Shell seeks to make diesel fuel from algae

By Tom Bergin

LONDON (Reuters) - Royal Dutch Shell is to fund a project that aims to produce transport fuel from algae, as biofuel production from palm oil and crops are increasingly criticized for causing deforestation and higher food prices.

Oil major Shell said on Tuesday it would build a pilot facility in Hawaii to grow marine algae from which it would extract vegetable oil that would be converted into a form of diesel for use in trucks and cars.

The Anglo-Dutch company said the research plant, which is being built with Hawaii-headquartered HR Biopetroleum Inc, would only use non-genetically modified algae.

Climate change and oil prices that almost reached $100 per barrel are driving strong interest in biofuels.

Scientists are excited about algae as a feedstock because they overcome the key shortcomings associated with the current generation of biofuels such as ethanol.

Palm oil or sugar cane plantations, cornfields and other feedstocks require land that would otherwise be used for food crops or left as forest.

However, algae grow rapidly, at any time of year, are rich in vegetable oil and can be cultivated in waste or sea water.

Shell has said it wants to develop one significant business in renewable energy, and in addition to advanced biofuels, it is also researching solar and wind power.