Algae was once sold as a promising biofuel alternative to corn—it ultimately failed. But now it’s back, and researchers say it’s poised to disrupt the ethanol industry.
Back in the late 2000s, there was much hope that algae could, due to its high productivity and ability to absorb CO₂, become a raw material used to produce biofuels as a replacement for gasoline. According to the Department of Energy, a single hectare of algae—the fast-growing microbe found mostly in water with the unique ability to perform oxygenic photosynthesis—could potentially yield 100 times more fuel per acre than corn.
Moreover, concerns about the land and environment impacts of food-based biofuels made algae, which could be grown in tanks or non-productive desert landscapes, seem like a potentially sustainable alternative. With an estimated 40 percent of American corn production going into ethanol, algae biofuels could displace corn, impacting numerous farmers and the agriculture industry in corn-growing regions of the United States. From a climate, land-use, and cost perspective, boosters argued that might be a good thing.
But algae wasn’t been to overcome inherent barriers and, with few exceptions, get beyond the pilot or testing phase. Challenges include processing or converting algae’s high amounts of saturated and polyunsaturated fatty acids; high cultivation/harvesting costs; and scaling/processing issues, such as how to cost-effectively dewater or perform hydrothermal liquefaction. In simpler words—it was too technically complex to produce, and too expensive to be a viable alternative. But that could soon change.
“The industry as a whole has some starts and stops,” said Peter Valdez, a chemical engineer at the Pacific Northwest National Laboratory, one of the world’s leading centers for algae research. “I think we’re in a resurgent period. There’s interest coming up again.”
In fact, research by Valdez, his colleagues, and others around the world might finally be paying off. One of the leaders is HutanBio, a UK startup, which is planning to launch a commercial demonstration site in Oman next year, building off more than a decade of research and a successful pilot in Malaysia.
“We’re going to launch, initially, a one-hectare commercial demonstration site,” Rachel Sparkhall, HutanBio’s marketing manager, told Offrange. “This will allow us to build the platform, the photobioreactors, and a continuous process downstream chain where we actually extract the water, dry the algae, and then go through an extraction and clarification process.”
Whether or not algae could impact corn’s preeminent role, at least in the United States, will depend on how quickly it can scale up production.
Other pilots by the startups Algaesol, Susalgaefuel, and Sustems have also started to make progress on turning algae into biofuels. And they’re testing real-world applications too, including a 2024 commercial flight using algae biofuels in Japan. These could be signs that these ethanol alternatives may be, finally, getting closer to the long awaited goal—commercialization.
Whether or not this could impact corn’s preeminent role, at least in the United States, will depend on how quickly algae can scale up production. Also playing a role—a potential biofuels boom in aviation, shipping, and other hard-to-abate sectors where electrification isn’t practical. In fact, right now, policies and standards are being debated to determine what types of biofuels will qualify as “sustainable” by governing bodies in the U.S., Europe, and globally. The decisions they made could have major impacts for both corn farmers and high-tech algae startups.
Why Algae and Not Corn?
In the U.S., corn-based ethanol—along with chemicals and products like high-fructose corn syrup—grew because of the massive abundance of corn being produced by American farmers, heavily boosted by government subsidies. It’s not the only productive food crop turned into a biofuel—in Brazil, sugarcane is used to produce ethanol, and in the Southeast Asian countries of Indonesia and Malaysia, palm oil-based biodiesel is now blended with petroleum for automobiles across the country. For American corn farmers, ethanol production, which is also heavily subsidized, has been an important source of income.
“Farmers are able to grow more corn crops on fewer lands with less inputs every year,” Justin Moore, the new uses research and biofuels manager at IL Corn, a farmer-led advocacy group, told Offrange. “There’s been a pretty gradual increase in ethanol production since the early 2000s to where we are today.”
The main biofuel crops globally all have one thing in common—high productivity. Corn, palm oil, and sugarcane produce far more calories per unit than most other crops. These sugars and oils can be, through proven processes, turned into various biofuels like ethanol. But there are sustainability and food security concerns with food-based biofuels, and HutanBio sees an opportunity to produce a more sustainable alternative.
The main biofuel crops globally all have one thing in common—high productivity. Corn, palm oil, and sugarcane produce far more calories per unit than most other crops.
“We have an opportunity to produce a new class of carbon-negative feedstock that isn’t compounding the existing problems that the biofuels that we currently have,” Sparkhall said.
