Does that headline grab you? If not, these numbers should:
If that has not grabbed your attention yet, consider that in January of this year, Continental Airlines completed a test flight using a biofuel mixture, which included fuel derived from algae. The test flight yielded a 1.1 percent increase in fuel efficiency compared to a jet engine using traditional jet fuel.
That isn’t exactly a great leap forward, but achieving incremental increases in fuel efficiency coupled with the latest engine technology, as well as use of new materials in aircraft production, such as the Boeing 787, could signal a dynamic shift for the airline industry. Leaders of the G-20 agreed in Pittsburgh to commit to phase out inefficient fossil fuel subsidies in the medium-term. While no specifics were mentioned on how this policy will be implemented or how long “medium-term” actually means, this commitment signals a recognition by the G-20 that such subsidies inhibit the growth of clean tech industries.
In addition to the massive investment that Exxon and similarly situated companies have thrown into the algae arena and the policy shift by the G-20, there is growing desire by Congress to stimulate investment in algae.
Senate Bill 1250, currently in the Senate Finance Committee, proposes to add a tax credit for producers of algae-based biofuels. The language of the Algae-based Renewable Fuel Promotion Act of 2009 seeks to add algae-based biofuel as part of the cellulosic biofuel producer tax credit (Internal Revenue Code 40). Under this section, if the legislation were to pass, producers of algae-based biofuels would be entitled to a tax credit of $1.01 for each gallon of qualified algae-based biofuel production.
For purposes of the tax credit, “qualified algae-based biofuel production’ means any algae-based biofuel produced by the taxpayer which is sold to another person or used by the producer: (1) for use in the production of a qualified algae based biofuel mixture (in that other person’s trade or business); (2) for use by the buyer as a fuel in that person’s trade or business; or (3) who sells the algae based biofuel at retail.
The Senate bill also provides producers of algae-based biofuels with bonus depreciation for property which is used in the United State to produce algae-based biofuels.
It seems clear that without the massive capital investment of big oil companies, pilot projects and test facilities to determine whether algae-based biofuels can scaled up would be very difficult to construct. It may also take Big Oil’s lobbying efforts to obtain tax credits for the algae-based biofuel industry.
Moreover, the ultimate success of algae-based biofuels may largely depend on the vast distribution networks of big oil companies. In other words, algae and Big Oil are inextricably linked, for better or for worse.
[photo credit: Flickr]