Supporting New Technology Worth the Effort

Some companies have adapted to changing market conditions and changed their business model to create other products, oftentimes with higher value,
By Matt Carr | February 17, 2016

As the campaign season heats up, one trend we are all familiar with is the criticisms leveled against federal support for new technologies, advanced biofuels and large-scale demonstrations of new processes. Oddly enough, this leads many critics who are normally business-friendly to mock companies for innovation.

How many times have we read capitalist and business-friendly politicians or publications criticize companies for leveraging technology, intellectual property and nimbleness to create new markets for their technology? Most recently, I have heard these complaints about companies that started out developing one product, but when market forces changed, they shifted gears to find better markets.

The truth is that these types of course corrections happen every day of every year. Smart investors look for companies with nimble technologies, smart management and talented teams to be able to surmount obstacles and succeed.

What makes some of them targets for criticism is that they received government funds to create, wait for it…biofuels. And now that they have shifted gears to find better near-term opportunities, the argument is made that all previous investment and support must have been wasted.

Now, it’s true that many biotech companies, originally founded to create low-carbon alternatives to fossil fuels, have had a challenging time developing these fuels at a price competitive with fossil oil. As such, these companies have adapted to changing market conditions and changed their business model to create other products, oftentimes with higher value, to enable the company to drive revenue, hire and retain employees, pay taxes and continue to grow the business.

Companies looking to create fuels from algae, for example, are finding they are uniquely suited to make these kind of adjustments. Technology advances that more efficiently cultivate and process algae can be applied to fuel products, but they also leverage algae as a platform to make products for markets that no investor would want them to pass up:

Human health and nutrition: Algae can more efficiently produce protein, Omega-3s and other nutritional ingredients than any other crop. Algae can even be used to cheaply make drugs for cancer, malaria and other ailments.

Animal and fish nutrition: Algae can help us remove the “middle fish” in aquaculture operations, sparing overtaxed fisheries. Farming algae in the desert as an animal feed can free up agricultural lands for other uses, bypassing the food versus fuel debate.

Soil health and productivity: Algae-based fertilizers are proven to improve crop yields, adjust soil nitrogen balances and even turn fields into carbon sinks, reducing costs for farmers and decreasing environmental impacts.

Many of these products would not see the light of day had it not been for technology developers working in algae-based fuels.

We should not be asking whether federal support for new technologies is worth the effort if the results don’t immediately match our preconceived notions.The real question we ought to be asking is: What types of technologies do we want—and need—to ensure long-term economic growth, energy security and food supplies and environmental benefits?

The answer lies not in continued subsidization for yesterday’s technology, but tomorrow’s. Advances in biotechnology are opening up unprecedented opportunities to create new products that compete on price, quality and performance. If anything, the cost curve for these technologies continues to bend down, whereas we know the cost curve for extracting fossil oil only goes up.

On behalf of the hundreds of companies developing algae technology for a range of solutions, from feed to food to fuel, we welcome the discussion about the proper role for taxpayer support and federal policy.

Author: Matt Carr
Executive Director, Algae Biomass Organization