“Costs must be reduced and production rates must be optimized. This will bring the economics down to a level where algae-based fuel can realistically compete with conventional fossil fuel products,” he said. “We believe this will not happen tomorrow but will occur over the next three to five years.”

Mr. Syed Alwi said hundreds of millions of dollars had been and were still being spent on research. “Rather than following others spending more money on research, we would like to go in now and do it,” he said. “When the breakthroughs come we will be more than ready. We don’t have to wait for another three years of development to actually do it.”

“There are still many keys that need to be found to lower production cost, like the best harvesting system, and people are still working on this,” he added. “We’re not taking a gamble here, this will be profitable as it is, but we will be able to increase our profit margins when more answers come.”

The Rompin project will use a closed system to grow algae in a controlled nursery environment at the early stage of the culture, and an open pond system for the mass culture.

“We will have also some part in a semi-open system, where ponds will be in covered greenhouses.” Mr. Syed Alwi said: “The advantage of a closed system is that it gives you more yield, because the CO2 that is added can be more concentrated in the water, which doesn’t evaporate — so the algae grows faster.”

Producing algae in a closed system, however, can cost five to 10 times as much as using an open pond system, he noted. “A completely closed system is just too costly at this stage. It is not cost-effective for production of biofuel. It is cost effective for production of high-value algae,” for neutriceutical, or food and pharmaceutical, products, he said.

Algaetech has identified several indigenous Malaysian microalgae species that can yield about 30 percent oil, and one strain has been found that could yield 60 percent. Mr. Khoo said the algae will feed on carbon dioxide from nearby industrial facilities.