Newt Gingrich Letter

Why Obama is absurd to suggest algae

We knew the people writing President Obama’s energy speeches didn’t know very much about American oil and gas potential when he started telling us that some of the largest untapped oil reserves in the world couldn’t do anything to affect fuel prices. But we didn’t know they were quite this hopeless. When the President told them he wanted to focus on “green” energy sources in his speech, I don’t think he meant it literally.

That’s one of the most rational explanations I can think of for how President Obama ended up giving a speech in which he told Americans that the solution to the rising cost of gasoline could be algae. After all, he reasoned, “You’ve got a bunch of algae out here, right? If we can figure out how to make energy out of that, we’ll be doing all right.”

This is a classic move of the Left: observe a real world problem (high gasoline prices) and propose a solution that is totally disconnected from the practical realities of the world and has little chance of success (algae).

It’s true that research labs are experimenting with algae-based biofuels, and we wish them well. If someday in the future, we’re all driving cars based on inexpensive fuel from algae, it’s possible that would be a positive development. But there’s a big difference between that and offering algae today as an answer to high gas prices, or using taxpayer money to subsidize this particular technology—such as the $14 million grant the administration gave an algae experimenter, or the tens of millions of dollars in loan guarantees the Department of Agriculture has handed out.

In theory, algae fuels would work by growing a strain of algae that produces some amount of oil in water and sunlight. Spreading this production over many acres, it’s possible to produce a large amount of algae. The algae must then be separated out—which today is done using centrifuges—leaving behind an oil product.

Unfortunately, there’s an overwhelming probability that these will turn out to be very bad investments for the taxpayers. Even the Algal Biomass Organization (the people charged with advocating the technology) don’t believe algae could be a competitive source of fuel until at least 2020. In fact, fuel from algae costs anywhere between $140 and $900 a barrel to produce today. As most Americans probably understood intuitively when they heard the President’s speech, there’s not much indication algae can ever overcome its fundamental problems to be competitive with oil and natural gas, of which the world also has plentiful supplies.

There are a few simple reasons algae is not likely to succeed in the real world, even a decade from now as its proponents predict:

1.    Even compared to other biofuels, it is extremely expensive to produce. For fuels such as ethanol (which is widely used even today), the cost of growing the crop is  essentially the cost of the agricultural land. In many parts of the country that means a few thousand dollars per acre. With algae, however, a large amount of equipment is involved, including machinery to mix the water constantly, equipment to separate the algae from the water, and an impermeable liner so water doesn’t leach into the ground. Even if we assumed all this cost $1 per square foot—less than cheap linoleum flooring—that would be nearly $44,000 per acre. That is much more expensive than the cost for alternative crops.
2.    To achieve high yields of algae, growers have to enrich the water with large amounts of carbon dioxide (which algae consumes). This means the CO2 would likely need to be captured and transported from fossil fuel plants, most of which are not located anywhere near the best locations for algae farming—the desert.  The capture of CO2 and the pipeline to transport this CO2 add significant cost (which, again, even other biofuels do not entail).
3.    The process requires large volumes of water, but if algae production takes place in the desert, large volumes of water are also hard to come by.
4.    As President Obama points out, there’s “a bunch of algae out there.” But producers of algae fuel use special strains in order to produce oil. In order to preserve their strains, they would somehow have to protect thousands of acres from contamination.
5.    Producers of algae have to somehow dispose of the actual algae once they have separated it from the oil. The mass of this algae would add up very quickly, and producers can only sell so much of the “algae bodies” as animal feed.

All of these things suggest that algae fuel is not likely to be competitive with other forms of fuel anytime in the foreseeable future. And more importantly, it is definitely not a solution to Americans’ urgent energy crisis brought on by unnecessarily high gasoline prices.

President Obama recently compared those who doubted his green energy fantasies to the “Flat Earth Society” and claimed that his side of the debate represented “the Wright Brothers, Bill Gates, and Steve Jobs.”

I don’t recall any of those people receiving $50 million loan guarantees from Teddy Roosevelt or Ronald Reagan—and their technologies worked.

Next week: the revolution in natural gas.

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