Background: Algae biofuels have been studied numerous times including the Aquatic Species program in 1978 in the U.S., smaller laboratory research projects and private programs.

Results: Using Molina Grima 2003 and Department of Energy figures, captial costs and operating costs of the closed systems and open systems were estimated. Cost per gallon of conservative estimates yielded $1,292.05 and $114.94 for closed and open ponds respectively. Contingency scenarios were generated in which cost per gallon of closed system biofuels would reach $17.54 under the generous conditions of 60% yield, 50% reduction in the capital costs and 50% hexane recovery. Price per gallon of open system produced fuel could reach $1.94 under generous assumptions of 30% yield and $0.2/kg CO2.

Conclusions: Current subsidies could allow biodiesel to be produced economically under the generous conditions specified by the model.