Bioresource Technology 102 (2011) 43–49

Contents lists available at ScienceDirect

Bioresource Technology
journal homepage: www.elsevier.com/locate/biortech

Algal biodiesel economy and competition among bio-fuels

D.H. Lee *
Institute of Applied Economics, National Taiwan Ocean University, 2 Pei-Ning Road, Keelung 20224, Taiwan, ROC

a r t i c l e i n f o a b s t r a c t

Article history: This investigation examines the possible results of policy support in developed and developing econo-
Received 30 March 2010 mies for developing algal biodiesel through to 2040. This investigation adopts the Taiwan General Equi-
Received in revised form 28 May 2010 librium Model-Energy for Bio-fuels (TAIGEM-EB) to predict competition among the development of algal
Accepted 7 June 2010
biodiesel, bioethanol and conventional crop-based biodiesel. Analytical results show that algal biodiesel
Available online 8 July 2010
will not be the major energy source in 2040 without strong support in developed economies. In contrast,
bioethanol enjoys a development advantage relative to both forms of biodiesel. Finally, algal biodiesel
Keywords:
will almost completely replace conventional biodiesel. CO2 reduction benefits the development of the
Algal biodiesel
Microalgae
bio-fuels industry.
Conventional biodiesel Ó 2010 Elsevier Ltd. All rights reserved.
Bioethanol

1. Introduction (Seymour et al., 2007) and computational general equilibrium

To reduce global warming, combat high oil prices, and achieve
the CO2 emission objectives of the Copenhagen Accord, recent
years have seen rapid development of renewable energy. Bio-fuels
are a key focus of these development efforts. Bio-fuels are environ-
mentally friendly, fossil energy independent (Schnoor, 2006), and
carbon neutral (Chisti, 2008; Keyzer et al., 2008). However, scarcity
of agricultural land puts bio-fuel manufacture into competition
with food production, creating inflationary pressure and jeopardiz-
ing economic stability (Schnoor, 2006; Alexandratos, 2008; Dew-
bre et al., 2008; Yang et al., 2008).
The US Department of Energy explored the feasibility of devel-
oping algal bio-fuels in the Aquatic Species Program (Sheehan
et al., 1998; Gross, 2008; Mata et al., 2010). Since the production
technology for algal biodiesel already exists and no agricultural
products are required as feedstock, algal biodiesel represents the
only alternative to fossil fuels in transportation applications (Chis-
ti, 2007). Additionally, the high oil content and rapid production
cycle of algal biodiesel can ensure stable supply (Demirbas, 2010;
Chisti, 2008). The major constraint on the commercialization of al-
gal biodiesel is its high cost (Sheehan et al., 1998; Johnson and
Wen, 2010). Therefore, US President Barack Obama in 2009 pro-
posed investing USD800 million in R&D and commercialization of
algal bio-fuels. This investment should reduce the associated costs
and make algal biodiesel likely the next-generation renewable
energy.
Models used in research on energy economics include the linear
programing model (Tseng et al., 2005), input–output model
model (CGE). The linear programing model cannot simultaneously
present the economic activities and energy alternatives of firms
and consumers, while the input–output model possesses no price
mechanism and thus is only suitable for economic planning.
Meanwhile, the CGE model can present optimal agent behavior,
inter-sectoral effects, price mechanisms and interactions among
all institutions, industries and agents in the economic body. The
CGE model thus is widely applied in the assessment and cross-
national comparison of various economic energy policies (Otto
et al., 2007; Schumacher and Sands, 2007; Hertel et al., 2010). En-
ergy occupies a key economic position, and the emergence of
renewable energy will gradually replace petroleum-based energy
and further influence the entire economy. The CGE model presents
the full impact of renewable energy on the macroeconomic body,
and thus is ideally suited for research on algal biodiesel.
The success of algal biodiesel depends on the structure of the
economy and energy substitutability. From an economic perspec-
tive, developed countries are more likely to adopt clean energies
because they have more flexible economies. This study adopts
the CGE model to forecast the feasibility of developing new ener-
gies to replace fossil fuels in developed and developing economies,
and to predict competition among algal biodiesel, bioethanol, and
conventional crop-based biodiesel to achieve CO2 reduction.
2. Model and scenario design
2.1. The Model

