Algae.Tec to build European algae fuel plant for Lufthansa

Perth-based Algae.Tec has confirmed it has signed an agreement with German airline Lufthansa to build a large scale facility in Europe to produce aviation biofuels produced from algae.

The company said it will manage the project and receive license fees and profits, while Lufthansa will arrange 100 per cent funding for its construction, and will sign an off-take agreement for at least half of the crude oil produced.

The size and the cost of the plant were not released, but when chairman Roger Stroud spoke at the opening of the company’s pilot facility in Nowra in August, he said “commercial scale” facilities of around 400 units would likely cost $80-$100 million. A 2,000 container facility could generate annual revenues of around $350 million.

Algae.Tec said the site will be located in Europe, near an industrial source of Co2 emissions, which will be used as the feedstock for the algae, which is grown in its unique enclosed system, which each unit contained in a shipping container.

“The agreement forms the base for a long-term cooperation between Algae.Tec and Lufthansa for the industrial production of crude algae suitable for conversion into aviation kerosene and conventional diesel fuels,” the company said in a statement.

The agreement is the first obtained by Algae.Tec, which is also pursuing similar deals in the NSW Hunter Valley and Brazil. It is also seeking to broaden its agreement with the likes of cement company Holcim in Sri Lanka, and potential partners in China and the US.

The news helped push the stock up 6c or 20 per cent to 36c on the Australian Stock Exchange, off its 52-week lows of 30c. It has fallen from a high of 62c.

As highlighted yesterday, alternative fuels have taken a prominent position at the Berlin Air Show, where this agreement was signed. The Advisory Council for Aviation Research this week said biofuels were essential to meeting the global airline industry’s goals of achieving carbon-neutral growth by 2020, and by 2050 cutting CO2 emissions in half compared to 2000.

Germany has embarked on a long-term strategy to phase out oil in favor of renewable energy, with aviation playing an important role in planned reductions in oil use of 10 per cent by 2020 and 40 per cent by 2050.