John Doerr, Kleiner Perkins Say Algae Won't Save World

Speaking at the ECO:nonomics conference yesterday, John Doerr, Vinod Khosla, and Bryant Tongall said they’re not interested in backing any companies working on algae biofuels.

On the face of it, that makes sense. It’s pond scum. However, algae was already used twice this year to fuel test flights of commercial planes. It was mixed with jatropha seed oil. But those test flights aren’t enough to get major venture capitalists interested, even though Khosla said he looked at more than 100 algae biofuel companies.

Environmental Capital: 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.

Algae garned its fair share of venture money last year according this Portfolio article, but like many alternative fuels, it needs to be able to prove it can be done at scale. According to a 2004 University of New Hampshire study we’d need a pond the size of South Carolina to create enough algae to satisfy our current fuel demands. And doing that would involve all sorts of new infrastructure headaches.

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