives, such as ethyl acetate. The biological process does not require additional steps and

can accept alcohols in a less dry state than when compared to chemical methods. Currently, the

majority of biodiesel sold is in the form of fatty acid methyl esters (FAME). This is produced as a

result of transesterification with methanol. Fatty acid ethyl esters (FAEE) are also produced from

ethanol transesterification. In general alcoholic transesterification products are known as fatty


29

acid alkyl esters (FAAE). Advantages of transesterification include the production of glycerol;

this can be sold as a product12.

However this method was also rejected for this project and direct hydrogenation is

recommended instead. The product of direct hydrogenation does not include the production of

glycerol. However, methane is produced as a byproduct. Methane serves a means to

supplement boiler heaters in the facility. This method does not require alcohols or biological

catalysts, and therefore, is a much simpler process. Additionally, FAEE break down at a faster

rate and cannot be stored as long as conventional diesels, while alkane products resulting from

direct hydrogenation are not affected by this limitation. More so, the resultant biodiesel of

hydrogenation is composed of pure hydrocarbons and has higher energy content12.

7.1.2- Recommended Applications

7.1.2.1- Photobioreactor

Photobioreactors utilize tubes made from plastic arranged in an array to act as solar collectors.

The culture media is circulated between the solar collector tubes and the bioreactor tank, where

degassing occurs.

The diameter of the tubes is limited to allow light to penetrate the thick circulating microalgal

broth. These tubes will be 70 centimeters in diameter and function by capturing sunlight energy.

This ensures high biomass productivity. The tubes must be stacked and parallel to each other,

arranged along the North to South axis with the bottom tubes flat against the ground. This is to

increase the surface area for capturing light. The bottom of the tubes will be covered in white

plastic to increase light reflectance and absorption. Figure 9 outlines a simple bioreactor setup3.

Figure 9

Y. Chisti- Biotechnol Adv, 25 (2007), pp. 294–306


30

7.1.2.2- Process

While there are several species of microalgae that have a higher percentage of oil in dry weight,

such as Schizochytrium, the selected species for this project is Euglena gracilis. This is because

the Euglena species is the one most commonly employed by Algal Scientific and much

experience is available in that regard. Additionally, Euglena species are heterotrophic

autotrophs and are thus, able to grow in the presence and absence of a light source. This allows

operations for prolonged periods of time without the use of artificial light sources, therefore

reducing costs.

Growth of microalgae will take place in photobioreactors with an artificial source of light. The

light source aids in growth. However, artificial light is used mainly for providing negative

phototactic effects for concentration and compacting of heavy solids to the bottom of the

photobioreactor; thus easing extraction.

Sources of nutrient will rely on wastewater and recycling of Nitrogen and Phosphorus. The

carbon source is also available in wastewater. However, photosynthesis will provide the main

source of energy and this will be supplemented with aeration of the medium with Carbon dioxide

emissions resulting from boiler heaters. The byproduct, methane, will also be used to

supplement the boiler heaters. A virus will then be used to rupture cell walls and oil vesicles for

oil extraction, followed by direct hydrogenation.


31

7.2- Recommended Corporate Strategy

7.2.1- Arenas to Compete in

Currently, the United States government and the EPA have mandated the use of 10%

bioethanol blends in all gasoline refineries in the country. If this was applied to biodiesel, large

profits can be made. However, this is not the case.

With the maximum production capacity of all 115 biodiesel plants in the United States limited to

2.2 billion gallons per year, the government is left with no choice. This is because the amount of

biodiesel that can be produced represents only 3% of the amount of petroleum diesel produced.

While the decision is solely up to the United States government, this project can provide a

choice for mandating a biodiesel blend by increasing the production capacity to 10%. The

current consumption of petroleum diesel is estimated at 54 billion gallons annually (Please refer

to section 4.3). With the current production capacity limited to 2.2 billion, and 10% representing

5.4 billion, the minimum production capacity required is 3.2 billion. This is the current goal of this

project, focusing on the United States as the primary arena.

