Algenol and Sapphire Energy Pursue Algae as Fuel

(MoneyWatch)  Using algae to produce fuel has turned out to be one of the most difficult technologies to advance. Decades of government study failed to perfect it, and dozens of startups have made big promises but little progress over the past few years. Yet there's still some progress, most notably from two companies, Algenol Biofuels and Sapphire Energy.

The latter, which rapidly raised over $100 million in venture capital last year, was recently involved in a test flight by Continental Airlines. Trying out biofuels in jets has become a popular PR move over the past few months, but they're generally crop-based fuels. But Sapphire managed to provide half of a fuel mix for a Boeing 737 in a successful flight.

Sapphire is worth keeping an eye on mainly because it recently drew so much attention from investors. The company hasn't talked extensively about its technology, although it did tell me last year that it will grow exotic strains of algae in open ponds of otherwise unusable water.

Algenol, on the other hand, appears to be moving along at a faster clip. The company claimed last year that it would be able to produce a billion gallons a year of algal biofuel by 2012. After that sort of announcement, and given the history of boastful algae companies, it seemed far more likely the outfit would quietly disappear.

But the company just told Clean Technology Insight ($ub. only) that it's already ordering the bioreactors that it plans to grow its algae in, with plans to start production this year. It will place its first US plant in Florida or Texas, and already has one under development in Sonora, Mexico with a company called BioFields.

It's hard to believe in algae given the fuel source's history of failures -- in fact, less than a month ago, one of the oldest companies in the space, Greenfuel Technologies, laid off over half its staff and pushed back deadlines. But with all the effort going into the sector, it wouldn't be surprising to finally see a success, either.