WAGENINGEN, Netherlands - The cost of farming algae as a biofuel must be cut by about 90 percent if it is to become commercially viable and reduce pressure on food prices, according to research by Dutch scientists.

 

Major companies including oil giant Exxon Mobil Corp., Finnish refiner Neste Oil and Dutch vitamin maker DSM are investing in algae production technology in order to develop biofuel.

 

It could eventually help ease demand and price pressures on food crops that also are used to produce biofuel, such as palm oil.

 

The oil content in algae ranges from 20 to 60 percent, which means that between 20,000 and 80,000 liters of oil can be produced per hectare of algae a year, according to Wageningen University research. By comparison, a hectare of palm oil plantation produces about 6,000 liters of oil per year.

 

But the cost of production of biofuel from algae is 10 times the cost of palm oil-derived biofuel, said Rene Wijffels, a professor at Wageningen who is also scientific director at an experimental algae farm run by several scientists at the university.

 

"It means we have to work hard to get this production done in a commercial way."

 

Wijffels monitors growth of microalgae, which are produced in laboratories and then grown at the farm in vertical plastic tubes or in plastic panels filled with water.

 

ExxonMobil, Neste Oil and DSM are among the investors who have put up a part of the funding for the $8.48 million trial project.

 

Neste Oil, which is expected to launch Europe's largest biodiesel refinery in the Dutch port of Rotterdam this summer, said previously that 80 percent of its 40 million euro annual research budget is spent on new technologies including biofuel production from algae.

Wijffels predicts that it could take 15 to 20 years to develop such production, relieving pressure on food prices arising from a rising population and greater use of biodiesel.

 

Rafaello Garofallo, an executive director of the European Algae Biomass Association, said the European Commission has set aside funds for three algae production facilities, which should start operating in the next two to three years.

 

"Algae have huge potential," he told Reuters. "There are even some efforts to have seaweed in the offshore wind parks. But the real challenge is technology."

 

The development of such technology could require investment in Europe of as much as 1.5 billion euros in the next few years, according to Rene Klein, another professor at Wageningen University.

 

(Reporting by Ivana Sekularac; Editing by Sara Webb and Jane Baird)

 

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