GREEN POWER: Is slimy algae the key to a green energy future?
FLICKR/LEE NACHTIGAL

There are some signs that the algae-based fuel industry might be ready to bloom.

One of the nascent industry's biggest and most well-heeled players, Sapphire Energy, announced last week that it would be producing 1 million gallons of diesel and jet fuel a year by 2011, double its initial estimates.

The La Jolla, Calif.-based company – with big-name backers like Bill Gates and the Rockefeller family – says it will be producing more than 100 million gallons a year by 2018 and 1 billion gallons a year by 2020 – enough to meet almost 3 percent of the U.S. renewable fuel standard (RFS) of 36 billion gallons.

But there's a hitch: Federal law makes no room for algae-based fuel in the RFS. The 2007 energy law caps corn ethanol production at 15 billion gallons a year by 2015 and has the remaining 21 billion gallons of renewable fuels coming from advanced biofuels, including 17 billion gallons from cellulosic biofuels and biodiesel.

"There needs to be policy work done to incorporate these new concepts like algae, which is an organism that actually consumes large amounts of carbon in the process of creating a liquid transportation fuel," said Tim Zenk, vice president of corporate affairs at Sapphire.

Algae-based fuel producers use sunlight, water and carbon dioxide to convert carbon dioxide into sugar, which the algae metabolize into lipids, or oil. The industry says it can do so using non-potable water and without converting more forests into farm fields – thus addressing major criticisms of corn- and soy-based biofuels.

Sapphire says its technology is unique because it produces a fuel that can be used with existing U.S. pipelines, refineries, cars, trucks and airplanes. "We are 100 percent convinced that the only way to address climate and energy security is to use the same infrastructure we already have," Zenk said.

Zenk said his company is supported by major oil companies. Its newly appointed president, C.J. Warner, is a 10-year BP executive.

"They really like us because we're providing them with what they do today, which is refining crude oil," Zenk said. "It's not ethanol, it's not biodiesel. It has the same molecules as gas, diesel or jet fuels."

The company's jet fuel was tested earlier this year by two of three airlines testing the commercial use of algae-based fuels in flight. Continental Airlines reported that the Boeing 737-800 test flight on Jan. 7 was successful. That test was the first commercial airline test of algae-based biofuel.

"Continental's primary role in the demonstration was to show that the biofuel blend would perform just like traditional jet fuel in our existing aircraft without modification of the engines or the aircraft," said Holden Shannon, Continental's senior vice president for global research and security, during a congressional hearing last month. "This is important because ... the current engine and airframe technology is unlikely to change materially for many years, so it is crucial that alternative fuel be safe for use with the current aircraft technology."

Zenk said the test flight showed that algae fuel gets better mileage than petroleum-based jet fuel. "We noticed a 4 percent increase in energy density in the fuels because of the lower-burning temperatures in the engine itself, which resulted in greater fuel mileage," he said.