Japanese firms join forces to create large-scale algae farm

Japanese firms join forces to create large-scale algae farm

Oil refiner Eneos Holdings Inc. and Honda Motor Co. are among a group of more than 35 Japanese companies and institutions that have banded together to try to tap the potential of microalgae to replace fossil fuels and provide an array of food and consumer goods products.

The group is hoping to create enough demand for a large-scale algae farm in Malaysia by partnering under an initiative called Matsuri Microalgae Towards Sustainable Resilient Industry.

The growing facility would be built by Singapore-based Chitose Bio Evolution Pte. The 5 hectare trial farm in the Malaysian part of Borneo Island is being built with financial support from Japan's New Energy and Industrial Technology Development Organization.

Microalgae is a potential replacement for biomass fuels such as corn and soybeans, which are part of the global food supply. A commonly used algae genus, Chlamydomonas, can absorb about 8.7 times more carbon dioxide than soybeans, according to Takanori Hoshino, an executive officer at Chitose Laboratory Corp.

The problem has been to grow and process algae at a scale that would be commercially competitive. Dozens of algae-fuel startups around the world have gone bust or retreated from trying to make biofuel over the past decades. The Japanese group's members hope to use their combined demand to make a large-scale farm viable by banding together.

Chitose is negotiating with the local Sarawak state government to get land to expand its facility to 2,000 hectares by around 2027, and is looking to raise 200 billion $1.8 billion for the project.

The farm would use carbon dioxide from a local thermal power plant to feed the algae and produce 140,000 tons of microalgae a year. According to Rebecca White, executive director of the U.S.-based Algae Biomass Organization, it would be one of the world's largest purpose-built algae farms after the planned expansion. The company expects to have 100 billion in annual sales from algae at full capacity.

The site in the Malaysian state of Sarawak was chosen because of its more intense tropical sunshine, low risk of natural disasters and easy access to markets in Asia, said Tomohiro Fujita, chief executive officer of Chitose.

Fujita said that the realm of imagination is within the realm of business. We are creating an industry that is something extraordinary. Natural algae has been harvested in Asia for centuries as a food source and began to gain popularity in the West in the 1970s with the development of a market for the cyanobacteria spirulina as a so-called superfood. Most of the production has come from harvesting natural sources in lakes and oceans for use as food additives for humans, fish and livestock, or as fertilizer.

According to the Center for Climate and Energy Solutions, the combined annual market for algae products could be $320 billion in 2030, and the past decade has seen a boom in cultivated products, typically by adding sugar to water to feed the algae. The big prize is to find a cost-effective way to make auto and jet fuel, as most projects focus on food and cosmetic ingredients.

Eneos hopes to start commercial production of algae-based bio fuel once Chitose starts operations in 2025, after it has been working on bio-jet fuel for more than 15 years.

Honda is still in the research stage for possible uses for algae and is conducting its own investigation into cultivation. The company said in an email that it was mainly expecting to use algae as a fuel for aviation, which is hard to electrify, as well as resin autoparts.

The Matsuri consortium also includes half a dozen chemical companies, including Mitsui Chemicals Inc., which is considering using algae as an alternative to naphtha, a feedstock used to make fuels, solvents and plastics.

By replacing chemical-based naphtha with a bio-based one, we can reduce carbon dioxide emissions and convert many household products to biomass-derived products, said Vice President Hideki Matsuo.

Other group members are looking at using algae in applications as varied as printing, food, cosmetics and medical industries.

The cost is the biggest hurdle. Fujita believes that Chitose will be able to produce algae for about 300 per kilogram once its expanded site is up and running.

if the price falls to the 100 per kilogram level, many more companies will consider replacing petroleum-based products with microalgae-based alternatives, said Motonari Shibakami, senior researcher at the National Institute of Advanced Industrial Science and Technology.

A key market needed to produce the scale to drive down the price of food. Microalgae are an alternative protein source for crops such as soybeans. According to Toshiya Sasaki, chief operating officer of Chitose's food startup Taberumo, said that spirulina is about 70% protein and can produce as much as 14 times the output per unit area than soybeans.

In an interview in Tokyo, Sasaki serves up a green-colored algae-filled meal with pasta, mayonnaise, frozen dessert and guava and pineapple-flavored juice. He says the number of packets that his firm has sold of flaked raw Spirulina, the company's principal product, has increased 14 fold since April 2020.

Sasaki said we want to establish a culture of eating algae.