Once this primary milestone has been reached, the current status of biodiesel is expected to

improve significantly as public awareness increases and heavier blends of biodiesel are

incorporated. In addition, the global market for the technology is also promising, as the

European market shows even greater interest in biofuels. This can be highly leveraged as the

current consumption of diesel in Europe is even greater than that of gasoline; thus, providing an

even larger market.

The recommended method of production via exploiting photobioreactors offers a convenient

method of scale up; as more bioreactors can simply be set up without requiring modifications to

established operating ones.

An additional source of wastewater will still be required for large scale production. Therefore,

collaboration with the food industry will be attempted. The recommended industry is the

carbonated beverages industry as there is a substantial amount of wastewater produced that

offers a suitable source of carbon. PepsiCo is currently the largest industrial food company in

the United States and has been investing millions of dollars in technologies for treatment of

wastewater35.

For a downstream supplier, BP has shown large interest in biofuels, among which is acquiring

Galveston Bay Biodiesel; a biodiesel plant based in texas36. Additionally, BP provides biodiesel

in fuel stations in several locations in the United States.

7.2.2- Staging and Pacing Over time

Technical Development

For this section, staging of the development procedure referred to as “small scale” comprises of

laboratory development, as well as, pilot scale. While large scale refers to production

equipment.


32

The initial stage of the project involves acquiring the rights to use the technology developed by

Mr. Oyler. After a licensure agreement has been settled, the project can move on to the

development stage.

The development stage involves a working hypothesis and laboratory optimization of the

desired biomass oil content of 30% by dry weight. The next step would be optimization of oil

extraction and conversion to biodiesel. During this pilot stage implementation of boiler heater

fumes for supplemented carbon dioxide introduction is not required.

The biodiesel produced from laboratory development is then used for application testing in a

diesel engine to ensure proper functioning. Upon successful results of the application testing,

the project may progress to optimizing the recycling protocol. Otherwise, further biomass growth

and conversion optimization is required. Anaerobic degradation for recycling of nitrogen and

phosphorus on a small scale is then initiated.

The small scale development is expected to span 18 months, starting from the third quarter of

2014 to the end of the last quarter of 2015. Please refer to figure 10.

In mid-2015, enough data should be available to initiate large scale development. The scale up

process requires accurate calculations to ensure the same specifications developed in small

scale processes are carried over to large scale. At this stage, the implementation of recycling,

methane production, and boiler heater incorporation should be developed as a continuous

production loop. This stage of development is expected to span 54 months, ending by

December 2017 (Figure 10).

Market Introduction

The introduction to market will begin by targeting transportation trucks, as most are diesel

operated. BP fuel stations located along the National Trucking Network (NTN) will provide

biodiesel in the form of blends. This transition should be simple as biodiesel consumption is

increasing along these routes. The biodiesel will be produced in Michigan where Algal Scientific

is based. Therefore, Michigan BP truck stops along the NTN will be the first to implement

commercialization. By mid-2018, Michigan Truck stops comprising of Bessemer, Casco,

Chelsea, Howard City, Monroe, Mount Morris, Mt Clemens, Sawyer, Tekonsha, Warren, and

Watersmeet will have included the product as a 20% biodiesel blend; B20.

As the production capacity increases, higher blends of biodiesel will be offered including B50

and B100; 50% biodiesel and 100% biodiesel, respectively. This step will be followed by

expansion along the NTN, with total coverage expected by 2025.

7.3- Acquiring Resources

Partnerships

In the 1st quarter of 2015, the targeted partners; PepsiCo and BP, will be presented with an

outline of the project with current development progress. By the 2nd quarter of 2016, results

from development will be presented to the partners and a contract agreement is outlined. This


33

allows time for modifications of the process during large scale development for input attained

from the partners. Wastewater from Pepsi will be used during the final stages of development to

finalize technical specifications. Moreover, BP will be receiving completed batches of biodiesel

for their blending compatibility testing. Feedback from BP will also be taken into consideration

before finalizing protocols.

