Economic evaluation of using algae as a pulp substitute

Abstract

This study presents an analysis of the economics of substituting pulp for the production of paper with algae. The analysis of the innovation is based on the critical evaluation of numerous independent sources of information. First of all, the optimal production option is determined, which led to the conclusion that the so-called raceway pond design has the best potential for the innovation. Besides substituting pulp with algae, it is also possible to use the remaining algal biomass for by-products. The product analysis resulted in the following selection of by-products:<br />Biodiesel made from the lipids and biogas made from the remaining algal biomass. Furthermore, we took revenues related to obtaining carbon credits into account. Subsequently, the processing steps and their costs were critically reviewed.<br />An integrated economic model was formulated based on the results of the production, product and processing parts. Our integrated model makes it possible to easily vary uncertainties related to the market situation and technology. Nevertheless, none of the variations resulted in positive economics. Thereafter, the report discusses the attractiveness of a potential investment against various product prices. Again, our integrated model of the economics makes it possible to effectively analyse the influence of uncertainties. This led to the conclusion that, with the current state of technology, it is only economically attractive to invest in producing algae as a pulp substitute when the crude oil price is above $600 per barrel. Last of all, the investment analysis addressed the effect of other potential improvements, e.g. due to genetic manipulation, but none of the realistic improvements resulted in a an attractive investment.