In fact, HutanBio has commissioned an independent life-cycle analysis that found that their HBx algae-derived biofuel, removes as much as 1.48 tons of CO₂ equivalent per ton of biofuel produced. Meanwhile, corn production in the U.S.—which hit a record in 2025—has been linked to nitrous oxide emissions, fertilizer overuse, and impacts on water and soil degradation. The same is true of sugarcane—linked to ecosystem damage to the soil, water, and atmosphere in Brazil, and palm oil, linked to deforestation, forest fires, and soil carbon loss in Southeast Asia.
Moore argues that those concerns are overblown, and that the U.S. corn industry has become far more sustainable over time. “We’ve disproven the food-versus-fuel argument time and time again,” said Moore. “Our farmers are extremely productive and efficient, and the carbon intensity of corn-based ethanol has dropped.”
In reality, this is still up for debate. While industry-commissioned studies show benefits, an independent study published in 2022 found that corn ethanol is 24% more carbon-intensive than gasoline, due to “emissions resulting from land use changes … processing and combustion.”
Algae’s Potential—and Its Limitations
Algae absorbs a lot of CO₂, but the compounds it produces aren’t as readily turned into a biofuel as corn sugars and starch. That means it requires developing brand-new processes and techniques, and so far, drying and extracting oil is difficult to make cost-effective.
“The barrier is the economics of it,” Valdez said. “When you look at the cost of algae compared to other biomass sources of other energy crops, we were still several times higher.”
Many startups in the 2000s and 2010 approached algae as a problem of engineering and scale, and what doomed a lot of those efforts was economics. But HutanBio took a different approach.
“The fundamental root of the problem was that the biology was just never strong enough,” Sparkhall said. Over 10 years, founders John Archer, a microbiologist, and Noor Azlin Mokhtar, who has a PhD in molecular genetics and genomics, focused on this challenge, testing over 1.2 million marine algae samples and finally finding 400 strains that met their criteria as potential feedstocks for biofuels.
Their platform takes their stable, oil-producing algae, and cultivates it using high-productivity vertical systems that can thrive in some of the hottest places in the world. In fact, one of the appeals of algae is that, unlike corn, palm oil, or sugarcane, it can be produced in arid landscapes like deserts. And that is why HutanBio has chosen to start in Oman.
“There is still an abundance of corn, so, why not use the most readily available and easiest to process sugars in the world?”
“We want to grow on coastal deserts, with access to seawater,” Sparhall added. “We don’t need arable land, so we want land that’s unproductive at the moment, but need to be near some level of industry because our feedstock to grow the algae is CO2.”
HutanBio is perhaps further along than any other algae biofuels startup, with a model that has been proven at a pilot scale and, at least on paper, profitable projections. The main challenges are engineering and the same issue that has proved insurmountable to the last few generations of algae startups—scale and market economics.
“Each phase of growth is going to bring different scaling challenges,” Sparkhall said. “We’ve done small-scale tests and trials, and there will be some unknowns that we’ll find along that way.”
Because their system is modular, HutanBio can grow it over time, and the plan is to scale it from one square kilometer to 100 by 2032, and then license the technology so that similar projects can be set up all around the world. As for biofuels, their target is 6,500 tons, or about 2 million gallons, per year by 2032. While that sounds like a lot, it is barely a drop in the bucket when compared to 18.5 billion gallons of corn ethanol produced a year just in the U.S.
That means, despite the progress that PNNL, HutanBio, and others have made, algae biofuels at a scale where they might compete with ethanol is still years away. Corn advocate Moore questions whether this research makes sense when, in his opinion, a sustainable biofuel already exists.
“Whether it’s purpose-grown energy crops, wastes, or algae, the motivation for us is that there’s a lot of opportunities.“
“I think those fuels are also going to have a higher cost with them just because of the technologies of scale,” Moore said. “There is still an abundance of corn, so, why not use the most readily available and easiest to process sugars in the world?”
For Sparkhall and Valdez, though, algae is more important now than ever, as the need to shift away from fossil fuels to more sustainable alternatives has gained even greater attention. Just look at this last summer of climate-linked heatwaves and forests fires, not to mention spiking gas prices due to ongoing geopolitical conflicts.
“We do believe that we can scale this to actually become large enough by 2040 to be able to produce enough fuel to completely decarbonize aviation and marine,” Sparkhall said.
For his part, Valdez doesn’t see algae as an end-all solution, but a key player in an increasingly complex future in which demand for liquid fuels will only grow.
“It’s really about embracing all different types of biomass that are available,” Valdez said. “Whether it’s purpose-grown energy crops, wastes, or algae, the motivation for us is that there’s a lot of opportunities across all the different biomass types.”