Figure 10

Quality Control Process Meeting Review

2014 2015 2016 2017

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Small Scale Biomanufacturing

Equipment Purchasing

Raw Material Purchasing

Optimize oil content

Optimize biomass conversion

Application Testing

Recycle Development

Large Scale Biomanufacturing

Scale Up Procedures

Equipment Purchase

Wastewater Procurement

Final Product Production

Meetings

Review


34

7.4- Leveraging Differentiators

For suppliers purchasing fuels, there are two major competitors in the market, petrodiesel, and

crop derived biodiesel. However, for consumers, petrodiesel is the only competitor. Crop

derived biodiesel cannot be viewed as a competitor for consumers, as biodiesel blends are

unlikely to indicate the source. Additionally, at the consumer level, the scarcity of biodiesel

indicates that market growth is possible for both types of biodiesel, without affecting each

other’s revenues. Refer to table 5 for differentiators between competing fuels. Bioethanol is

included as a comparison for alternative investments.

Table 5

Attribute Petrodiesel Feedstock Biodiesel

Algal Biodiesel Bioethanol

Smoother Running*

No Black Soot* Low Particulate

Emissions* Low Carbon Monoxide

Emissions*

No Diesel Aroma* Low Possibility of

Contamination Reproducible High Energy

Content / / Sustainable

Requires Small Area for

Production

Carbon Neutral Can Run on

Current Engines * Benefits are mostly for consumers.

As evident from table 5, algal biodiesel possesses several advantages over competitors.

However, consumer awareness is required to translate them into benefits for the end user. This

can be provided by distributing informational pamphlets in fueling stations, as well as, providing

brief informational segments over the radio. Radio segments can be very effective as the

majority of consumers have access to this source of information. Furthermore, increasing the

production capacity of the United States, to 10% of petrodiesel consumption, provides


35

governmental authorities the opportunity to implement a mandated blend requirement. This can

further leverage the market demand for algal biodiesel.

8- Implementation Considerations and Challenges

This section covers challenges that may arise in the manufacturing process mainly concerned

with culturing techniques. Legal and regulating compliance is required, including acceptable

biodiesel standards.

8.1 Considerations Involving Manufacturing

There are several complications that need to be addressed with the use of the selected

Photobioreactor setup. Sedimentation of the biomass in the solar tubes can result in blockage.

This can be prevented by maintaining a high turbulent flow using airlift pumps. This requires a

supply of air for operation and is not as flexible as using mechanical pumps. However,

mechanical pumps are not as gentle as airlift pumps and can result in damaging the biomass40.

For sanitization, the photobioreactors will require periodical cleaning using automated clean-in-

place operations41.

Additionally, oxygen produced by photosynthesis may dissolve leading to oversaturation of air in

the bioreactors, thus inhibiting photosynthesis and may cause photooxidative degeneration of

microalgal cells42. To prevent this from happening, oxygen must be removed from the mixture in

the degassing tank (Figure 9); maintaining the saturation concentration lower than 400%3. The

degassing chamber uses air bubbles to remove excess oxygen. Biomass concentration, light

intensity, afferent oxygen concentration and flow rate must be taken into consideration when

designing the tube lengths42.

Furthermore, the degassing process may result in gas bubbles returning to the solar tubes.

Bubble free broth is required for the tubular array. Therefore, a gas-liquid separator must be

designed to ensure the removal of bubbles41.

Moreover, the consumption of Carbon dioxide during photosynthesis may result in an alkaline

PH in the tubular array. PH monitors must be set up and the addition of Carbon dioxide to the

degassing tank will be automatically adjusted based on PH readings. Carbon dioxide will also

be pumped into the tubular chambers at set interval to prevent an excessive rise in PH43.

In addition, respiration due to high temperature can result in loss of biomass. Temperature

control and cooling procedures must therefore be implemented. Heat exchangers coils must be

set up within the degassing tank (Figure 9).

The fluctuation of sunlight during seasons will cause variations in the growth rate of the

microalgae. This can be resolved by implementing light sensors to detect light exposure and

respond by relaying the activation of the artificial light sources.


36

8.2- Regulatory Challenges

In light of recent developments resulting in the increase of petroleum products prices, financial

incentives has led to the increase in interest of biodiesel and biofuels in general. For market

acceptance and successful commercialization, the production of biodiesel must have a certain

level of assurance for qualitative and quantitative properties.

