West Australian company Algae.Tec has plans to build a demonstration plant beside Manildra, and have it operating by the middle of next year, before expanding into a full commercial operation in 2012.

Algae.Tec executive chairman Roger Stroud said the demonstration phase would start with two or three shipping containers taking nutrient-rich waste water and carbon dioxide produced by the Manildra plant, and then using it to grow algae.

The algae would be processed to remove oil to create biodiesel, while the remnant could be used to create ethanol, animal feed, and even potentially jet fuel, Mr Stroud said.

“As far as we’re concerned this is about the fifth peg in a seven-peg process along the road to renewable fuels using algae,” he said.

Algae.Tec had been looking all over Australia for suitable sites, and had not considered the Shoalhaven until contacted by chairman of the Manildra board, Dick Honan.

“There are so many synergies between our requirements and Manildra’s operation at Bomaderry it was a very compelling case,” Mr Stroud said.

He was so confident the demonstration would be successful and “validate to the rest of the world what we’ve already validated internally”, planning had already started on expanding the trial to a full commercial operation with between 200 and 300 shipping containers “helping to resolve Manildra’s carbon dioxide issues”.

Mr Stroud said the algae used in the process had been shown to remove up to 85 per cent of carbon dioxide from the air, in turn producing oxygen through the photosynthesis process.

Also feeding the algae’s growth will be a parabolic light collection system, sending light into each of the shipping containers that can be stacked on top of each other.

“The system’s totally enclosed,” Mr Stroud said, explaining it would not produce any odours or discharge.

Research is being carried out all over the world as countries look to algae and biodiesel to ease fuel concerns, and Mr Stroud said he had gathered some of the world’s leading experts for what he was confident was a commercially viable and sustainable operation.

“This will attract enormous interest globally,” he said, predicting it could be the birth of techno tourism in the Shoalhaven.

Mr Stroud expected the commercial operation to create between 25 and 30 jobs, and was looking forward to speaking with Shoalhaven Freshwater and Marine Research Centre head Pia Winberg at the Shoalhaven campus of Wollongong University about how the organisations could work together.

While economic modelling had been drawn up based solely to government policy as it stood, Mr Stroud said any carbon price instituted as part of an emissions trading scheme would provide “icing on the cake” for the company, because of the way it was capturing and converting carbon dioxide.