Algae can be either large and multicellular—macroalgae; or microscopic and unicellular—microalgae. Macroalgae, more commonly known as seaweed, has been on the radar as a growing industry for decades, and is currently a $6.39 billion industry, 80 percent of which is made up of food products. And the sector is on the rise: over the last 5 years (2011-2015), North American food and drink product launches featuring seaweed flavors increased by 76 percent.
Despite this growth, the potential applications of microalgae are much wider, and most investment into algal research has been focused on these microscopic forms of algae. Microalgae, also sometimes referred to as microphytes, were Earth’s first plants and are unicellular organisms that produce more than half the world’s oxygen. There are now tens of thousands of species of microalgae, all with unique characteristics.
The commercial market, already a multi-billion dollar industry, has historically been dominated (about three-quarters market share) made up of food products like baby formula and nutritional supplements, with another fifth is dedicated to aquacultural production (as feed and for other uses like maintaining a healthy water balance). However, these shares are shrinking as newer microalgae applications gain traction.
The two most widely cultivated strains of microalgae are spirulina and chlorella, both of which are frequently used as health and nutrition supplements. In 2012, approximately 85 companies were producing 5,000 tonnes of spirulina and 2,500 tonnes of chlorella. China and the United States are the top producers of spirulina, with India and Thailand also developing large production capabilities, as well. Chlorella is primarily produced in Taiwan, China, Japan, and Germany.
Microalgae is typically farmed in one of two ways, either in open “raceway ponds” or in closed photobioreactors (PBRs). Algae culture must be added initially to initiate production, and nutrients should be added into the system periodically. In order to obtain good yields, water must be kept free of contaminants and must be kept in constant circulation to ensure the ecosystem is carbon dioxide-rich. Researchers have also developed innovative methods of providing algae within photobioreactor systems, which provide algae with a direct supply of carbon dioxide that can be more efficiently absorbed.
In some parts of the world, microalgae grows naturally in local water sources and can be harvested directly. Algae production has also been swept up in the urban agriculture movement with companies marketing at home algae growing kits and one company even harvests it in barrels on the roofs of Bangkok.
A particularly large chunk of the investment in algae research so far has been directed toward its potential applications as a biofuel, although commercial production of algal biofuels has remained limited.
A little less than a decade ago algal biofuels were widely touted by the clean energy movement as revolutionary. And that was hardly surprising: After all, algae fuels can be carbon-neutral given that one of their major inputs is carbon dioxide; they can replicate rapidly, even in saltwater or sewage water; and some algae varieties are more than 50 percent oil. Because of that last point, an acre of algae can produce 19,000 liters of biodiesel annually, more than ten times the amount that can be extracted from corn or soybeans.
By 2008, algae-based biofuels venture capital had grown to more than $179.5 million from just $32 million the year before, and in 2009, ExxonMobil, partnering with Synthetic Genomics, pledged $600 million toward algal biofuel research.
But a few years and $100 million dollars later, ExxonMobil was far less optimistic about the endeavor. In 2013, the company announced that it would be re-focusing its research in the field, conceding that investments in algae-based biofuels may not be successful for another quarter century. Other ventures into the field struggled similarly.
Unlike other popular sources of biofuel, algae has not historically been widely cultivated—which means that there were, and continue to be, significant knowledge gaps that need to be traversed in order to produce it efficiently. Developing efficient strains of algae can easily take years of research, which of course requires not just time, but money, too. Additionally, photobioreactors, which are used for growing algae in a closed system, and oil extraction processes remain expensive. Technological advancements will bring down costs, but again long-term financial investment is necessary.
ExxonMobil’s 2013 backtrack was indicative of a wider downturn in interest in algal biofuels at that time. Still, the US Department of Energy (DOE) has continued to support research in algal biofuels, awarding almost $60 million in grants to the field over the past three years. The DOE’s investments are focused on bringing down the price of algae-based biofuels from their current price of about $8 per gallon to less than $5 by 2019. (For more on algae-based biofuels, read our October 2015 insight on the subject.)