Biodiesel standards have been developed in the United States and must follow the American

Society for Testing and Materials (ASTM). These standards for biodiesel follow ASTM D 6751

and are designed to limit the amount of contaminants in fuels. Table 6 summarizes the

allowable limits of contamination of biodiesel sold in the United States. Such contaminants are

generally a result of the manufacturing method selected44.

Table 6

G. Knothe- Analyzing biodiesel: standards and other methods; J Am Oil Chem Soc, 83 (2006), pp. 823–833

To meet the required standards, testing procures must be carried out to determine the level of

contaminants present. Testing is not concerned with specific compounds, but rather conducted

for a collective class of compounds. For instance, glycerol is tested for as a class using gas

chromatography, regardless of the type fatty acid incorporated in the glycerol compound.

ASTM does not have restrictions over the method or production or quality systems; such as that

of Good Manufacturing Procedures. However, final product testing is required for each

compound listed in table 6. ASTM provides specific testing methods for each contaminant and

acceptable upper and lower limits44.


37

8.3- Regulatory Implementation Challenges

Fortunately the method of conversion outlined in this project, direct hydrogenation, eliminates

the presence of certain compounds, such as glycerol and alcohols. However, testing for these

compounds is still required.

There are several testing specifications for biodiesel that have been carried over from petroleum

diesel. However, due to the different nature of biodiesel, not all methods are intercompatible.

For example, storage practices for biodiesel must follow a different set of handling

requirements. The susceptibility of biodiesel to absorb water and undergo oxidation, as a result

of linolenic and linoleic acid esters, can alter the quality of the fuel during storage. Additionally,

for international considerations, a different set of standards exist; including Europe, Australia,

and South Africa. Some standards require stricter monitoring of contaminants. European

standards even have different references for biodiesel used for transportation fuels and that

used for oil heating.

It is not feasible to transport the biodiesel product overseas for commercialization. However, the

establishment of biodiesel plants in Europe is possible. This will require testing procedures for

European standards. In order to ensure the same level of quality and a globally consistent

product, European standards of testing must also be implemented in the United States,

including testing methods for both standards. Table 7 outlines biodiesel standards implemented

in Europe for vehicle and heating oil use.

Table 7

G. Knothe- Analyzing biodiesel: standards and other methods; J Am Oil Chem Soc, 83 (2006), pp. 823–833


38

9- Global and International Considerations

9.1- Political Considerations

There have been claims that the adaptation of biofuel polices by US Government agencies is

significantly affected by the political power of the Midwestern states. These claims point to a

connection between the state of Iowa hosting the presidential elections and the use of 40% of

Iowa’s corn crops for biofuels. Furthermore, Iowa represents less than 1% of the US population,

yet is responsible for 20% of the US corn crop45.

As growth economies resulted in the rise of petroleum fuel to over $100 per gallon, the

production of biofuels becomes a very attractive investment. Thus, the United States has

announced that energy security is the key policy for investment, and that higher levels of

biofuels should be mandated. However, the possibility of a lack of the $1/gal tax credit for

biodiesel producers is not very optimistic.

The Energy Independence and Security Act, EISA, has mandated an increase in biofuel

production to 15 billion gallons by 2015, compared to 10 billion in 2007. EISA also mandates

that biofuels produce a reduction of at least 20% emission of greenhouse gases when

compared to gasoline. Furthermore, this increase is expected to reach 36 billion by 2022.

Political concerns are raised regarding this policy, as the amount of grain grown for biofuels in

2009 was so vast that, according to the Organization for Economic Corporation and

Development (OECD), 330 million people could have been fed instead. Fortunately, the

production of microalgal biodiesel does not dip into the world food supply. EISA employs life-

cycle assessments of biofuels for environmental impacts associated with the product, as well

as, the process45.

9.2- Summary of Relevant International Patents

The following is a summary of international patents that should be taken into consideration

when entering the global market.

