This sounds like a potentially promising development:
A San Diego company said Wednesday that it could turn algae into oil, producing a green-colored crude yielding ultra-clean versions of gasoline and diesel without the downsides of biofuel production.
The year-old company, called Sapphire Energy, uses algae, sunlight, carbon dioxide and non-potable water to make "green crude" that it contends is chemically equivalent to the light, sweet crude oil that has been fetching more than $130 a barrel in New York futures trading.
The basic idea isn't new, and has been attracting investment dollars at a healthy clip. Like other biofuels, "oilgae" is appealing because it uses carbon dioxide as an input, giving it the potential to be close to carbon-neutral (although Sapphire wouldn't release detailed information on the carbon impact of the process). Unlike other biofuels, though, this wouldn't displace huge swathes of cropland--the yield per acre is on the order of 200 times that of corn ethanol. It's still in the early stages, and cost competitiveness has been an issue in the past when oil was cheaper, but the fact that it can be used without replacing refineries or cars seems like a good sign.