While lowering production costs and improving oil yields are both effective ways of driving down the cost of algal biofuels, other innovators have looked to capturing and making use of biofuel byproducts as another way to reduce costs. Once the oil has been pressed out or chemically extracted from microalgae, the remaining byproduct is a mixture of proteins and carbohydrates which can have a variety of uses. Researchers at Duke University, for example, are using a grant from the US DOE to genetically modify algae in a way that could increase the value of its proteins, making these byproducts more attractive for use in food for livestock, fish, or even humans.
Some companies are building the sale of these byproducts into their business models. However, as the immediate viability of algal biofuels remains unclear, companies like Solix and Solazyme, which were originally founded to develop energy applications of algae, have shifted their focus. They’ve now pivoted to pursue more immediately lucrative markets in food and personal use, given that the same benefits and efficiencies of using algae as an oil crop extend to other oil products. For example, Solazyme, now rebranded as TerraVia, developed algal oils to be used in personal care products, and just last month the company announced that it would be continuing its relationship with Unilever, and expected the five year deal to result in sales worth over $200 million.
The largest consumer of microalgae at present is actually human food—primarily because of their now widespread use in baby formula. Today, the algae-derived omega-3 fatty acid, docosahexaenoic acid (DHA) is found in 99 percent of all baby formula in the US, and its total US production, combined with that of another omega-3 fatty acid, eicosapentaenoic acid (EPA), is valued at over $300 million.
Though EPA and DHA naturally occur in human breast milk, they are not found in high concentrations in cow’s milk and were not actually incorporated into infant formulas until 2002. Manufacturers began working to include them in baby formula after trials in the 1990s showed that infants, particularly those who had been born prematurely, had better cognitive functioning when fed long chain omega-3s supplements, specifically DHA and EPA. While these long-chain omega-3 fatty acids can be found in many varieties of fish, it’s actually the microalgae that fish consume that give them their rich omega-3 content. As a result, several companies extract DHA and EPA directly from algae and market them to formula manufactures.
Other human food consumption
In addition to being rich in long-chain fatty acids, which have been shown to reduce the risk of prostate cancer in men and improve overall heart health among adults, researchers have unearthed a plethora of additional benefits associated with microalgae consumption. Preliminary studies indicating that consuming microalgae may improve athletic performance, reduce cholesterol and triglycerides, and enhance immune functions have helped catapult spirulina and chlorella to superfood status among health-conscious consumers in the west.
Perhaps an even more exciting human consumption use-case may be in developing countries whose populations face frequent food insecurity.
Spirulina has high concentrations of various amino acids, iron, B-12, and rare essential fatty acids, and with dried spirulina containing 60 percent protein (by weight) it’s ideal for those who are undernourished. Studies suggesting that spirulina taken as a dietary supplement decreased the viral replication of HIV and increased immune response peaked interest in increasing production and distribution of the food in countries where the virus is prevalent. Both the Food and Agriculture Organization of the United Nations (FAO) and the World Health Organization (WHO) have advocated for the increased consumption of spirulina in developing countries.
In Chad’s Kanembu region around Lake Chad, spirulina has been an indigenous food source for centuries and is referred to locally as dihé. Since it is harvested from naturally occurring pools of water around the lake, spirulina in the region is 100 times cheaper than in developed countries. Furthermore, consumption of dihé is credited for having a positive effect on nutrition in this part of the country.
Programs have been set up in numerous countries including Cambodia, Chad and Rwanda to increase spirulina production and consumption. The FAO has also promoted spirulina farming in Eastern and Southern Africa as an alternative or supplement to fishing in over-fished areas. The regions boast hot, sunny climates well suited for algae growth in open pond systems which require few resources and are relatively resilient to weather changes. Furthermore, where climates are suitable, barriers of entry into the industry are low in terms of capital investment.