Patent Description

CN103451101 This is a Chinese patent owned by Petrochina Co Ltd. The patent claims the production of high quality biodiesel from microalgae using photobioreactors. However, the patent specifically states the limitation to Chlorella vulgaris species. Therefore, operation in china with the current invention does not infringe on this patent. Although, this could be a competing technology.

WO/2014/003530 This is a Moroccan patent owned by MASCIR. The patent claims the production of biodiesel from microalgae using species of the genus Dunaliella.

KR101317242 This Korean patent entails a method for separation to lipids from microalgal biomass for production of biodiesel. The process is carried out using a membrane separator converting the biomass into an oil-in-water emulsion.

US20130157344 This United States patent claims a method for producing biodiesel from strains of Characium polymorphum and/or Ankistrodesmus braunii.


39

9.3- Global Similarities

The EU is encouraging the use of biofuels as part of a mission to reduce greenhouse gas

emissions. The EU Biofuels Directive, mandates that by 2020, 20% of transportation energy to

be renewable. This is applicable to biodiesel and bioethanol. Biodiesel is currently the dominant

biofuel used in Europe. This is aided, in part, with tax exemptions and implementation of

national targets across Europe. Germany is currently the largest consumer of biodiesel in the

EU46.

In December of 2013, the Argentine government has announced the increase in blend

concentration of biodiesel from 8% to 10%. This is expected to result in an increase in

consumption of biodiesel to 450 thousand tons per year; reflecting on a $50 million reduction in

fuel costs46.

The European’s Commission’s antidumping duties (ADD), has recently decided against the

import of biodiesel, and investment in domestic production is initiated. Asian governments have

also mandated blending requirements, resulting in high demands experienced in early 201446.

Malaysia recently announced an effort to create a 40% reduction in carbon emissions by 2020.

9.4- Societal Practice and Consideration

The emergence of second generation biofuels, such as microalgal biodiesel, may result in

multiple barriers in regards to social acceptance. The adoption of such a technology may face

opposition from those investors still within the payback period for first generation biofuels.

Consumer barriers may also arise due to the unknown impact of the technology47.

On the other hand, the appeal of producing sustainable quantities of biofuels while reducing

waste production and water purification will result in benefits to the environment. This is more

likely to generate societal acceptance.

It is also reasonable to assume that consumers would be reluctant to use a certain kind of fuel

in their vehicles without recommendation from vehicle manufacturers. It is therefore, important

to promote consumer education along with escalading blends of biodiesel.

9.5- Ethical Concerns

The major ethical concern revolving around the production of biofuels is most commonly that of

altering land use strategies48. Microalgal biodiesel serves to solve this concern by using a

method of production that does not rely on feedstock, while at the same time is able to reduce

Carbon dioxide emissions.

However, the ethical concern with algal based biodiesel is whether this technology can maintain

and advance a long term socio-economic progress by producing enough energy to replace

fossil fuel consumption. More so, the yield production per unit area must be sufficient enough to

support an efficient method for displacing fossil fuels. The land used for manufacturing must not

be arable land; as this will cause competition between food and fuel, resulting in increased food


40

prices. This is a critical point considering the growth of the population. Fortunately, the use of

microalgal biodiesel also fares well in those regards49.

Theoretically, producing similar yields, algal biodiesel requires less than half the land area

required by the highest yielding agricultural crops. While this may still be a significant area, the

advantage is that algal biodiesel does not require arable land and will not compete with food

supply. In fact, algal byproducts are even able to provide a food supply. According to the US

Department of Energy, microalgal biodiesel represents the only source of feedstock that can

possibly completely replace transportation fuels worldwide. It is therefore, the only technology

that has the potential to gradually phase out the use of fossil fuels; preserving the energy and

maintaining the environment for future generations. The use of photobioreactors also avoids the

possible adverse ecological effects that can be typically caused by raceway ponds49.

Water is the main component of the growth medium for microalgae. Water aquifers are

experiencing low levels of water extraction, and can view microalgal growth as a competing

industry for this valuable resource. Assuming 50% oil content by dry mass, the National

Renewable Energy Laboratory (NREL) has estimated the requirement of 16 trillion gallons of

water required annually for microalgal biodiesel production to replace the entire US diesel

demand. This is considerably lower than the 4000 trillion gallons of water used to irrigate corn

crops, as estimated by the USDA49. However, this project does not intend to employ scarce

water extraction for growth, but rather recycle wastewater. This not only preserves the water

supply, but also treats wastewater so that it can be reused for industrial processes.

Biodegradability is another area of ethical concerns. Typically, petroleum spills are a major

source of environmental contamination. Studies have shown that biodiesel is biodegradable

according to EPA standards. Not only is biodiesel degraded by 95% by 28 days, but it also

promotes the degradation of petroleum diesel through cometabolism of the blend50.

However, the use of residual biomass as fertilizer raises concerns regarding the residual virus

left over from the extraction process. Will this virus affect other crops when incorporated in the

fertilizer? Can it rupture the cell walls of crops? Is it able to infect neighboring farms?

Unfortunately more research is required to evaluate the potential adverse effects this may have.

A method of inactivating the virus may be required prior to obtaining approval as a fertilizer.


41

10- Summary and Conclusion

The scarcity of petroleum based fuels has pushed the incentive for developing sustainable

sources of energy that are efficient and environmentally conservative. Biodiesel is a renewable

clean burning fuel. Biodiesel possesses advantages over petroleum diesel as it produces fewer

emissions and offers a safer storage profile. Traditional biodiesel production has relied on the

use of crops as feedstock, mainly corn and soybean. While this process of production is more or

less environmentally friendly, it is far from sustainable. This is because grain based resources

requiring a large arable land area for growing. Therefore, this is only a temporary solution, as it

dips into the food supply. Furthermore, the production capacity of biodiesel for the United States

is 2.2 billion gallons per year. The aim of this project is to increase the production capacity to 5.4

billion gallons. This represents 10% of petroleum diesel consumption and allows government

agencies the option to mandate a 10% blend of biodiesel.

Microalgae are photosynthetic microorganisms that have the ability to fix Carbon dioxide and

provide a source of biomass for conversion into biodiesel. Typically, microalgae can be

commercially grown in either raceway ponds, or photobioreactors. Raceway ponds require low

costs, but do not have high biomass yields and are inefficient as they require extensive

maintenance, are vulnerable to contamination, and are known for losing resources through

vapor. On the other hand, photobioreactors utilize solar capturing devices to provide

photosynthetic needs, prevent contamination, and ensure high biomass productivity. For this

reason, photobioreactors are the proposed method of biomass production.

The growth of microalgae requires resources, and large scale production will require a

sustainable supply of these resources. The majority of the resources can be found in

wastewater. Wastewater is readily available to Algal Scientific as the business is built upon a

mission to treat wastewater. The production scale of the company is 100 tons; however the

project requires production of 3.2 billion gallons, an equivalent of 10 million tons. To address

such demands, a method of recycling of resources is required.

The main nutrients required are Phosphorus and Nitrogen. These nutrients are present in

adequate supply in wastewater, and are easily recovered from the biomass through anaerobic

degradation after extraction of lipids. Left over carbon in the residual biomass is converted into

methane. This is used to supplement boiler heaters. Boiler heaters in the facility produce

emissions rich in carbon. These emissions are captured and used to aerate the

photobioreactors providing a supplemented source of carbon. However, the majority of carbon

is incorporated into the biodiesel and is not recoverable. Therefore, an additional source of

carbon is required. It is proposed to partner with PepsiCo. PepsiCo is the largest food industry

in the United States and the production of carbonated beverages and other food products

produces a large quantity of wastewater that is rich in carbon. PepsiCo is also spending millions

in investments for treating their water. Since water treatment is a byproduct of this process, this

partnership is viewed as mutually beneficial.

The extracted lipids will then be converted into biodiesel. Both the extraction and conversion

processes outlines in the project require intellectual property rights for operation. The IP


42

strategy for this is to acquire a license for operation, and possibly consultation from the inventor.

A patent search identified several related patents, however their scopes do not cover the

outlined process and no infringement is evident.

The major players and manufacturers of biodiesel in the United States are producing biodiesel

by utilizing mainly corn and soybean as feedstock. The process outlined in the project shows

promising potential for profit as it reduces cost of production by 67% when compared to

competitors.

