When it comes to algal biofuels, the big money usually chases the littlest organisms: pond-scum specialist Sapphire Energy raised upwards of $300 million from investors including Bill Gates, while closed-tank micro-algae company Solazyme (NASDAQ:SZYM) netted $198 million from its IPO in 2011. Turning slime into fuel is a tricky business, though, and in recent years Sapphire and Solazyme have both sought to supplement their stuttering algal-biofuel businesses with other product lines, while Exxon Mobil (NYSE:XOM) has rethought its $600 million algal-fuel development deal with Synthetic Genomics. That’s leading a number of startups, research teams, and investors, to explore a potentially simpler, lower-tech approach to next-generation biofuel production: macro-algae, better known as seaweed. 

Conventional micro-algae are incredibly energy-dense, but require careful nurturing in large ponds or tanks, often in tandem with sophisticated bio-genetic research to create suitable algal strains. Seaweeds, by contrast, are far hardier: they grow wild in huge quantities, can easily be dredged from open oceans or collected on beaches, and can also be easily farmed, obviating the need for costly land-based aquaculture. What’s more, while macro-algae is less energy-dense than the slimes favored by most algal-biofuel companies, it still compares favorably to conventional feedstocks: one 2014 study found that some types of seaweed could theoretically yield 15.5 metric tons of ethanol per hectare per year, more than four times the ceiling for corn-ethanol production. 

Other estimates suggest that seaweed biofuel could deliver 30 times more energy per acre than soy, and 5 times more than corn, all without displacing land and crops that could be used for feeding people. And while life-cycle analyses of seaweed biofuels remain tentative, it’s increasingly clear that seaweed biofuels are environmentally beneficial relative to fossil fuels: multiple studies have found that biogas from seaweed has a greenhouse impact less than half of that of natural gas, for instance.

All that adds up to a big potential opportunity. Seaweed farming is already a $6 billion industry, thanks mostly to the demand from Asian consumers for seaweed-based food products, but the seaweed-biofuels sector remains very much in its infancy. Still, there are a number of promising technologies in development: California startup Marine BioEnergy last week received $2.1 million from the Department of Energy’s ARPA-E agency to fund research into open-ocean kelp farming, chiefly based on a technology using robotic submarines to tow frame-anchored kelp between deep, nutrient-rich waters and shallower, well-lit waters. The company’s technology also allows seaweed farms to submerge to avoid shipping and bad weather, eliminating some of the main risk factors for offshore aquaculture. 

With the largest territorial waters of any nation, and kelp-friendly environments spanning both its eastern and western seaboards, the U.S. could potentially emerge as a global leader in macro-algae biofuels. Marine BioEnergy president Cindy Wilcox says that globally, seaweed biofuels could supply enough energy to provide 10 billion people with more carbon-neutral energy per capita than is now used by the average American. “With this new industry, California can become self-sufficient in renewable energy,” she says, and could one day become a major national or even global clean-energy exporter. 

Still, barriers remain: the U.S. funded several research projects into offshore seaweed cultivation in the 1970s and 1980s, but harsh weather conditions disrupted the testing and left lingering doubts about the viability of offshore cultivation. There’s also no clear regulatory framework for aquaculture in federal waters, making it hard for companies to test new offshore models for seaweed cultivation. And seasonal fluctuations in the useful carbohydrates present in seaweed can also be significant: one study found that carbohydrate levels swung between 5 percent and 32 percent over the course of a year, suggesting that seaweed harvesting might only be profitable on a seasonal basis. 

Those problems have led some to question the economic viability of seaweed biofuels. Bio Architecture Lab, once among the most promising seaweed-to-biofuel startups, turned its back on the sector, and walked away from a near-complete ethanol production facility, in 2013, saying that seaweed was more valuable as a commodity than as a biofuel feedstock. “Seaweed is worth $1.30 a kilogram without doing anything to it, so why would you harvest it and produce ethanol,” which at the time cost 75 cents a kilogram, CEO Ric Lucien said. “The opportunity cost is too great.”

Despite Lucien’s skepticism, a number of additional revenue streams could make seaweed biofuel production more profitable. Seaweeds contain chemicals and rare metals, including gold and silver, potentially making large-scale seaweed processing a lucrative proposition. Macro-algae also absorbs nitrogen, phosphorus, and other pollution-linked nutrients, so residues from biofuel production could be sold as eco-friendly agricultural fertilizers. And new cultivation techniques could also make the industry as much as 10 times more space-efficient. Boston-based nonprofit GreenWave, for instance, netted this year's $100,000 Fuller prize for its “3D ocean farming” technology, which dramatically boosts per-hectare output by farming seaweed in vertical columns along with oysters and other eco-friendly marine organisms.  

That’s left many investors feeling cautiously optimistic about the viability of seaweed biofuels, with major chemical and energy companies including Dupont (NYSE:DD), Statoil (NYSE:STO), and Chilean state-owned petro-giant ENAP making substantial investments in the seaweed biofuels sector. Some governments have been getting in on the act, too: Venice, Italy, is experimenting with a seaweed-powered bio-methane power plant that could one day provide half the city's electricity, and both the South Korean and Filipino governments have made major investments in seaweed-to-energy facilities.  

There’s a long way to go: replacing 1% of America’s gasoline supply with macro-algae ethanol would require the use of more than ten times as much seaweed as is currently harvested worldwide. But there’s plenty of wild-growing seaweed to go round, and plenty of open water in which to farm more. There are no sure bets — but for investors eying next-generation algal biofuels, it’s worth looking beyond slime.


Companies to watch

Japan’s Tokyo Gas Co. has been researching the use of seaweed as a biomass feedstock since 2002, developing a pilot project capable of processing one ton of seaweed a day into carbon neutral biogas, in part using biomass washed up on nearby beaches. 

In Norway, Seaweed Energy Solutions has picked up more than 5.5 million euros in seed money from Statoil and others to develop an offshore seaweed-growing technology capable of large-scale production.  

Indian startup Sea6 Energy has pivoted away from the micro-algae approach to focus on large-scale seaweed production, and is working with Novozyme to develop new systems for converting seaweed to ethanol.

Ben Whitford is the U.S. correspondent for The Ecologist. He has written for the Guardian, Newsweek, Mother Jones, Slate, and many other publications.