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Intellectual Power Helps Make County a Clean Tech Leader

San Diego County, long known as fertile land for biotechs and academic scientists, has sprouted the biggest cluster of green technology companies focused on developing fuel from algae than any other region, industry leaders said last week.

At least 672 clean technology businesses have established a local presence, including dozens of algae companies, according to Lisa Bicker, CEO of the nonprofit trade group CleanTECH San Diego.

“San Diego algae companies are electing to plant the flag in San Diego because of the intellectual power,” she said.

Bill Barclay, chief intellectual property officer with Maryland-based Martek Biosciences, echoed a theme carried by other company executives and academic researchers during the Algae Biomass Summit at the San Diego Marriott Hotel & Marina last week.

“We have to be very careful not to over-promise success,” he said.

The three-day event was expected to draw 700 attendees to the downtown hotel. It brought together industry executives, government officials and entrepreneurs.

Taking The Lead

Paul Roessler, who heads biofuels production at La Jolla’s Synthetic Genomics, said at the annual industry meeting that his firm will take the lead in developing different algae strains, along with growing and harvesting efforts, while ExxonMobil will provide engineering expertise and systems design.

“They have all the capability to enable this at the commercial scale and relevance,” he said.

The next generation of renewable fuels could prove a boon to San Diego, which has already attracted some of the industry’s largest investments.

In July, ExxonMobil’s research and engineering arm said it was pouring $600 million into an algal fuels project involving Synthetic Genomics, started by genomic pioneer J. Craig Venter. Sapphire Energy, which this year provided the fuel for a Continental Airlines test flight, has raised more than $100 million from investors. And major defense contractors General Atomics and SAIC have received nearly $50 million in government funding for algae research.

Lucrative Algae Crops

Among the conference attendees were budding entrepreneurs interested in growing lucrative algae crops, which one speaker valued as high as $31,000 an acre on a yearly basis.

Alternative fuel sources have the potential to reach trillion-dollar energy markets, experts say. In the past year, investors have increasingly shown interest in the sector.

In 2008, venture capitalists invested a record $8.4 billion, up 38 percent from $6.1 billion in 2007, according to the San Francisco-based Cleantech Group, which tracks VC investments in environmentally friendly technologies. Biofuels accounted for roughly 11 percent of the investment.

Global production and wholesale pricing of biofuels reached $25.4 billion in 2007 and is projected to hit $81.1 billion by 2017, according to Clean Edge, a market research firm.

While major oil companies have sunk billions into a few large businesses, analysts also said they see opportunity for startups to capture a share of the investment dollars.

“Venture investors are betting that small companies still have the opportunity to generate huge returns because of the chance to leapfrog others with innovative science,” said Dallas Kachan, managing director for the Cleantech Group.

Industry Challenges

Before consumers begin replacing gasoline with renewable fuels at the pump, however, the industry will have to find ways of cutting production costs and bringing it up to commercial scale.

“What we really need to do is figure out when you grow it, how can you cultivate it economically,” said Mario Larach, chairman of San Diego-based Kai BioEnergy.

John Benemann, a consultant and Algal Biomass Organization board member, encouraged the industry to co-promote other algae-based products in order to grow its algal biofuels business. As it stands today, most estimate algae-based fuels would cost $8 a gallon to produce, making it more expensive than gasoline.

Local researchers have strengthened their push to build a major algae research center with the formation of the San Diego Center for Algal Biotechnology, announced earlier this year. The group has asked the government for $50 million to help it set up a nationwide hub for research into algae-based fuels.

“If we applied a little bit of federal muscle into this, I think we can go a long way in a little time,” said Dr. Steve Mayfield, an associate biology dean at The Scripps Research Institute and director of SD-CAB.

Most industry analysts acknowledge they will first have to develop the technologies used in growing the small organisms.

Martek Biosciences’ Barclay touted the use of fermenters, the kind of equipment used in harvesting biotech drugs and for brewing beer, versus growing algae in outdoor ponds.

“If we’re really going to be successful, we need to start focusing on the intermediate technologies,” he said. “We know everything about it and essentially have control over all the variables.”

He said the company has already experienced commercial success in bringing algae to the market as a nutritional component in food products.

“We wanted to compete with fish oil,” he said. “We’re in everything from yogurts to milk to nutritional bars to supplements now.”

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