* Tel.: +886 2 2462 2192x5407; fax: +886 2 2462 4565. The TAIGEM-EB model is an extended version of the Taiwan
E-mail address: dhlee@mail.ntou.edu.tw General Equilibrium Model-Energy for hydrogen (TAIGEM-EH),

0960-8524/$ - see front matter Ó 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.biortech.2010.06.034
44 D.H. Lee / Bioresource Technology 102 (2011) 43–49

derived from the MONASH model (Dixon and Rimmer, 2004), and supply’’ criterion (Fig. 1). The power sector of TAIGEM-EB is mod-
adapted specifically for bio-fuels. The TAIGEM-EB model is a dy- eled in the form of a technology bundle derived from the MEGA-
namic forecasting model for the Taiwanese economy, covering 57 BARE model (ABARE, 1996), which comprises ten power
sectors, six labor categories, eight types of margin, and 67 com- generation technologies, namely hydro, stream turbine-oil, stream
modities. The supply chain for industry production is represented turbine-coal, stream turbine-gas, combined cycle-oil, combined cy-
as a five-level nested structure. The energy composite of the model cle-gas, gas turbine-oil, gas turbine-gas, diesel, and nuclear. The
comprises the algal biodiesel, conventional biodiesel, bioethanol, power sector can switch power technologies in response to fluctu-
coal products, oil products, natural gas products, and electricity ating costs.
industries. Households consider budget constraints with the goal Table 1 lists the cost shares of algal biodiesel, conventional bio-
of maximizing utility or welfare, and firms minimize their costs diesel and bioethanol production derived from the survey data,
or maximize profits under resource constraints to meet production then adds and balances the circulation chain of these industries
and consumption demand. The model outputs are the ‘‘optimal’’ into the input–output table. The per liter production costs of algal
states of all agents in the economic body of the ‘‘demand equals biodiesel, biodiesel and bioethanol are USD8.80 (Chou, 2005;

Local Market Export Market Local Market Export Market

CET CET

Good 1 Good G

CET
Functional Form

Activity Level Inputs or Outputs

Leontief

Good 1 Good G Other Costs Primary Factors and

CES CES CES

Imported Domestic Primary Factors Energy

Good 1
Domestic
Imported

Good G Good G
Good 1

CES
CES

Land Labor Capital

Electricity

Composite Composite Composite Natural

Coal Products Oil Products Gas Products

CES
CES CES CES

Occupation Occupation
Coal

Products
Coal

Kerosene

Gasoline

Fuel Oil

Diesel Oil

Refinery GAs

Natural Gas

Types 1 Type O
Gas
Conventional

Bio-Ethanol

CES
Bio-diesel

CES CES CES CES

Biodiesel

CES
CES CES CES
Algal-

Domestic
Import

Domestic
Import
Domestic
Import

Domestic
Import

Domestic
Import
Domestic

Domestic
Import
Domestic
Import

Domestic
Import

CES CES CES

Domestic
Import

Domestic
Import

Domestic
Import

Fig. 1. Production structure of TAIGEM-EB model.

 D.H. Lee / Bioresource Technology 102 (2011) 43–49 45

Table 1
Cost share of bioethanol, biodiesel and algal biodiesel. Survey data.

