The US committed over half a billion dollars of taxpayer money ($510 million to be exact) over the next 3 years to advancing biofuels into a more usable form available for use by commercial and military aircraft, bringing private and public investment to just over US$ 1 billion.
(oilprice.com) Obama calls them "next generation biofuels" because the plan is that they will be cheaper (due to mass production) and more widely available (the algae could be used more effectively). The US government is confident that the investment will speed up biofuel development however that ignores over 50 years of scientific research that yielded few improvements. In Brazil, for example where 90% of new vehicles are being made to run on a combination of bio-fuel and fossil fuel, the country is facing record energy deficits, for example in 2010 imports of fuel skyrocketed as land use demanded during algal biofuel production simply overwhelmed the country; prices skyrocketed also with the price of biofuel rising 85% over the year. Even with the high cost impediments (in the range of $65-$100 per gallon), the US secretary of agriculture countered with "For every dollar increase in the cost of a barrel of oil, it costs the Navy $30 million".
Petrobras aims at ending Brazil's supply shortage, it is investing $1.9B in the next four years to raise production of ethanol (will invest another $600M in biodiesel and $1.6B in other biofuel operations); $328M is going to Brazil's biggest sugar ethanol mill, the Boa Vista (49% Petrobras share was acquired in June 2010 for $240M; the other 51% is owned by Sao Martinho) to quadruple production (ethanol production has a 5-10% profit margin).
(Reuters: Petrobras, Sao Martinho to expand ethanol output) (traditionally, algae makes up about 60% of biofuel production with the rest coming from other bio sources).
Traditionally, the American bioethanol industry (works to prevent other options from being considered) and the lack of progress in determining which biofuel feedstock is the most economically viable, have been major impediments to production increases. Strong opposition from the petroleum industry could also become a problem when biofuels gain wider acceptance, for now though oil companies have shown interest in gaining market share in the biofuel industry; in 2010 for example Royal Dutch Shell began a $21 billion milling and fuel distribution joint venture with Brazilian ethanol company, Cosan. The partnership has so far been extremely profitable for Cosan, by August Cosan reported a record $1.44B quarterly profit, net revenue was up 29.75%.
Over the last 45-55 years the US government has only spent about $2.5 billion on biofuel research with less than appealing results. While biofuels are a great option long term, for the short term it might not be considering the cost to produce (per kWh renewables in general are 23c, natural gas is 9c and coal (popular in China) is 4c) and the fact that in both the United States and Europe, both nations and people have increasingly tight budgets.
Additionally, there are the environmental impacts associated with algal biofuel production: Fertilizer used to grow algae at the rates needed comes largely from petroleum feedstocks.
(Scientific American) Algae uses sunlight and water to convert CO2 into fuel-usable material; it is much more economical to use C02 coming from petroleum sources. Also, a high energy centrifuge is utilized to separate the algae from the surrounding water in order to extract the fuel source.
Algae is the third and latest generation biofuel and so it has an integral role to play in the future of biofuels. It earned that distinction by being environmentally friendly (biodegradable) and more effective than the alternatives (30X more energy per acre as compared to Soybeans). Third generation was preceded by second generation biofuels (attractiveness comes from its use of non food material such as wheat stalks and wood) and first generation biofuels (ethanol and biodiesel). The ethanol used in first generation biofuels is produced through fermentation of sugars extracted from plants (sugar extracting methods can be applied to almost any kind starch-based material). Drawback of first generation's bioethanol: gas powered vehicles can only run on a mixture of at most 15% bioethanol. A biofuel is by definition renewable material since the matter within it must be at least 80% renewable.
There are also other consequences to increased reliance on biofuels/ethanol : In January 2011 the United Nations director of Food and Agriculture called the US strategy of using foods like corn to make bio energy, a detriment to world food prices and supply. In fact only four countries in South America are able to increase biofuel production without endangering food security. In Brazil 3% of land is used to produce the sugar cane used in biofuels.
Currently, algal biofuel production is at least 40X that of soybean biofuel production (over 2000 gallons compared to about 50 gallons).
(dotyenergy.com) The "Energy Independence and Security Act of 2007" set a "mandatory Renewable Fuel Standard," requiring fuel producers to use at least 36 billion gallons of biofuel in 2022.
