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Algae is the third-generation of biofuels, and different from previous ones, it holds higher biofuel yields, combined with the fact that large scale algae cultivation can take place on lands that are unsuitable for food crops. This opens the door for the creation of a wide range of types of fuel, including butanol, biodiesel, jet fuel, and ethanol.
Algaculture produces minimal impact on freshwater resources; as a biodegradable product, it could be produced using saline or wastewater, without threatening food supplies. Moreover, algae fuel is nearly carbon-neutral because it also extracts CO2 from the atmosphere. Unfortunately, current production costs are still too high for it to be a fossil fuel competitor.
Once harvested, algae can be processed and blended into a number of varieties of fuel. Lipid oil can be transformed into biodiesel, and the carbohydrate content can be fermented into bioethanol or butanol fuel. Nonetheless, the lipid extraction, necessary to produce the fuel is costly and energy-consuming. First, the algae needs to be completely dried, transforming it into a powder, from which the lipids may be extracted. This demands incredible amounts of water and fertilizer. Research is being conducted regarding more competitive production modes.