In war-torn Central African Republic (CAR), where more than 39,000 children under the age of 5 are expected to suffer from severe acute malnutrition in 2016 nuns are championing a local initiative to grow spirulina as a supplement. In a place like landlocked CAR, where traditional food aid can be difficult to import due to conflict and a lack of infrastructure, the ability to locally grow this nutrient-rich commodity with very few resources can be transformational.
Because some people may remain averse to the idea of eating algae, livestock may be the first to consume them on a mass scale.
Global feed demand is quickly approaching 1 billion annual tonnes, which equates to annual sales upwards of $400 billion. With global production of animal protein expected to grow at a brisk 1.7 percent per year between 2010 and 2050, the demand for livestock feed is swelling along with it. Currently most animal feed is made up of corn and soy, but just as algae’s high protein content and nutrient profile make it appealing for human consumption, these same qualities make it alluring for use in animal feed. Indeed, substituting some grain-derived protein sources for microalgae could boost the overall nutrient profile of feed, while relieving growing pressure on grain production.
Microalgae are already used heavily in aquaculture, primarily as a nutritional supplement. Algae are also beneficial for larval nutrition, provide fish with their rich omega-3 content, and even give salmon its pink color.
Microalgae use in poultry and pig production are still emerging, but initial research is promising. Studies on pigs have shown that 30-50 percent of soy protein can be replaced with a mix of microalgae, including chlorella, with no significant differences in rearing. In one study with turkeys, a spirulina-rich diet was found to reduce mortality and increase growth rates.
However, feeding algae to livestock at too-high levels may have adverse effects on growth rates. For example, broiler chickens’ weight gain was reduced significantly compared to traditional feed, when algae was substituted as a protein source at higher proportions; and when fed to laying hens, algae was found to alter the taste of eggs. Other studies showed that algae substitutions at certain levels could reduce the carbohydrate digestibility in cattle and sheep.
Furthermore, industrial livestock production has very formulaic feed processes that are not very flexible, which could further delay mainstream adoption of algae as a supplemental feed source. Ironically, these companies may have the most to gain from adoption of algae. Its immunity-boosting properties would be advantageous to industrial forms of rearing in which livestock tend to be more susceptible to disease and companies are increasingly being pressured to decrease antibiotic use.
As the ability to produce algae cost-effectively improves and further research is conducted, algae’s use as an animal feed ingredient is likely to grow. However, many more tests and trials need to be conducted in order to determine the most suitable types of algae and the level to which they can substitute traditional feed ingredients.
Another tremendous, but relatively recent, market for algae is a slice of the $1.1 billion natural food color market. Phycocyanin is a blue colorant that can be extracted from spirulina and has become a popular alternative to brilliant blue (E133), a synthetic dye, as brands race to substitute artificial ingredients in the face of the natural foods movement. In 2013, DIC, one of the largest producers of spirulina, invested $10 million into a new extraction plant after projecting that demand for the spirulina-derived colorant could grow by seven-10 times.
Perhaps one of the more unexpected applications of microalgae is in medicine. TransAlgae, which also began as an algal biofuels company, now sells a proprietary technology derived from microalgae that allows previously injectable vaccines to be administered orally. Though these oral vaccines are now only administered to livestock the company has set its sights on the expanding to the human pharmaceuticals industry.
Scientists are also making strides forward in algal applications in the lucrative $100 billion cancer treatment industry. In 2012, scientists at the University of California, San Diego (UCSD) were able to genetically engineer algae to create a number of complex human therapeutic proteins more cheaply and in greater quantities than other methods. But particularly exciting was new research published in late 2015, describing a less harmful delivery mechanism for chemotherapy. Microalgae are genetically modified to only bond with cancer tissue, protecting non-cancer cells from the adverse effects of chemotherapy drugs.
It’s astounding that something as seemingly unremarkable as algae could be a fuel source with a carbon footprint 80 percent less than gasoline; an easy-to-grow food source that can yield 200 times more protein per acre than beef, and have exciting applications across the medical field. With all of its productive and potentially profitable uses of algae, the industry—especially the microalgae industry—is only likely to continue to bloom.