VCs plunk more money into algae for fuel

Ah, algae. We've all swallowed a little bit on summer swimming expeditions, but it's gaining prominence in the scientific and venture capital world as a feedstock for alternative fuels.

Solazyme has closed a "significant" round of funding, according to a report in VentureWire, the news service owned by Dow Jones that covers start-ups. Meanwhile, Aurora BioFuels has landed $3.2 million in financing, according to documents filed with the U.S. Securities and Exchange Commission.

These companies, like LiveFuels, believe that it will be possible to produce a synthetic version of petroleum out of algae. A lot of the world's massive oil fields, such as the North Sea Field, actually , executives at LiveFuels have said.

Grown petroleum would have economic advantages over some other alternative fuels, advocates say. For one thing, it's petroleum, so it runs in regular cars. Only 4 percent of cars on the road today can run on fuels that are mostly based around ethanol. Plus, the infrastructure to sell it to consumers exists.

These companies, ideally, will sell their petroleum, or petroleum-making technology, to ExxonMobil and other oil giants that now have to go to democracy-friendly countries like Russia and Venezuela to get gas. Good luck finding an ethanol pump.

Algae gas would put carbon dioxide into the air, but growing it would also consume carbon dioxide: the algae would suck it from the atmosphere while growing. Thus, it's more carbon-neutral than regular gas. With regular gas, oil companies dig carbon up from underneath Earth's crust, and it eventually gets into the atmosphere.

Turning this into an industry will take considerable work, but algae-based petroleum could hit by 2010. Researchers have to figure out optimal growing strategies for the algae, as well as figure out economic ways to convert algae into petroleum. Still, the field is stocked with scientific heavyweights. The science behind LiveFuels comes from Sandia National Laboratories, while Aurora grew out of the University of California at Berkeley.