Bio-ethanol Bio-diesel Algal biodiesel

Input USD/‘ Input USD/‘ Input USD/5 tons working volume
Inter-mediate input Sweet potato 0.53 Wasted oil 0.53 Photobioreactor (5 ton) 4375.00
(or sugarcane) (0.59) (or crop) (0.62) Light-emitting device 1562.50
(or molasses) (0.64) NaOH 0.003 Gas–liquid separation bins (200L) 1250.00
Methanol 0.09 Dosing tank (100 L) 2500.00
Energy 0.10 Stroma mixer 1875.00
Stirring rod and vane 937.50
Gas meter 437.50
Pump 1875.00
PH meter 937.50
High-speed reflow pump 625.00
Chemicals and nutrients (5 tons) 312.50
Electric power (12 days) 187.50
Oil extraction and centrifuge 625.00
Primary input Wage 0.16 Wage 0.10 Wage 63281.25
Depre-ciation 0.18 Depre-ciation 0.10
Rent of land 0.17 Rent of land 15625.00
Rent of durables 0.25 Waste treatment 0.07 Rent of durables 8195.06
Profit 0.07 Test 0.08
Other cost 0.03 Profit 0.10
Total cost 1.09 Total cost 1.17 Total cost 104601.31

Note. Unit (USD/‘) means the cost in US dollars when firms produce bio-fuels per liter. Unit (USD/5 tons working volume) means the cost in US dollars when firms produce
microalgae in a 5 ton photobioreactor in a microalgae cultivation cycle. The exchange rate at 1:32 to transform NTD to USD.

Kanellos, 2009), 1.09 and 1.17, respectively. The total algal biodie-
sel production cost for a 5 ton photobioreactor is USD104601, and
such a system can produce 0.5–0.7 tons of microalgae oil every
12 days.
Figures from IPCC (2006) and the annual energy balance sheet
of Taiwan were used to estimate the CO2 emission matrix. This
study assumes the use of 100% pure algal biodiesel, biodiesel and
bioethanol, which emit approximately 70% less CO2 than petrodie-
sel and petrogasoline (Edwards et al., 2008) as model scenarios.
2.2. Model parameters
A modified input–output table lists the database for the TAI-
GEM-EB model. Bio-fuel production requires intermediate inputs
(biomass and semi-finished products from other industries) and
primary inputs (energy, labor, capital and land). Survey data on
biofuel cost and circulation chain was obtained to prepare the in-
put–output table for formulating the supply and demand chains.
The survey data were obtained from the relevant literature and
from field experts. Power generation costs for ten power genera-
tion sectors were obtained from the Taiwan Power Company.
The annual recursion of the status of all industries and agents
was simulated. The TAIGEN-EB performs a historical simulation
to update the database to 2009. Table 2 lists exogenous shocks in
the forecast of the petroleum economy baseline from 2000 to
2009 obtained from a national economic report issued by the
Directorate-General of Budget, Accounting and Statistics, and the
parameters are summarized as follows.

Table 2
Exogenous shocks for forecasting baseline: from 2000 to 2040.

Macroeconomic variables growth rate (%) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010–2040
Energy-saving decline rate 0.60 0.60 1.20 1.20 1.20 1.2 1.20 1.20 1.20 1.20 1.20
Production technological progress 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Real GDP growth rate 5.78 2.17 3.94 3.33 5.71 4.09 5.44 5.98 0.73 1.87 Endog.
Imports 4.54 13.5 5.71 6.72 18.60 3.90 4.57 2.98 3.12 13.73 Endog.
Household consumption 4.84 1.00 2.07 0.84 3.13 4.81 1.49 2.08 0.57 1.48* Endog.
Export 18.1 8.08 10.5 10.9 15.3 4.77 11.41 9.55 0.56 9.21 Endog.
Investment 8.38 21.1 1.61 2.05 15.4 0.43 0.04 0.55 11.17 11.80 Endog.
Government expenditure 0.28 0.55 1.47 0.71 0.69 1.98 0.71 2.08 0.68 3.63 Endog.
Number of households 2.28 1.80 1.80 1.76 1.75 1.57 1.40 1.59 1.91 1.45 0.151 to 0.515
Employment trend 1.20 0.49 1.13 1.07 2.11 1.59 1.70 1.81 1.06 1.19 1.00
Aggregate price index 1.80 0.51 0.89 2.21 1.92 0.70 0.09 0.32 0.36 2.86 Endog.
Exchange rate 5.15 6.00 1.29 0.49 2.87 3.76 1.32 0.96 4.03 4.86 Endog.
Exports price index 0.87 0.77 0.32 0.87 1.61 2.45 2.49 3.56 2.14 6.60 Endog.
Imported crude oil price 0.00 0.00 4.96 13.94 27.4 38.9 20.2 10.4 36.52 36.38 Endog.
Primary factors productivity Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. 2.00
Consumer price index Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. 2.00
Energy structure Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog.
Industrial structure Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog. Endog.
Labor (primary factor) demand Labor is a CES aggregation of various types of labor forces.
Price of petroleum The price of imported petroleum based on crude oil price projection of EIA forecast.
Technology bundle Substitution elasticity of hydro is 0.2, nuclear power is 0.3, and fossil-fueled power generation technologies are all 1.2.
Ascension to WTO Taiwan joined WTO in 2002. The tariff rate decline rate was assumed to in conformance to WTO rules up to 2010.
Developed and developing Different elasticity settings are adopted in the simulation. CES elasticities between different energies and primary inputs,
country elasticities setting CES elasticities between six occupations and Klein–Rubin household expenditure elasticities are setting doubled in
developed country. Elasticity of production transformation and Armington elasticities between domestic and imported
commodities of production, investment and consumption of developed country scenario are setting 50% to 100% higher
than developing country.
46 D.H. Lee / Bioresource Technology 102 (2011) 43–49

