Over the last two decades, the cost of producing biodiesel from algae has dropped steadily, from hundreds of dollars per gallon to tens of dollars. But getting the final cost reductions that will bring algae-based biofuels to cost parity with conventional fuels may take another decade, say European researchers.

In an article recently published in the journal Science, two researchers from Wageningen University and Research Center in the Netherlands outlined the resources needed to make algal biodiesel economically feasible in European markets within a decade.

According to the authors’ calculations on fuel consumption in Europe, almost 2.3 billion gallons of biodiesel will need to be replaced. To supply the European market, algae yields would need to be over 4,400 gallons of fuel per acre each year. That would require 22 million acres – a land area the size of Portugal.

In comparison, one acre of palm oil yields about 600 gallons per acre and corn yields about 270 gallons per acre.

By looking at existing technologies and modeling a variety of commercial-scale plants, the researchers determined it would take a decade for algae-based biodiesel to become cost-competitive in Europe.

However, there are signs that the industry is reaching the scale necessary to becoming competitive.

The target of 4,400 gallons per acre is right in the range of what some algae players claim to be producing today. Companies like Algenol, Solix, Solazyme and OriginOil say they are making – or on the road to making – between 2,000 and 5,000 gallons of fuel per acre. And earlier this fall, Solazyme announced it had delivered 20,000 gallons of fuel to the U.S. Navy. Shortly after, the company signed a contract with the Navy to provide 150,000 more gallons.

But even with all the other revenue streams that come from selling algae cake, algae biofuels still cost between $6 and $35 per gallon.

The news has been mixed about algae recently. This study from the Netherlands comes months after another piece of research was released showing that algae biofuels emit more carbon dioxide than they sequester from waste streams. That piece was widely criticized by the algae industry, which said that the data used in the study was over a decade old.

Many analysts are skeptical about algae’s ability to scale in the near-term. But a number of companies – including fossil fuel giants – are investing heavily in the technology. Perhaps there’s something to it, even if it is a decade away.