Imagine having a virtually limitless supply of clean, renewable fuel to run our cars and trucks, a fuel produced from something as noxious and seemingly useless as pond scum.

Fantastic as that may sound, it's no pipe dream to Algenol Biofuels. The three-year-old company aims to make ethanol with blue-green algae, by feeding it a steady diet of carbon dioxide and farm animal waste.

A dark horse in a crowded field vying to develop a new generation of biofuels, Algenol is based in Florida, but its research arm is in Baltimore. In a nondescript brick building by the Jones Falls Expressway, about 15 company scientists and technicians work on what they hope will be an alternative energy breakthrough.

"The most advanced energy is in your backyard - it's right here," Algenol CEO Paul Woods said recently as he showed Sen. Benjamin L. Cardin around the Baltimore lab.

 

Inside the building, a brightly lit, walk-in closet holds racks of beakers, vials and petri dishes filled with green, pink and yellow substances being analyzed by the staff for their ethanol-producing capacity. A large metal canister nearby cryogenically freezes samples for storage.

The focus of the research is not really algae at all, but cyanobacteria, which turn many lakes and ponds a soupy green in summer. Though not technically plants, cyanobacteria are commonly referred to as blue-green algae, since they also use photosynthesis - sunlight - to convert nutrients and carbon dioxide into fuel.

The organisms produce some ethanol naturally, but company officials say they've selectively bred and genetically manipulated them to pump out more. The firm believes it can produce enough to run fleets of vehicles by growing its special blue-green algae in sprawling grids of "bioreactors" filled with sea water. The company announced a year ago that it had struck a deal to build a production plant in Mexico, but Woods now says he hopes to begin building the first facility this year in Florida, with another to follow in Texas.

A native of Toronto, Woods, 47, says he first discovered the process for making ethanol from blue-green algae while studying genetics 25 years ago at Western Ontario University in Canada. But it didn't appear to have much commercial promise until a few years ago, when oil prices began to spike and demand for ethanol grew. Meanwhile, he started a couple natural gas businesses in Canada and the United States.

Like other entrepreneurs, Woods is no stranger to adversity. His last business venture before this one - a natural gas marketing company he launched in the late 1990s - wound up in bankruptcy and was sold in 2000. Woods says the firm was caught in a credit squeeze. He says he retired after that, until launching Algenol three years ago. He stresses that the new company's startup was underwritten with $70 million invested by him personally and a few partners.

"I'm not risking anybody else's money or efforts," he says.

Algenol executives say their process can produce ethanol more efficiently and without the problems associated with other sources of biofuels. Making fuel from algae won't have the environmental side effects of corn-based ethanol, they say, nor will it divert farmland from food production.

In fact, Woods contends there are almost no downsides to his company's process. It will help fight global warming, he explains, because the manufacturing process will consume roughly the same amount of carbon dioxide as the fuel will generate when it's burned.

"Everyone in the world is trying to get rid of carbon dioxide," he says. "We need it."

Indeed, the venture will need large quantities of the gas, not merely what's found naturally in the air. It will either have to generate its own or have it supplied by businesses needing to get rid of it. Woods says his firm's ability to make ethanol affordable likely depends on the federal government requiring industries to reduce their carbon-dioxide emissions.The production plants the company hopes to build in Florida and Texas will need vast tracts of land for row upon row of algae-filled bioreactors, but Woods says the company is targeting desert or arid lands, so no usable farmland will be taken out of cultivation. The ethanol-making process will yield fresh water as a byproduct, he notes, which could be used to irrigate nearby lands.

As for waste, Woods says any leftover animal manure and algae will be processed for use as a fertilizer or soil supplement. The salt left behind from using sea water in the process will be injected deep into the ground - a commonly accepted disposal method, according to Woods.

Algenol is getting help from experts at the Johns Hopkins University and the University of Maryland Biotechnology Institute. Frank Robb, a professor at UMBI's Center for Marine Biotechnology, has been contracted by the company to help with its research. Joseph Katz, a professor of mechanical engineering at Hopkins, has signed on as a consultant, in part to help design the "bioreactors" in which the blue-green algae are to grow.

"Do I believe in this technology? Absolutely," says Katz. "I want to help them ... find a new, alternative source of energy that can be produced at sufficient scales to make a difference," he says.

The odds against such startups are long. There are maybe 150 different companies worldwide pursuing biofuels from algae, according to Al Darzins, a senior manager at the National Renewable Energy Laboratory in Boulder, Colo.

But most of the other ventures are trying to produce fuel by cultivating algae for the oils they produce. Algenol says its blue-green algae will produce ethanol naturally, cutting out costly harvesting and processing of the aquatic plants.

"I'm kind of impressed," says Darzins.

Still, economics, not technology, remains the biggest hurdle, he adds. Various companies have demonstrated that they can produce small amounts of fuel from algae, but none has figured out how to make it at a price that can compete with gasoline or diesel.

"We don't have the infrastructure yet to grow literally thousands of acres, maybe millions of acres of algae," Darzins says.

In time, engineers may figure out how to cut those processing costs, Darzin says, but he predicts it will be at least five or 10 years before anyone finds a way to produce commercial quantities.

Algenol executives contend they have political as well as economic hurdles to overcome - federal renewable fuel standards and mandates that favor corn-based ethanol and so-called "cellulosic" biofuels - those produced from switchgrass or other nonfood plants. Though encouraged by the Obama administration's announcement of funding and technical assistance to develop biofuels, including those made from algae, Algenol's CEO says his company's prospects would be brighter if Congress would "level the playing field" by making tax breaks and production incentives equally available to all producers of ethanol.

That was Algenol executives' motive in inviting Cardin in for a tour of its Baltimore lab recently. The Maryland Democrat, a member of the Environment and Public Works Committee, said he'd see how he could help.

"To have a process that can wean us off imported oil and be easier on the environment," he told them, "is very impressive."