Table 3
Assumptions made for scenarios design.

Scenario I (Baseline) Scenario II Scenario III Scenario IV

Economic structure Developing economy Developing economy Developed economy Developed economy
Effort No effort Strong effort Strong effort Very strong effort
Technology progress rate Technology progress rate at Technology progress rate at Technology progress rate at Technology progress rate at
annually of algal biodiesel 0% 25% 25% 30%
sector
Elasticity (developing economy/ 1. CES elasticities of different energies: Coal composite (coal and coal products) (0.2/0.5). Refining petroleum products composite
developed economy) (1/2). Algal biodiesel (0.4/0.8). Biodiesel (0.4/0.8). Bioethanol (0.4/0.8). Gas and natural gas (1/2). Electricity (1/2). Between all
energies (1.6/3.2). Between energy composite and primary inputs composite (labor, capital and land) (1/2).
2. CES elasticities of sectors between six occupations (0.4/0.8).
3. Klein–Rubin household expenditure elasticities between commodities (0.35–0.7/0.7–1.4).
4. CET elasticity of production transformation (0.3/0.6).
5. Armington elasticities between domestic and import goods of production, investment and consumption (0.95–2.5/1.2–3).
6. CES elasticity of primary inputs (labor, capital and land) (0.5/0.5).
7. CES elasticities of technology bundle of power generation sector (0.2–1.2/0.2–1.2).

(1) The annual rates of improvement in energy saving and pro-
ductivity efficiency are 1.2% and 2.0%.
(2) The price of imported crude oil increased by 27.4%, 38.9%,
20.2%, 10.4%, 36.5% and 36.4%, respectively, in each of the
years from 2004 to 2009. As predicted by EIA (2010), the
price of crude oil will increase 3.0% annually from 2010 to
2040.
(3) The rate of increase of employment is 1%.
(4) The consumer price index (CPI) increases by 2% annually.
(5) The annual growth rate in the number of households ranges
from 0.151% to 0.515% from 2010 to 2040.
(6) Tariffs will decline at a rate that complies with World Trade
Organization (WTO) regulations until 2010.
2.3. Scenario design
Developed economies can adjust industry structure more easily
than developing economies because their economic structures are
more flexible (Greenspan, 2005). This study compares the feasibil-
ity of developing algal biodiesel in developed and developing econ-
omies. Scenario I represents the baseline situation in which neither
governments nor the private sector invest in bio-fuels. This study
simulates the effects of strong effort in developing and developed
economics in Scenarios II and III. Scenario IV explores whether
strong effort can drive algal biodiesel to the top of the list of renew-
able energies. This study presents the results of government and
private investment in developing new energy technologies in the
form of technology improvement. Technical advancement leads
to cost reduction, presenting a gross sum of algal cultivation, har-
vesting and post-processing. Strong effort indicates that the total
production costs of algal biodiesel are reduced by 25% annually.
TAIGEM-EB can present developing and developed economics
via closure and elasticity configurations. According to Greenspan
(2005) and US CBO (2006), large elasticities are assigned for the
developed economies to reflect their flexible industry structure,
which responds effectively to external economic change such as
oil price rise. The key components are the configuration of elastic-
ities among energy alternatives: elasticity of coal composite com-
modity (alternative for coal and coal products) was set at 0.2 and
0.5, respectively, for developing and developed economies; refin-
ing petroleum products composite at 1 and 2; algal biodiesel at
0.4 and 0.8; biodiesel at 0.4 and 0.8; bioethanol at 0.4 and 0.8;
gas and natural gas at 1 and 2; electricity at 1 and 2; between all
energies at 1.6 and 3.2; and between energy composite and pri-
mary inputs composite (labor, capital and land) at 1 and 2. Table
3 lists the figures for other elasticities.
The roadmap for new energies such as hydrogen was made up
to year 2040 (US DOE, 2006; AU DOTRE, 2008). The forecast year
span for this study was set as the same period.
3. Results and discussion
3.1. Energy structure and macroeconomy: Scenarios I–II
In scenario I, in which no effort is made to develop biofuel pro-
duction technologies, the crude oil share will decline from 54.9% in

