What Is Biothermal Energy?

Biothermal energy is a renewable energy source that seeks to generate electricity from the composting of organic materials. It is often used in agricultural applications, such as by exploiting the fibrous matter derived from sugarcane during sucrose extraction.

Although biothermal energy is considered to be a viable source of energy production, it is still in its early stages of development. Nonetheless, some investment products have been created for those wishing to invest in the sector.

Key Takeaways

  • Biothermal energy is a renewable energy source produced through the use of decomposing organic matter.
  • It's an approach to renewable energy production that is still in the early stages of development, relative to other energy sources.
  • Biothermal energy has been less successful than solar energy partly because of the increased difficulty of producing large-scale electricity in an efficient manner.
  • Biofuels have been generated based on plant and animal materials, including ethanol and "green diesel" products.

How Biothermal Energy Works

Biothermal energy was first developed and popularized by the French farmer and inventor, Jean Pain. In the 1970s, Pain demonstrated that he could generate sufficient electricity from his farm’s compost to power all of his household heating, hot water, and electricity needs. Pain’s method consisted of accumulating 10-foot-high mounds of compostable material and using a network of tubes to capture the natural heat and gases emitted by the organic material while it naturally decomposed. These natural fuels could then be burned in order to supply the needed electricity.

This basic process has since been used to generate various biofuels based on both plant and animal materials. For example, ethanol is made from both corn and sugarcane, while vegetable oils and animal fats have been used to produce biodiesels. So-called “green diesel” products have also been made, using plant sources such as algae as well as recycled animal fats such as grease sourced from restaurants. Even manure can be used as a potential biofuel source.

Special Considerations

These types of biothermal energy products fall under the general umbrella of renewable energy sources. However, whereas some renewable energy sources such as wind and solar have a virtually unlimited natural supply, biothermal energy sources require finite inputs such as organic material. This had led to challenges in producing biothermal energy at a large scale since it can be difficult to source and process the organic materials in a manner efficient enough to make them cost-competitive compared to alternative energy sources.

Example of Biothermal Energy

In recent years, investors have been increasingly interested in alternative energy sources. In 2008, the Swedish Export Credit Corporation issued an exchange traded note (ETN) specifically targeting the biofuels sector. This ETF, called the MLCX Biofuels ETN, holds a basket of futures contracts linked to commodities that are regularly used to produce the biofuels made in the sector.

For investors interested in other aspects of the alternative energy industry, many other products are available. These range from exchange traded funds (ETFs) investing in various alternative energy approaches, to funds focused on specific sectors such as solar or wind, and even to the alternative energy sectors of specific countries or regions.