The choice of Algal Scientific as the implementing company is rationalized by their expertise in

microalgal growth in bioreactors for water treatment. The projects fits in nicely with their product

portfolio as it supplements the production of other products and is aligned with the company’s

core value of reducing waste and preserving resources. The VALUE chain analysis is

promising; however analysis of Porter’s five forces reveals the buyer power has a strong

influence on the success of the project. Therefore, capabilities are required to increase

customer awareness and outline the benefits of biodiesel at the consumer level, as well as,

environmentally.

Furthermore, the VRINE analysis indicates a sustained competitive advantage for the project.

The work breakdown structure suggests completion of the technical development process by

the end of 2017; having optimized biomass culturing, conversion, and recycling techniques

starting from laboratory testing all the way to large scale final production. Several challenges are

expected during this stage, including monitoring PH and Carbon dioxide levels.

For a successful product launch, biodiesel must meet US standards set by ASTM D 6751.

European standards must also be met for global commercialization. This follows standards EN

14214 and EN 14213. Global commercialization offers plenty of opportunities as interests in

biodiesel have been expressed in several regions including Europe, China, Argentine and

Malaysia. Global commercialization will require production plants overseas and must follow

regulatory procedures for each specific country. An international patent search reveals several

competitors, however, no patents are available that prevent the operation of the process

outlined in this project.

The majority of ethical concerns regarding biodiesel production are avoided by this project. The

production method does not compete with food production and does not take up arable land

space. Water treatment is also provided and will not use up scarce resources. Moreover, the

environmental aspect of biodiesel is greatly improved over petroleum diesel due to

biodegradability. Blended forms of biodiesel also promote the degradation of petroleum diesel

through cometabolism. However, potential adverse effects of using residual biomass as a

fertilizer is possible and a method for deactivating the virus prior to use should be developed.


43

11- Methods- Resources Used for Research

11.1- Literature Review Databases

Technology Databases

1. US National Library of Medicine National Institute of Health

2. University of Wisconsin Ebling Library

3. Science Direct

4. ProQuest

5. Jstor

National Consumption and Market Figures

1. US Energy Information Administration 2. United States Environmental Protection Agency 3. National Renewable Energy Laboratory

Patent Search

1. The United States Patent and Trademark Office 2. World Intellectual Property Organization

11.2- Personal Interviews

1. Scott Falton, M.S.- Adjunct Professor at the University of Wisconsin M.S. in Biotechnology

Program 2. Tom Burke, Ph.D.- Director of Genome Engineering, Cellular Dynamics International 3. Susan LaBelle, M.B.A.- Adjunct Professor at the University of Wisconsin M.S. in

Biotechnology Program 4. Ellen Rashke- Study Toxicologist at Covance


44

12- References

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2. http://www.biodiesel.org/what-is-biodiesel/biodiesel-basics

3. Y. Chisti

Biodiesel from microalgae

Biotechnol Adv, 25 (2007), pp. 294–306

4. B. Sialve, N. Bernet

Anaerobic digestion of microalgae as a necessary step to make microalgal biodiesel

sustainable

Biotechnology Advances- Volume 27, Issue 4, July–August 2009, Pages 409–416

5. http://www.whitehouse.gov/energy/

6. J.U. Grobbelaar

Algal nutrition. In Richmond A, editor. Handbook of microalgal culture: biotechnology and

applied phycology

Wiley-Blackwell (2004)

7. I. Angelidaki, W. Sanders

Assessment of the anaerobic biodegradability of macropollutants

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8. O. Christ, P.A. Wilderer, R. Angerhöfer, M. Faulstich

Mathematical modeling of the hydrolysis of anaerobic processes

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9. E.W. Becker

Microalgae in human and animal nutrition

A. Richmond (Ed.), Handbook of microalgal culture, Blackwell Publishing, Oxford (2004),

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10. M.R. Brown, S.W. Jeffrey, J.K. Volkman, G.A. Dunstan

Nutritional properties of microalgae for mariculture

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11. United States Patent No.: US 8,308,944 B2






