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Financial Times: Shell bets on algae to make biodiesel

By Ed Crooks
Published: December 12 2007 02:00 | Last updated: December 12 2007 02:00

Royal Dutch Shell hopes to build a commercial plant producing biodiesel from algae in two years’ time, following the launch yesterday of a joint venture to develop a research project in Hawaii.

The joint venture, with Hawaii-based HR Biopetroleum, will initially build a small research plant but hopes to move to a full-scale commercial plant of 20,000 hectares. Shell said it expected yields of about 60 tonnes of oil per hectare a year, meaning a full-scale plant would produce 1.2m tonnes of oil a year.

The two companies did not reveal the size of the investment, but Shell will have a majority stake in the company, called Cellana.

Shell has held back from production of first-generation biofuels such as ethanol and biodiesel from vegetable oil, focusing on second-generation fuels that can be produced from non-food plants or plant waste. It has argued that government support for biofuels ought to give greater incentives to second-generation products on the grounds they are likely to have much better environmental performance, particularly in cutting carbon dioxide emissions.

Graeme Sweeney, Shell’s head of future fuels, suggested that biodiesel from algae would need such support to be viable. He said: “The issue for us is that we are here investing in providing sustainable routes to biofuel with a low-carbon footprint.”

As a biofuel product, algae has advantages over traditional crops. It uses less space and can been grown in salt water, relieving pressure on agricultural land and fresh water, among the biggest problems associated with first-generation biofuels. It also has higher yields.

Shell said its “conservative” estimate of an annual oil yield of 60 tonnes per hectare was 15 times the four tonnes a year possible with jatropha, a biofuel crop being pioneered by D1 Oils in partnership with BP.

But Mr Sweeney admitted there was a long way to go to prove the commercial viability of the process.

Separately, Shell confirmed that it had sold its rural solar businesses in India and Sri Lanka and was selling the equivalent business in the Philippines.

However, it said it had not given up on solar power, and was investing in a pilot project in Germany in a joint venture with Saint-Gobain.

Copyright The Financial Times Limited 2007

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