Cover
Fuel’s gold
by Joanne Black
Biofuels are getting bad press, but a Nelson-based company believes it can deliver a fuel the world is waiting for. If its revolutionary algae-harvesting scheme succeeds – and some experts have their doubts – it will change our world.
Nick Gerritsen’s Dutch surname comes from his grandfather, Albert Gerritsen, who in the early 1950s left his homeland out of disappointment that so many former Nazi conspirators had become influential in the postwar Netherlands. Aged 40, Albert walked away from a family inheritance and, with no English and just £50 in his pocket, brought his wife and two children to New Zealand.
“I still grapple with the braveness of that,” says Nick Gerritsen.
On Gerritsen’s maternal side of the family are the McKies, who were early New Zealand settlers and “serious entrepreneurs”. They founded Nelson Lime and Marble, which went on to discover oil in Taranaki. The McKie No 1 and No 2 oilfields bear their name.
Looking at a view of Picton’s waterfront from a table at Le Café, which he jokingly refers to as his office, Gerritsen smiles at the family link to the oil industry. And right now, he has much to smile about. He is a founder and director of Aquaflow Bionomic Corporation, which recently announced that later this year it expects to have the ability to manufacture commercial quantities of biocrude, a crude-oil substitute made from algae from Marlborough’s oxidation ponds.
If the company can produce the fuel on a commercial scale, and without using more energy in manufacture and distribution than can be extracted from it, Aquaflow will have stolen a march on the energy industry.
Algae’s potential as a biofuel feedstock has long been known, but commercial production was still thought to be years away. If Aquaflow can produce fuel on a commercial scale, the company’s 100 or so New Zealand investors, as well as its 20% Asian cornerstone shareholders, stand to become very rich indeed from exporting the know-how.
In New Zealand, about 37% of the diesel and petrol used by the transport industry comes from imported oil. A share of that market alone would be lucrative, but Aquaflow is not necessarily aiming at New Zealand, or even at road transport fuel. The company has had approaches from Boeing, among other big players, and is considering using its biocrude to make aviation fuel.
“It’s a very real and significant opportunity for us,” Gerritsen says. “The civil aviation market this year globally is US$332 billion and is aiming for a minimum 20% blend [with biofuels], so at that minimum the addressable market is $US66.4 billion. If we get a decent chunk of that, well, you start to get a feeling for the size and potential of this.”
He readily compares Aquaflow’s potential to that of Microsoft, “who I recall sold something like US$49 billion of software globally last year, so even taking only the aviation opportunity – and there are heaps of other applications besides aviation fuel – you can start to see just how big we could become”.
The potential is, indeed, massive. And the higher oil prices go, the more sought-after alternatives become, and the more economic they are.
“When we started, the price of oil was about US$70 a barrel and now it’s quite comfortably above $110, and I was talking the other day to a big multinational company that is considering shifting to a $150-per-barrel strategy. The reality is there is a significant structural change occurring internationally and the ramifications are not only for fuel.
“The media need to realise that if you go through and look at everything you use in your daily life – plastics, materials, building materials, paints, glues – everything that is derived from the crude-oil product, the ramifications of the price rises will be massive, and I don’t think people are fully understanding the multiplication effect that is going to follow from this. It’s not just about fuel, but fuel is the most blunt and immediate effect. But what about when detergents cost you 10 times what you’re paying now?”
Those price rises make Aquaflow’s developments, if they can be reproduced on a commercial scale, enormously valuable, and their timing perfect. Growing fears of worsening environmental damage caused by carbon emissions from burning fossil fuels, as well as the insecurity of oil supplies, have put enormous pressure on oil companies, industry and governments to come up with alternative fuels.
Although Brazil has had success making ethanol from sugarcane, other countries are mostly still struggling. Many of the technologies that were once heralded as breakthroughs have been found to produce significant carbon emissions across their life cycle, especially if the power used to produce the biofuel comes from electricity produced by coal- or gas-fired power stations.
Parliamentary Commissioner for the Environment Dr Jan Wright summed up the situation in a submission to Parliament’s local government and environment committee last month when she recommended the Biofuel Bill, which is before Parliament, be dropped, and that a much more cautious approach be adopted. If passed, the bill would come into force on July 1 and require that petrol and diesel sold at pumps contain 0.53% biofuels, rising to a 3.4% composition by 2012.
Wright said if the bill did proceed, she would like to see a life cycle carbon-dioxide reduction standard written into it, similar to the 35% carbon-dioxide emissions reduction over fossil fuels being considered by the European Commission. Her point was that any old biofuel is not necessarily better than none at all, especially as there are big differences in greenhouse-gas emissions from the various types of biofuels.
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