0.6

Crude Oil
0.5

0.4
energy share [%]

0.3 Coal

0.2

Nuclear
0.1
Natural gas
Hydro
Bioethanol
0.0 Biodiesel
2010 2015 2020 2025 2030 2035 2040 Algal biodiesel

time [year]

Fig. 2. Energy structure in Scenario I. Developing economic structure with no support.

 D.H. Lee / Bioresource Technology 102 (2011) 43–49 47

0.6

Crude Oil
0.5

0.4

energy share [%] 0.3 Coal

0.2

0.1 Natural gas

Nuclear
Bioethanol
Hydro
0.0 Algal biodiesel
2010 2015 2020 2025 2030 2035 2040 Biodiesel

time [year]

Fig. 3. Energy structure in Scenario II. Developing economic structure with strong support.

2010 to 46.52% in 2040. Meanwhile, the natural gas share will de- ios I and II in developing economies. Consequently, the imple-
cline from 7.2% to 6.4%, mostly being replaced by nuclear and coal mentation of an algal biodiesel economy may be difficult in
alternatives. Furthermore, the nuclear share will rise from 5.7% to developing countries (Fig. 3).
12.8% and that of coal will increase from 30.9% to 31.5%. Of the Until 2019, real GDP growth rate is higher in developing nations
three bio-fuels, the bioethanol will grow its share from 0.9% to in scenario I than scenario II. This phenomenon occurs because of
1.83%, but the share of conventional biodiesel and algal biodiesel the high budget and resources dedicated to building infrastructure
will be merely 0.1%. Therefore, in scenario 1 neither forms of bio- as well as the high cost of developing bio-fuels. After the bio-fuels
diesel will play any significant role in Taiwan up to 2040 (Fig. 2). industry takes shape, the effect of promoting economic growth will
If algal biodiesel technologies receive strong support, the use become clear. Therefore, investing in clean energy requires
of crude oil is forecast to drop to 45.0% by 2040 while coal will improving the overall economic structure (such as in scenarios III
increase to 37.1%. Given the difference between Scenarios I and and IV) (Table 4).
II, the share of nuclear of total power consumption will increase Bio-fuels can help reduce CO2 emissions. Taiwan’s 2010 CO2
only slightly to 6.4%, while that of natural gas will fall to 6.5%. emissions are estimated at 275.9  106 tons. Without investment
Without support, the share of bioethanol of total power consump- in cleaner bio-fuels, CO2 emissions will climb to 1184.3  106 tons
tion will gradually grow to 3.67%, indicating the competitive by 2040 (Scenario I). However, if the government and private sec-
advantage of the industry. Since algal and conventional biodiesel tor strongly support bio-fuels, annual CO2 emissions will reduce to
are substitutable, the share of algal biodiesel will increase to 1105.9  106 tons, or a 6.6% reduction, from 2010 to 2040. This re-
0.51% while conventional biodiesel will be almost completely re- sult demonstrates that even given technical transfer or capital
placed by algal biodiesel and will have a share of just 0.1%. The injection from developed countries in accordance with the Copen-
above forecasts show that the share of bio-fuels is low in Scenar- hagen Accord which mandates US$100 billion worth of such sup-
port between 2010 and 2020, it will be difficult for developing
economies to do their bit to contribute to meeting Accord objective
Table 4 of limiting the average global temperature rise to no more than 2°
Real GDP growth rates (%) under scenarios I–IV. (Table 5).
Scenario I Scenario II Scenario III Scenario IV II–I III–I IV–I
2010 1.77 1.29 1.70 1.70 0.48 0.07 0.07
3.2. Energy structure and macroeconomy: Scenario III–IV
2015 5.34 4.43 5.05 5.05 0.91 0.29 0.29
2020 2.91 3.96 4.46 4.46 1.05 1.55 1.55 If relying solely on technological advances to lower costs, it
2025 4.02 3.89 4.28 4.28 0.13 0.26 0.26 seems difficult for biodiesel to assume a more important role.
2030 3.39 3.85 4.37 4.37 0.46 0.98 0.98
Therefore, scenarios III and IV compare the industrial development
2035 3.30 3.68 4.44 4.44 0.38 1.14 1.14
2040 3.45 3.37 4.51 4.52 0.08 1.06 1.07 of algal biodiesel and its relationship with other bio-fuels in devel-
oped economies which possess a more flexible industry structure.

