Biofuel Nonstarter?


News from the WSJ Eco:nomics conference: Private capital is no fan of algae-based biofuel. I’ve posted before about some of the positives of algal biofuel — such as the fact that we don’t have to burn our food to produce it – but its prospects aren’t looking so hot:

For all the hype surrounding algae biofuel, the moneymen still aren’t ready to invest. At a panel at the WSJ Eco:nomics conference, top venture capitalists John Doerr, Vinod Khosla, and Bryant Tong explained what they like (smart-grid technology) and what they don’t (algae).

The algae discussion was prompted by a question from Michael Weaver, whose company Bionovitas has made advances, he says, in bolstering the yield and cost-competitiveness of algae. Why, he asked, aren’t the big VCs putting money into pond scum when every other clean tech seems fair game?

All three said they’ve looked at dozens of algae biofuels plans in recent years; Mr. Khosla says he’s looked at more than 100. None have invested a dime so far.

For Mr. Doerr of Kleiner, Perkins, Caufield & Byers, the problem is algae itself. To get better economics, you need to grow the stuff in cheap, open-air ponds, not in fancy bioreactors. But that is rough on algae and limits yields. Mr. Tong, of Nth power, says both the economics and the timeline of algae biofuels are still ugly at this point.

Mr. Khosla adores liquid alternative fuels, like ethanol. He told a big biofuels summit last October that he “believe[s] in the potential of algae.” But he hasn’t invested in algae so far because it fails his cardinal rule: economics. Algae has to be cost-competitive without subsidies and with oil between $45 and $50 a barrel, he said tonight.

Which raises an interesting question. Is Bill Gates, an early and high-profile investor in algae biofuels, onto something or out of his depth?


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