Part: 1, 2, 3
Guido Radaelli's rented house in the Berkeley Hills commands sweeping vistas of the San Francisco Bay. But the sparse furnishings inside hint at his status as a recent grad student. Last year, Radaelli made a peculiar addition to the décor. In a loft overlooking the living room, he installed four large fish tanks filled with a pale green liquid. Since then, Radaelli has tended to the tanks like a sick child, taking samples and checking temperature and pH levels several times a day.
"It's a challenging relationship," admits Radaelli. But, he hopes, a lucrative one as well.
The tanks contain modified algae strains which Radaelli claims could offer a solution to America's, and the world's, fossil fuel crisis. That's because the unicellular green goo produces up to half its weight in oil. Harvesting that oil has been the dream of alternative energy researchers for decades.
The make-shift laboratory is the brainchild of Radaelli and two grad school friends who founded Aurora Biofuels in 2006. Aurora CEO Matt Caspari has an M.B.A., chief scientist Burt Vick earned a Ph.D. in biochemistry, and Radaelli studied petroleum engineering in his native Italy and business at Berkeley.
Aurora is one of dozens of start-up companies rushing into northern California's booming clean-tech sector. Ten years ago, ambitious innovators like the Aurora guys were getting rich in the Internet or biotech sectors. But today, with oil prices soaring and global warming a looming reality, alternative energy is all the rage. And the Bay Area and Silicon Valley are at the epicenter of this new investors' frenzy. It's a green rush.
Aurora chief scientist Burt Vick and Noventi partner James Horn. Photo by Michael Montgomery
"Our business is about making money," says James Horn, a partner in the Silicon Valley venture firm Noventi, which is investing heavily in so-called clean tech. "And one of the drivers that we saw in Silicon Valley was that there was this migration of engineering talent and entrepreneurial talent moving into the clean tech space. California as a state has always been a leader in technology innovation. It's just that we're applying our skills and our talent in new areas."
Alternative energy, which is just one part of the clean tech sector, has seen a flood of new investors like Horn. Globally, more than $70 billion went into renewable energy in 2006, according to the United Nations.
"The energy business ... is a $6 trillion market," says Horn. "It is such a vast market that there really is sufficient potential to justify the investments that are going into the market right now. And again, we are very early on in this process."
What are BioFuels?
The two most common types of biofuels are ethanol and biodiesel. Ethanol is an alcohol, the same as in beer and wine (although ethanol used as a fuel is modified to make it undrinkable). It is made by fermenting any biomass high in carbohydrates through a process similar to beer brewing.
Today, ethanol is made from starches and sugars, but scientists are developing technology to allow it to be made from cellulose and hemicellulose, the fibrous material that makes up the bulk of most plant matter. Ethanol is mostly used as a blending agent with gasoline to increase octane and cut down carbon monoxide and other smog-causing emissions.
Biodiesel is made by combining alcohol (usually methanol) with vegetable oil, animal fat, or recycled cooking grease. It can be used as an additive (typically 20 percent) to reduce vehicle emissions or in its pure form as a renewable alternative fuel for diesel engines.
Helping fuel the world with humble algae oil is not as farfetched as it may sound. Some 100 years ago, Rudolf Diesel designed his first engines to run on peanut oil (as well as coal dust). Today, bio-fuels made from soy and corn are a booming business. But there's growing concern that tapping food stocks as a source for renewable energy could backfire. Corn and soy use valuable farmland and freshwater. Increasing demand for ethanol is driving up the price of corn. This in turn raises food prices.
However, algae doesn't need soil and thrives in wastewater. All it needs to grow are sunlight and carbon dioxide. Algal oil can be harvested and converted into bio-diesel; the algae's carbohydrate content can be fermented into ethanol. Both are much cleaner-burning fuels than conventional diesel or gasoline. What's more, bio-fuels derived from plants like algae are considered "carbon neutral." While burning fossil fuels releases CO2 that was trapped underground for millennia, the CO2 released from burning bio-fuels was just pulled out of the air as the plants grew. So, according to proponents, bio-fuels are simply recycling the same gases over and over.
That's not all. Aurora claims to have developed and patented (together with Berkeley plant biologist Anastasios Melis) a technology that dramatically boosts algae's photosynthetic power to 100 times that of soy and other crops. It's a very profitable calculation considering the amount of diesel burned in America's transportation sector.
"We consume 60 billion gallons of diesel fuel every year," says Aurora CEO Matt Caspari. "So if our technology does what we are claiming it can do, it's a major opportunity and it's attractive for venture capital investors."
But it's not just the lure of profits that pulled the Aurora team into alternative energy.
"This is the type of business that has a double bottom line," says Burt Vick. "Not only [is it] very healthy from a financial standpoint, but also from a social and environmental point of view as well."