Analysis: Algae for carbon dioxide (CO2) capture

Summary
This post describes a simplified economic analysis of an algal biofuel technology that converts carbon dioxide (CO₂) from cement plants into (potentially) useful algal oil. I examined various key factors such as CO₂ offset price, price of algal oil, and productivity that affect the profitability of such a process.

Based on my analysis I conclude that the single most important factor that affects the economics of CO₂ capture is the algal biomass yield (mass produced/unit area). Doubling the productivity (and the CO₂ offset) per hectare decreases the payback time by 50 % (15 years to 7 years).

Disclaimer: This is not a critique of the specific algal biofuels process proposed. CO₂ mitigation using algae is one of the answers to our grand energy challenges, and we must continue to address these issues.

Assumptions:
The Holcim plant in Jerez likely produces a fraction of the total 5.1 million tonnes of cement per annum (5.1 MTPA). (A cement plant in India I worked at produced 2.6 MTPA, and it was the largest in Asia at that time. Not having first-hand data for this specific facility, lets assume that this plant is 1 MTPA, for the sake of comparison. The exact production does not alter the results significantly).

Cost of algal oil: 4 $/gal
Price of carbon offsets: 15 Euros/T CO₂ (20 USD/T CO₂)
(A high-cost scenario for algal oil and carbon offsets would be 6$/gal, 50 $/T CO₂. This is also addressed in the analysis.)

Data:
Each lb of cement produces 1.0 lb of CO₂ (U.S. average, pg.10).
Total CO₂ to be mitigated annually by 2011: 50,000 T in 100 ha (0.05 MTPA CO₂ in 100 ha) .
Algal biofuel production: 1.3 million gallons/year

Calculations:
Total CO₂ production: 1 MTPA
By 2011, the 100 ha. facility would mitigate 50,000 T of CO₂ (0.05 MTPA CO₂). This would be 5% of the CO₂ emissions (if the Jarez facility production is 1 MTPA)
Average CO₂ use of algae: 0.0005 MTPA/ha.
Revenues from algal biofuel: 5.2 million $/year
Revenues from carbon offsets: 1 million $/year
Total revenues: ~6 million $/year

Results
Capital cost of algal facility: $ 92 million/0.05 MTPA CO₂.
Area needed for 5% of the cement plant's CO₂ output (assuming 1 MTPA production): 543 U.S. football fields (5.4 football fields = 1 ha.)

Payback on investment: 92/6 =~ 15 years. In comparison, typical payback for a new chemical plant is ~ 7 years.

Higher CO₂ prices (50 $/T CO₂), decrease the payback period by ~ 3 years. Higher algal oil prices (6 $/gal) and 20 $/T CO₂ prices will result in a payback period of approximately 11 years.

Higher oil and higher CO₂ prices will lower this period (11 yrs) by an additional ~2 years. However, doubling the productivity (and the CO₂ offset) per hectare decreases the payback time by 50 % (15 years to 7 years).

The revenues from algal biodiesel + carbon offsets will be partly offset by the parasitic losses from the power plant to run the system. I don't have a feel for how much these utility costs would be. Any comments, anybody?

Bottomline The single most important factor that affects the economics is the productivity of algal biomass/unit area. Doubling the productivity (and the CO₂ offset) per hectare decreases the payback time by 50 % (15 years to 7 years).