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 covering 2.5 hectares but hopes to move quickly to a commercial demonstration covering 1,000 hectares, and then a full-scale commercial plant of 20,000 hectares.
Shell said it expected yields of about 60 tonnes of oil a year per hectare, meaning that 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 the production of "firstgeneration" 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 because they are likely to have better environmental performance.
Graeme Sweeney, Shell's head of future fuels, suggested that biodiesel from algae would need such support to be viable.
"The issue for us is that we are here investing in providing sustainable routes to biofuel with a low carbon footprint," he said.
Algae has many advantages over the use of traditional crops for producing biofuels. It uses less space and can be grown in salt water, relieving the pressure on agricultural land and fresh water that are among the biggest problems associated with first-generation biofuels.
It also has much 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 specialised biofuel crop.
Separately, Shell confirmed that it had sold its rural solar businesses in India and Sri Lanka, and was selling the equivalent businesses in India and the Philippines.
