Can algae oil be an alternative to palm oil for biodiesel?

What a difference a week makes! Last week I was smug after identifying an interesting technology to remove algae from water bodies. This week, in hindsight, it seems like a bad idea as I happened to come a technology to use the algae to make biofuels instead. Eves Energy, a company based out of Singapore has tied up with the Nanyang Technology University to produce sustainable aviation fuel with a palm oil substitute derived from micro-algae. The company aims to have a production facility spanning 3,000 sq km at Indonesia’s Seram Island & is expected to start commercial production in 2026. Already, shipping & airline companies have taken note & this was featured in the Chemical Engineering journal in Dec23 as technology to watch out for!

Algae are broadly clustered into two types – eukaryotic & prokaryotic & normally we differentiate between them by their approach to food. Eukaryotes are like plant cells with cell wall, nucleus, chloroplasts and can produce food by photosynthesis. Prokaryotes, on the other hand have structures similar to bacterial cells & they survive on food available in their surroundings. There is however another important, but less well known difference between them – eukaryotes store triglycerides in the cell & that yields the oil that we are talking about, today.

Oils like palm oil, which are used in cooking, bakery & confectionery, cosmetics & specialty chemicals are mixtures of fatty acids. In nature, these fatty acids are coupled to glycerol, forming triglycerides. Depending on the oils, the type and & percentage of fatty acids vary. For example, coconut oil has mostly fatty acids with 12 carbons; while in palm oil, the proportion of fatty acids with 16 carbons and 18 carbons is higher. The other thing that characterizes fatty acids is their level of unsaturation. If all the carbon-carbon bonds in the fatty acid are single bonds, it is saturated. If it has double or triple bonds it is unsaturated. Unsaturated fatty acids tend to have shorter shelf lives as they get oxidized & give off a rancid odour. One way of avoiding it is to hydrogenate it – that is how Dalda is made – which as we know is not great for health. For any oil, it is possible to identify the types of fatty acids present & therefore separate them by distillation. Since triglycerides make up 50-70% of the weight of algae, they have attracted a lot of interest as potential replacements for oils like palm oil.

Indonesia is the largest producer of palm oil, followed by Malaysia & together they account for nearly 70% of the global production. Over the years, the industry has come in for a lot of criticism from environmentalists as large tracts of forest land have been converted to supported the growing demand. Indonesia strategically diverts part of their palm oil production to biofuel – partly to improve their sustainability credentials and at the same time ensuring that prices stay stable. Algae versus palm might seem like a David vs Goliath match-up at first glance, but what makes algae attractive is their extremely rapid growth, ability to adapt and survive in a challenging environments and, with the right strains, high triglyceride content. The question is, can it be commercially competitive?

Costing of algae oil is notoriously difficult as there are too many unknowns & there are no plants operating at scale today to provide a baseline. Estimates that I have come across vary between 10 to 40 US$ per gallon, but the generally accepted rule-of-thumb is that it is atleast 4-5 times the cost of oil derived from current sources. While Eves Energy believes they can get competitive at a scale of 1.2 million gallons per year with their technology, let us examine the steps in the process to get a sense of the challenges involved.

For starters. algae is not weight efficient, so the volume of material handled is quite large compared to the actual yield of oil. Aggregation can be done effectively by centrifugation but usually the cheaper option of chemical flocculation is preferred. Having got the algae, it needs to be dried before we can get to the oil extraction stage. While sundrying is the cheapest, for the kind of scale & throughput we are talking about, conventional approaches like hot air drying would be essential. Unlike palm oil, where only the fruit and seed need to be crushed to extract oil, for algae the entire bulk needs to be processed. Since yields are low with mechanical crushing, solvent extraction is unavoidable. This means a costlier plant as handling solvents require flame proof equipment & higher operating cost. Also, larger the scale, bigger the challenge. Alternatives like using supercritical CO2 or sonication to breakdown algal walls to facilitate release of oils are much inferior on cost – value ratio.

Once the oil is extracted, it has to be refined to remove colour, chemicals & impurities to make it suitable for processing. Thereafter it is distilled to separate the fatty acids of interest for the application. After the oil is extracted from algae, the algae cake left behind is rich in proteins and carbohydrates & can be fermented to generate biogas or ethanol & the final residue could be used as bio-fertiliser or animal feed. In case of palm oil, the process is much simpler and more importantly, there are ready markets for different distillation cuts – some of which are sold at a premium, which helps to keep the price of refined palm oil competitive. These value streams are yet to be established for algae oil. While Eves Energy is looking to convert all the oil to make sustainable aviation fuel (SAF) – which sells at about twice the price of jet fuel, to improve the overall viability, they would do well to consider extracting value adding cuts to for producing omega fatty acids or terpenols – which are smaller niche markets but with significant premiums available.

Ultimately the cost of algae oil will be driven largely by the yield & NTU’s innovation is about leveraging the knowledge of the metabolic pathways during photosynthesis to maximise triglyceride generation in the cell. Despite their simple structure, algae cells have an inbuilt feedback mechanism to regulate photosynthesis. Metabolates, intermediate compounds formed during metabolism, assess external condition and decide whether to grow fast or store resources for survival. The metabolite that triggers this choice of route is called Acetyl-CoA carboxylase (ACCase for short) & the way it regulates the use of carbohydrates is somewhat similar to that to the way RBI varies interest rates to keep inflation under check. Under favourable conditions, the ACCase uses up the carbohydrates to increase the production of phospholipids and glycolipids which help in photosynthesis. On the other hand, when the resources are stressed, it switches from growth to survival mode and the ACCase alerts the cells to stop using up the carbohydrates & store it as fat (triglyceride) instead.

If these algae cells were to be harvested for oil extraction when photosynthesis is driving production of phospholipids, the yield of triglycerides would be only 30-50%. On the other hand, when the cells switch to survival mode, the yield of triglycrides goes up often well in excess of 70% of their weight. By optimizing the operating parameters in a bioreactor, it is therefore possible to closely mimic the conditions that drive the reaction along the desired pathway. Scientists at the NTU have successfully demonstrated the potential to increase yield further by adding pyruvic acid to the substrate. The pyruvic acid, which is broken down by enzymes in the chloroplasts of the algae cell, generates additional ACCase – which in turn, accelerates the conversion of carbohydrates to triglycerides.

Malaysia and Indonesia dominate the palm oil market today so it is hardly surprising that they have taken the lead to support the largest alternate technology at scale – so that they have a better view of an alternate future, were it to evolve. Time will tell whether algae oil will replace palm oil as feedstock for biodiesel, but come 2026 we will have a good idea if it is shaping up to be a battle of equals.