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Also, mentioned this company which sounds worth researching.

We were nearly ready to delete the Algae Group from our Beach Boys Index. Then Germany’s air carrier Lufthansa came flying in with a press release, announcing its plans to build “a large-scale algae-to-aviation biofuels production facility in Europe.” Lufthansa has partnered with Australia’s Algae-Tec Ltd. (ALGXY: OTC/PK or AEB: ASX), a developer of algae-based biofuel technologies, and has agreed to foot the bill for the facility, but has so far been mum on the cost. Algae-Tec will run the facility.

The commitment of a large company like Lufthansa to such an undertaking is impressive. The air carrier had previously run several test flights using biofuel but complained about inadequate biofuel supplies.

Commissioning and running the biofuel plant for Lufthansa will not be a maiden voyage for Algae-Tec. Just two months ago the developer opened a new algae-based biofuel plant in Australia’s New South Wales. The company claims to have perfected a “high-yield, enclosed and scalable algae growth and harvesting system.”

One of the attractive elements to the Algae-Tec system is reliance on carbon emissions as feed for the algae. I noted that Lufthansa’s announcement made much of the emissions savings and that the location of the plant in Europe would depend upon finding a reliable source of carbon. They should have little difficulty in finding a partner willing to give up carbon.
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No. of Recommendations: 2
The big problem I see with algae based bio fuel is that I have not seen reliable cost figures. Fuel is a commodity and if bio fuel can't compete with fossil fuel on a cost basis (tax benefits included) then it won't happen. I was very excited when OriginOil got an order from Australia for a pilot project. It has been at least a year and OriginOil has not reported on results which to me means failure (unless it is kept as a state top secret).

Germany is hydrocarbon fuel deficient. Conversion of coal to liquid fuels has never been shown to be cost competitive and Rentech (RTK) essentially abandoned it. I have not heard from Sasol, the African firm doing it for over a year, they had built some pilot plants in China. It seems to me that Germany is making the decision on a political basis, not on an economic one. I don't like that as a basis for investing (some people do, specially if they get subsidies ;).

I sold RTK a year and a half ago at a decent profit and I'm holding OOIL based on the cleanup potential of the technology, not for the bio fuel.

Denny Schlesinger
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