NCPA - National Center for Policy Analysis

Algae Energy: Dead in the Water?

October 3, 2012

Algae have been touted as a potential source of energy as early as the Carter administration. Scientists surmise that algae can be squeezed to reap its oil, which can be turned into a type of ethanol, similar to corn and soybeans.  But, despite the billions put into decades of research, the government is no closer to making algae a viable candidate to replace traditional sources of energy, says Alison Morris of the Capital Research Center.

  • Since November 2008, the federal government has invested $2 billion on research and development for algae biofuel.
  • On top of that, the Department of Energy has spent $85 million to purchase the fuel and plans to spend $30 billion more.
  • The Obama administration estimates algae can replace transportation oil use by 17 percent, or 21 million gallons.
  • However, that pales in comparison to the 140 million gallons used as transportation fuel.

The government's generous support for algae biofuel isn't unfounded.  Many biofuel manufacturers have heavily funded Democratic campaigns, and some even work inside the Obama administration. Solazyme, for example, contributed over $360,000 to Democratic Campaigns since 2007. Its reward: $27.7 million for a new refinery.

The U.S. Navy has also been responsible for propping up the demand for algae biofuel. It invested nearly $12 million to buy 450,000 gallons of algae biofuel at $26 per gallon. This is an example of wasteful spending considering traditional sources of fuel could have been purchased at a fraction of the cost.

With an energy crisis at hand, the federal government should focus on fossil fuels, which the United States has an abundance of. Thanks to new methods such as hydraulic fracturing ("fracking"), the government has been able to tap into vast reserves of natural gas that could provide energy for decades. Furthermore, fossil fuels are more cost-effective than biofuels.

Proponents of shifting to algae biofuel cite the negative implications of continued production of corn and soybean ethanol. Corn ethanol, in particular, has been linked to higher food prices and greenhouse gas emissions. However, when corn ethanol first began being used, it was touted as the answer to energy independence with no side effects, just as algae is today. Without scientific understanding of the environmental and economic costs associated with algae biofuels, there is little reason the government should invest in it.

Source: Alison Morris, "Algae Energy -- Dead in the Water?" Capital Research Center, August 31, 2012.


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