High costs remain the big obstacle to commercial production. The algae business has suffered from “fantastic promotions, bizarre cultivation systems, and absurd productivity projections.” says John Benemann, an industry consultant and Ph.D. biochemist who has spent more than 30 years working on algae. Even if the capital costs and operating costs of algae farms are low, and the productivity of the algae is improved, Benemann says that “algae biofuels cannot compete with fossil energy based on simple economics… The real issue is that an oil field will deplete eventually, while an algae pond would be sustainable indefinitely.” In a thorough 2010 technology assessment, researchers at the Lawrence Berkeley National Laboratory estimated that producing oil from algae grown in ponds at scale would cost between $240 and $332 a barrel, far higher than current petroleum prices.

Perhaps more worrisome, government scientists say the environmental benefits of algae remain unproven. Writing in American Scientist, Philip T. Pienkos, Lieve Laurens and Andy Aden, all of the National Renewable Energy Laboratory, say that the few life-cycle assesements of algae done so far have shown “unpromising energy returns and weak greenhouse gas benefits.” By phone, Pienkos acknowledged that, in theory, algae should produce low-carbon fuels because the CO2 emitted when the fuels are burned is absorbed from the air when algae grow. But, he says, calculating the true sustainability benefits of algae requires doing a detailed study of inputs and outputs and “that will be difficult until big algae farms are built.”