Table 5
Carbon dioxide emission amounts (tons) under scenarios I–IV.

Scenario I Scenario II Scenario III Scenario IV II–I III–I IV–I

2010 275.9 274.5 274.3 274.1 1.3( 0.5%) 1.5( 0.5%) 1.7( 0.6%)
2015 383.0 379.5 365.4 359.2 3.5( 0.9%) 17.6( 4.6%) 23.8( 6.2%)
2020 510.2 515.5 469.5 463.9 5.4(1.1%) 40.6( 8.0%) 46.3( 9.1%)
2025 646.1 635.6 577.0 559.3 10.5( 1.6%) 69.1( 10.7%) 86.8( 13.4%)
2030 795.6 746.8 691.9 668.5 48.7( 6.1%) 103.7( 13.0%) 127.1( 16.0%)
2035 967.0 898.1 820.2 785.9 68.9( 7.1%) 146.8( 15.2%) 181.1( 18.7%)
2040 1184.3 1105.9 978.9 926.9 78.5( 6.6%) 205.4( 17.3%) 257.5( 21.7%)
48 D.H. Lee / Bioresource Technology 102 (2011) 43–49

0.7

0.6 Crude Oil

0.5

energy share [%] 0.4

0.3
Coal

0.2 Algal biodiesel

Bioethanol

0.1
Nuclear
Natural gas
0.0 Hydro
2010 2015 2020 2025 2030 2035 2040 Biodiesel
time [year]

Fig. 4. Energy structure in Scenario III. Developed economic structure with strong support.

0.7

0.6 Crude Oil

0.5
energy share [%]

0.4

0.3
Coal

0.2 Algal biodiesel

Bioethanol
0.1 Nuclear
Natural gas
0.0 Hydro
2010 2015 2020 2025 2030 2035 2040 Biodiesel

time [year]

Fig. 5. Energy structure in Scenario IV. Developed economic structure with strong support.

In a flexible economy as in developed countries with a 25%
strong effort in technology advancement, the shares of various en-
ergy types of total energy production will be as follows: petro-
leum 42.65%, coal 22.34%, bioethanol 15.8%, algal biodiesel
7.05%, nuclear 6.7%, natural gas 4.72%, and conventional biodiesel
0.07%, as illustrated in Fig. 4. The decline in the share of fossil fuels
results primarily from substitution by bioethanol and algal biodie-
sel. The annual 25% cost decrease can only increase the share of
algal biodiesel to second place. Bioethanol will dominate alterna-
tive fuels before 2030. The CO2 emission level of 978.9  106 tons
is approximately 17.3% lower than in Scenario I. Similar to what is
shown in Fig. 5, this study attempts to intensify the effort by
incorporating 30% technology advancement to further explore
the trend of bio-fuels substituting for fossil fuels. The share of
petroleum of total production will reduce to 36.09% while that
of algal biodiesel will reach 19.24% in 2040, having overtaken bio-
ethanol in 2038. At that time, the three types of bio-fuels will
together represent 31.37% of total energy production, higher than
the 22.82% of goal, and similar to that of petroleum. The algal bio-
diesel economy thus will be realized. CO2 emissions will further
decline to 926.9  106 tons, a reduction of 21.7%, representing an
impressive result. Therefore, in terms of developing clean energies
to achieve the CO2 reduction objectives of the Copenhagen accord,
developed countries have a better chance than developing ones.
3.3. The competition between algal biodiesel and bio-fuels
Algal biodiesel has to be cheap to become a significant source of
energy by 2040. According to (Chisti, 2007), for algal biodiesel to
potentially replace fossil fuels, it must be priced as follows: Calgal
oil, (per liter) 6 6.9  10
3
 CPetroleum (per liter). For example, if crude
oil is priced at US$100/bbl, algal biodiesel must be priced at less
than US$0.69/L to offer a competitive alternative. Given the long-
term uptrend in crude oil prices, the real competitive price level
for algal biodiesel can be far higher.
In terms of the competition between algal biodiesel and
other bio-fuels, although bioethanol lacks government support, it
has maintained solid growth even with high fossil fuel prices.
Bioethanol has better development potential than algal and con-
ventional biodiesel. Compared to algal biodiesel, conventional
biodiesel, of which the feedstock is crops, is completely uncompet-
itive. Thus microalgae will undoubtedly become an important
 D.H. Lee / Bioresource Technology 102 (2011) 43–49
feedstock of biodiesel in the future. However, in the absence of
government support bioethanol has higher growth potential than
algal biodiesel.
Because bio-fuels are cleaner than fossil fuels, developing algal
biodiesel and bio-fuels offers an effective means of reducing CO2
emissions. However, the manufacturing and refining of bio-fuels
requires energy inputs. Human-produced CO2 can be used to culti-
vate microalgae. Also, clean energies such as solar, wind, nuclear,
or hydrogen can be used to extract and refine algal biodiesel.
Conventional biodiesel uses vegetable oil or waste oil as feed-
stock. Unfortunately, the use of crops as the feedstock has potential
to give rise to negative effects that will hinder its development
(Schnoor, 2006). In contrast, microalgae cultivation does not re-
quire large areas of arable land. Furthermore, cultivation sites
can either be in desert areas or in shallow coastal waters, and no
feedstock is required. Moreover, algae can be cultivated using race-
way ponds or photobioreactors, making the process more compet-
itive than traditional bio-fuels. Once the process becomes
economic, algae production technology can be promoted in devel-
oping countries to reduce CO2 emissions.
The research results show that it is difficult to develop algal bio-
diesel to the point where it can replace fossil fuels whether in
developing or developed economies. Governments should adopt
energy and carbon taxes to limit the use of fossil fuels. Govern-
ments could also subsidize the investment, consumption and im-
port of new energies, encourage business R&D, and promote
consumer purchases of clean energy vehicles. These measures
would considerably facilitate algal biodiesel development. Multi-
lateral alternative energy developments offer the only means of
fulfilling the CO2 emission objectives of the Copenhagen Accord
or Kyoto Protocol, and microalgae could play a central role in the
process.
4. Conclusions
Competition among bio-fuels, namely algal biodiesel, bioetha-
nol and crop-based biodiesel, as well as competition between
bio-fuels and conventional fuels were forecast using a nation-wide
economic model. Algal diesel will become a significant fuel type
only if provided with strong government support from a developed
economy. The algal biodiesel industry thus should focus on the
benefits associated with CO2 reduction rather than the direct eco-
nomic benefits in its promotion and development.
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