Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
part of its program to
promote beneficial reuse of carbon dioxide, the
Department of Energy awarded a total of $27.2 million ($3.0 million in the
first phase and $24.2 million in a second phase) to a consortium led by alternative
energy developer Phycal, Inc. (private).According to the DOE website, Phycal is to develop
an integrated system to produce biofuel from microalgae cultivated with
captured carbon dioxide (CO2).The
biofuel is to be blended with other fuels for power generation or as drop-in
diesel or jet fuel.
is a bit of a stretch to see Phycal’s project as a bona fida “reuse” of CO2
that would have otherwise gone out into the atmosphere.The company ferments the root food crop
cassava (also called yucca or manioc) to produce ethanol.Nonetheless, this is more by-product that final
product, because what Phycal really needs are the sugars and CO2 that are also
produced in the fermentation process. That
is because Phycal is principally focused on algae-based biofuel production and
CO2 is the critical food source for growing algae.Sugars give the algae an extra boost before
the oil harvesting step.
design does have a certain appeal.Algal
oil can be turned into a drop-in diesel or jet fuel that has significantly more
versatility and lower distribution costs than ethanol.Integration of the dual ethanol/biofuel plant
affords precious economies that are vital to turn out a cost-competitive fuel
development partners include General
Electric’s (GE:NYSE) Global Research
Group and Seambiotic (private) among
others.The group has set up a pilot cassava/algae
farm near Hawaii’s Wahiawa, Oahu.Phycal
has some confidence in its ability to iron out the kinks in its process.In late 2011, the company signed an off-take
agreement with Hawaaiian Electric for delivery of 100,000 to 150,000 gallons of
algae-based biofuel beginning in 2014.The biofuel will be tested at the utility’s Kahe Generating Station.
only accredited investors are in a position to get involved with Phycal at this
stage in the company’s development.A
stake in its partner General Electric is a play on the myriad markets that are
the targets of GE’s broad product portfolio.
that the world economy has yet to agree on a value for the liability of
creating toxic CO2 emissions, it is impressive that work on CO2 sequestration
has progressed at all, let alone the next step of finding uses for CO2. Even though “carbon capture and use/reuse”
gets little attention from investors, it appears to be quietly underway.We expect the economic impact will be equally
quiet, manifesting in lower costs rather than generating more visible new revenue
streams.However, knowing which
companies are successfully harnessing the CO2 beast could be an advance look at
CO2 can be used in three major areas:polymers, biofuels and inorganic materials.The February 26th post “Muscle Behind Carbon Exploitation” was
about Alcoa’s attempt to use CO2 for treating clay soil for environmental remediation - an inorganic material.Phycal’s project is an example of biofuel
production.Next post will be a look at
a polymer application.
Neither the author
of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies