The biodiesel industry in Australia is currently undergoing significant expansion due to a number of factors which include increasing demand, recent peaks in crude oil prices, the availability of lower-cost manufacturing plant, and government support in the form of capital grants and tariff relief. Current projections are for a biodiesel production capacity of 1000 ML in 2010, representing a staggering increase on 2003/04 production which was just 1 ML. But perhaps the biggest risk to the fledgling local biodiesel industry is the availability of low-cost feedstock in sufficient quantities. Present biodiesel production utilizes mainly tallow and recycled cooking oil as the lipid feedstock, but these sources are very limited. While some future plants will use imported palm oil, there remains significant scope within the marketplace for large quantities of an alternative lipid feedstock that meets quality and cost criteria.

Many species of microalage are known to produce high levels of lipids, in the range 25 - 60% (dry weight), and can grow over a wide range of salinities from freshwater to saturated brine. Several commercial processes already exist for the large-scale production of microalgae (e.g. beta-carotene production from Dunaliella salina), however these have high production costs which are offset by high-value products. The challenges of producing large quantities of microalgal lipids at low cost are significant. This paper presents our view of the technical and economic feasibility of one process option for meeting these challenges. The research and development needed to commercialize this process is also discussed.