17. Y. Chisti

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18. http://biomassauthority.com/whats-better-biodiesel-or-ethanol/

19. http://www.chemicals-technology.com/features/feature77667/

20. Henrik Salsing

Chalmers University of Technology

Dissertation: DME and the Heavy Duty Diesel Engine

21. http://www.biodme.com/

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45

22. http://www.eia.gov/

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32. http://www.algalscientific.com/

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millions-on-water-quality/

36. http://www.bp.com/en/global/alternative-energy/our-businesses/biofuels.html

37. Presentation Slides by Susan LaBelle MBA, Faculty, MS Biotechnology, Spring 2014

38. Presentation Slides by Professor Russell Coff, Wisconsin School of Business, UW-

Madison, Spring 2014

39. J. Sheehan, T. Dunahay, J. Benemann, P. Roessler

A look back at the U.S. Department of Energy's Aquatic Species Program — biodiesel

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40. T. Mazzuca Sobczuk, F. García Camacho, E. Molina Grima, Y. Chisti

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cruentum

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41. Y. Chisti, M. Moo-Young

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44. G. Knothe

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J Am Oil Chem Soc, 83 (2006), pp. 823–833

http://www.eia.gov/

http://www.rechargenews.com/news/biofuels/article1284009.ece

http://www.carsdirect.com/green-cars/top-4-biodiesel-companies-to-watch

http://domesticfuel.com/2014/01/17/imperium-gets-canola-deal-for-biodiesel/

http://www.futurefuelcorporation.com/biobased.html#biodiesel

http://www.arkansasenergy.org/solar-wind-bioenergy/bioenergy/biofuels.aspx

http://www.ccbebiodiesel.com/

http://www.algalscientific.com/

http://www.metromodemedia.com/innovationnews/algalscientificplymouth0281.aspx

http://www.techconnectworld.com/Cleantech2011/a.html?i=40299

http://www.environmentalleader.com/2012/08/14/dr-pepper-coca-cola-pepsi-spend-millions-on-water-quality/

http://www.environmentalleader.com/2012/08/14/dr-pepper-coca-cola-pepsi-spend-millions-on-water-quality/

http://www.bp.com/en/global/alternative-energy/our-businesses/biofuels.html

http://bus.wisc.edu/faculty/russ-coff


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45. http://ourworld.unu.edu/en/all-biofuel-policies-are-political

46. http://www.icis.com/energy/biodiesel/?tab=tbc-tab2

47. Hon-Choong Chin, Weng-Wai Choong, Sharifah Alwi, Abdul Hakim Mohammed

Issues of social acceptance on biofuel development

Journal of Cleaner Production

48. http://www.global-greenhouse-warming.com/ethics-of-biofuel.html

49. http://www.rvo.nl/sites/default/files/bijlagen/Ethics_of_Adoption_and_Development_of_Al

gae-based_Biofuels.pdf

50. Z. Yue

Determination of main components and anaerobic rumen digestibility of aquatic plants in

vitro using near-infrared-reflectance spectroscopy

Water Research- Volume 44, Issue 7, April 2010, Pages 2229–2234

http://ourworld.unu.edu/en/all-biofuel-policies-are-political

http://www.icis.com/energy/biodiesel/?tab=tbc-tab2

http://www.rvo.nl/sites/default/files/bijlagen/Ethics_of_Adoption_and_Development_of_Algae-based_Biofuels.pdf

http://www.rvo.nl/sites/default/files/bijlagen/Ethics_of_Adoption_and_Development_of_Algae-based_Biofuels.pdf


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13- Appendix

U.S. Biodiesel Production Capacity and Production (million gallons)

U.S. Energy Information Administration | Monthly Biodiesel Production Report


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U.S. Inputs to Biodiesel Production (million pounds)

U.S. Energy Information Administration, Form EIA-22M "Monthly Biodiesel Production Survey"

Documents

Biodiesel from Microalgae - WordPress.com · 2014. 6. 11. · Sustainable Biodiesel- Mustafa Hafez 1 Table of Contents Section Page 1. Executive Summary 2 2. Introduction 4 2.1- Statement