Algae

Sapphire Energy has received about $105 million in grants and loan guarantees from the U.S. Department of Energy - part of some $600 million in outlays to 18 experimental biofuel sites across the U.S. Sapphire says it will use the money to further its laboratory work and build algae ponds in the New Mexico desert. The company says it can produce an algae-based equivalent of crude oil that can be processed into gasoline, diesel and jet fuel at traditional petroleum refineries – thereby taking advantage of existing infrastructure.

One, global warming and the higher price of gas is prompting consumers and car makers to embrace alternative fuels such as ethanol and butanol.

Second, many believe we can harness microbes to do the dirty work of chemical transformation and fermentation for us. Dyadic International has found a prolific fungus that they believe can transform waste products from farms into fuel, while Microgy has a digester that turns a mix of cow manure and microbes into natural gas.

An acre of algae can produce 50 times more oil than an acre of soy, estimates John Sheehan, now vice president of strategy and sustainable development at LiveFuels.

...And to top it off, algae's not a massive food crop at the moment, so you aren't using a valuable food crop to gas cars.

...An NREL paper on algae--along with research from some of the national labs--forms the basis of a lot of the thinking around algae.