UK Startup IDs A New Hope For Algae Biofuel: Carbon-Negative Production
Last Updated on: 13th May 2025, 10:28 am
Algae biofuel stakeholders have weathered some tough times over the years. The idea of extracting biofuel from oil-rich microalgae has its upsides, but among other issues, the cultivation process is energy intensive. That was a big hurdle back in the early 2000s, before the cost of renewable energy went down. Now the startup HutanBio has cracked the code and they are gearing up for commercial production in regions where renewable energy conditions are optimal (see lots more algae background here).
Algae Biofuel Meets Carbon Sequestration
CleanTechnica began tracking the algae biofuel industry during the Obama administration, and the hopes were high. Microalgae can be cultivated without infringing on land for crops, which is a big selling point. The potential for reducing fertilizers and pesticides is another part of the pitch. In addition, microalgae can be cultivated in seawater, eliminating freshwater conflicts.
The US Department of Defense even got on board, supporting algae R&D along with other non-fossil resources in its alternative fuels program. The bloom soon fell off the algae biofuel rose, though, as commercial production proved elusive. Somewhat ironically, ExxonMobil had been supporting early-stage research, but it ended up dropping out in 2023.
The company should have stuck around. By 2023, researchers and private sector stakeholders were exploring the use of microalgae as a natural carbon sink, adding value to the biofuel balance sheet. In addition, fuel is just one, temporary opportunity for algae-driven carbon capture and recycling. Plastics and other more long-lasting forms of carbon sequestration are also in the mix.
A Breakthrough For Algae Biofuel
Sure enough, cleantech investors were beginning to sit up and take notice. HutanBio came to the attention of the UK venture capital investor Clean Growth Fund last year. The firm dropped an investment of £2.25 million (just a hair under $3 million) on HutanBio in January of 2024, about one year after ExxonMobil dropped the algae biofuel ball.
“After a decade of research and development in the UK and around the world, HutanBio, a bio-tech company founded by scientists from Cambridge University, based in Cambridge (UK) and in Malaysia, has secured investment from Clean Growth Fund to accelerate the commercial use of its HBx bio-fuel oil to reduce greenhouse gas emissions,” Clean Growth Fund summarized in a press statement.
HutanBio has targeted the maritime fuels industry from the outset, culling through a trillion samples in an effort described as the “world’s largest ever marine microalgae bioprospecting programme.” The shipping industry is a ripe target for alternative fuels because it is under a mandate from the International Maritime Organization to reduce CO₂ emissions by at least 40% by 2030, compared to a 2008 baseline. The ultimate IMO goal is to zero out fossil fuels entirely by 2050.
The algae will be cultivated in bioreactors, with arid, sun-soaked regions in Morocco and Western Australia as initial locations with premium conditions. Co-location with existing heavy industries will provide for the supply of CO₂. Clean Growth Fund also anticipates that HutanBio’s AI-optimized reactors can eventually function in other regions around the world as well.
“HBx’s production does not use any fresh water and has been optimised to thrive in brackish to very salty environments, it avoids competition with agriculture and does not drive deforestation or peatland destruction and, unlike current biofuels from terrestrial oil-crops, does not compete for food resources,” Clean Growth Fund summarizes.
Algae Biofuel Meets Carbon Accounting
The advent of low-cost renewable energy is one element supporting the business case for algae biofuel. Another key factor is the development of a data-driven carbon accounting profession, which brings us to the latest news about HutanBio.
Last week the company announced confirmation that the production process for its proprietary HBx microalgae biofuel achieves the level of net-negative carbon emissions. For confirmation they turned to the carbon accounting firm EcoAct, a branch of leading global firm Schneider Electric, which performed a detailed lifecycle assessment (LCA) of the process.
The LCA focused on HutanBio’s targeted locations, which now include parts of the Middle East as well as Morocco and Western Australia. Across all three regions, EcoAct found that the process removes up to 1.48 metric tons of CO₂-equivalent.
The availability of low cost renewable energy was a key factor. Examining the difference between renewable electricity and fossil fuels for algae biofuel production, the LCA found that HutanBio’s renewables-based system can reduce production emissions by up to 5.6 times.
Broken down by region, the LCA also found that conditions were best for achieving the net negative level in Morocco, where logistics and sourcing chains are readily available, in addition to solar energy.
“The LCA addressed all production stages — including raw material inputs, inbound transport, production and refinery processes, and waste handling, offering a transparent carbon accounting methodology rarely seen in the biofuels sector,” HutanBio emphasizes.
The Carbon Accounting Difference
HutanBio notes that the LCA assessment does not include Scope 4 emissions, which relate to the emissions produced by users of a product or service. In the case of HutanBio’s algae biofuel, that end of things will have to be addressed by the maritime industry, and other stakeholders are already on it. Last week, for example, the leading Finnish firm Wärtsilä introduced an onboard carbon capture system aimed at abating up to 70% of CO₂ emissions from ships.
In the meantime, the ability to track and assess carbon emissions transparently, accurately, and in detail is all the more important in these uncertain times, when investors are seeking real facts to underpin their decisions. An accurate carbon accounting system, for example, can enable manufacturers to prioritize areas in need of attention, but identification is just the first step. Companies also need to deploy effective systems and alternative technologies to address the issue, and carbon accounting factors into that step as well. The Norwegian LCA firm ClimatePoint, for example, has established a venture capital branch to support high-impact solutions for Scope 4 emissions.
“The biofuels industry has long struggled with inconsistent reporting and opaque sustainability claims,” explained HutanBio CEO Paul Beastall in a press statement. “These results mark a significant milestone in the development of science-backed, scalable low-carbon alternatives to fossil fuels.”
HutanBio CTO James Ibberson also chipped in his two cents, emphasizing that carbon accounting pulls back the curtain on production-related emissions in the biofuel industry. “Our approach is to measure everything, optimise what we can, and be completely transparent about the results,” he said.
Hold on to your hats. If all goes according to plan, HutanBio will begin constructing its first commercial pilot facility early next year.
Note: I’m reporting from Norway this week, so you’ll see additional news about Norwegian legacy firms and startups in CleanTechnica this week (this trip is supported by the firm Arc Press).
Image (cropped): The UK startup HutanBio is targeting the maritime industry for a rebirth of the algae biofuel industry, leveraging the carbon-capturing ability of microalgae (courtesy of HutanBio).
Sign up for CleanTechnica's Weekly Substack for Zach and Scott's in-depth analyses and high level summaries, sign up for our daily newsletter, and follow us on Google News!
Whether you have solar power or not, please complete our latest solar power survey.
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Sign up for our daily newsletter for 15 new cleantech stories a day. Or sign up for our weekly one on top stories of the week if daily is too frequent.
CleanTechnica uses affiliate links. See our policy here.
CleanTechnica's Comment Policy
