Small Caps | Aug 03 2012
By Greg Peel
Algae.Tec ((AEB)) is an Australian green technology company pioneering the use of scalable algae producing modules to capture carbon emissions for conversion, with the use of solar energy, into “clean” biofuels. Algae.Tec was introduced in the following FNArena articles:
To the average Australian, the concept of “carbon capture” seems to have rapidly become a pie in the sky concept. The Rudd government came to power with a green agenda and set aside a lump of money in the budget finance carbon capture development, but the Gillard government has since scaled back its budget allocation in the race for surplus, at the same time introducing a carbon tax. When one talks of carbon capture the assumption is one of geosequestration – the pumping of CO2 into rock fissures in the hope the carbon will go away and not come back. Geosequestration development has to today amounted to a lot of talk but little action.
On the other side of the coin, airlines around the world are among those in the private sector looking at practical solutions to carbon emission reduction, and several carriers have been busy test-flying aircraft powered by various biofuel mixes. Commercial flights are in the offing. Airlines nevertheless represent only one sector investing practical ways of reducing a carbon footprint.
Germany's Lufthansa is one such airline leading the charge towards substituting its standard fuels for cleaner biofuels. As part of its development process, Lufthansa signed a memorandum of understanding with Alage.Tec late last year to evaluate the potential of the company's algae-sourced biofuel production system. For the production of biofuel, the Algae.Tec proprietary algal growth system requires sunlight and CO2 emissions. Neither is hard to find, but yesterday the company passed its first significant milestone when its small demonstration plant in Nowra, NSW, was “switched on” by the NSW minister for Resources and Energy.
The demonstration plant has been built in collaboration with leading Australian flour producer the Manildra Group, and captures the CO2 emitted from the production of ethanol at Manildra's Nowra facility. Yesterday's opening was attended by various representatives from academia and industry, including from a curious coal industry. It is interesting to note, as a sideline, talk of Victoria's longstanding brown coal industry possibly closing down altogether due to the commercial burden of the tax on carbon emissions from brown coal power production.
Last year Algae.Tec signed a collaboration contract with the world's largest cement producer Holcim to build a similar test facility at a Holcim plant in Sri Lanka. The facility will initially involve five Algae.Tec biofuel modules but the intention is to expand into a much larger facility, and then multiple facilities, assuming success. Yesterday's successful Nowra start-up is a first step towards such success.
Algae.Tec has also signed a memorandum of understanding with a company in China to build, initially, a 250-module facility, and late last year the company secured US$6m of convertible note financing in the US to supplement its development costs.
As a micro-cap, Algae.Tec is not covered by the broking house majors in the FNArena database and the stock has largely flown under the radar. AEB shares closed yesterday at 31c.