In the laboratory, algae shows more promise than any other biofuel, producing more oil per acre than any other feedstock. According to some estimates, it could produce anywhere from 20,000 to 100,000 gallons per acre a year compared to corn's 20-30 gallons.
So, why isn't it fueling airliners and cars around the world?
Because of the financing valley of death – the difficulty that experimental projects, no matter how encouraging, have in obtaining the considerable investment needed for a commercial launch.
With the financial crisis drying up funding for new green technologies even further, lawmakers are recognizing the need to step into the breach.
A movement of lawmakers, energy companies and environmental groups is now promoting the creation of a federal green bank that would finance clean energy and energy efficiency projects.
Two bills for a green bank are currently being considered by committees in the House of Representatives:
A proposal by Reps. Jay Inslee (D-Wash.), John Dingell (D-Mich.) and Bart Gordon (D-Tenn.) to create a Clean Energy Deployment Administration was attached to the American Clean Energy and Security (ACES) bill, headed for a floor vote this summer. It would provide direct funding and also working with lenders to ensure outside support for clean tech businesses that otherwise would not be able to secure funding.
Rep. Chris Van Hollen (D-Md.) introduced a similar bill to the House Ways and Means Committee last month for a government-owned Green Bank that would fund clean energy and energy efficiency projects.
Van Hollen's Green Bank would have an initial capitalization of $10 billion through the Department of Treasury Green Bonds, with a maximum limit of $50 billion.
To put that in perspective, the Green Bank would start out at a level that is close to half of the total that was invested in new renewable energy projects in the United States last year. According to the 2009 Renewables Global Status Report released by Renewable Energy Policy Network for the 21st Century, in 2008, about $24 billion was invested in new projects, 20% of the worldwide total. The Inslee bill doesn't doesn't specify a funding level for the CEDA proposal.
The poor economy makes a green bank especially necessary, says Reed Hundt, co-chairman of the Coalition for the Green Bank, a consortium that includes a variety of organizations such as the Pickens Plan, the Natural Resources Defense Council, the Department of Energy and companies including General Electric.
"Between now and 5-10 years from now, in this long time period, there is no reasonable prospect of significant new capital investment in new energy capacity in transmission in the United States," Hundt says.
"That's because of three things: Number one, the decline in the economy. When the economy is smaller, we use less electricity. You don't make new capacity when you're using less. Number two, there is no financing available. Companies can't borrow money. And number three, if there was any demand for new capacity, the companies would not be ale to make money on their investments unless prices were raised 10%-20%. This is for any kind of energy at all – whether it's coal or natural gas or LNG for anything."
Both bills would provide financing for a variety of emerging energy technologies – including nuclear and carbon capture and storage projects, which are controversial with environmentalists who say nuclear isn't clean because it creates radioactive waste and that CCS still uses dirty coal.
Van Hollen's proposal specifies that nuclear projects could only receive money after all money previously appropriated for nuclear has already been spent, effectively forestalling any support nuclear for a long time.
The CEDA would support CCS and nuclear, but its focus would be to fund technologies that "will stabilize greenhouse gases, diversify our nation's energy portfolio and increase energy efficiency," Inslee spokeswoman Torie Brazitis says.
Despite the possibility of CCS and nuclear being funded, Hundt says that if a green bank provides financing clean energy at low cost, the country can create alternative energy capacity every year regardless of fluctuations in the economy without raising prices.
One way it would achieve this is with a renewable electricity standard, which is a requirement for utilities to obtain a certain percentage of their power from renewable sources.
"I think if we have a green bank, then we're going to be able to get the votes in Congress for a renewable electricity standard, because there will be a way for companies to meet an RES, to build new capacity without raising prices or going broke," Hundt says.
Environmental players have championed the idea.
Al Gore endorsed Van Hollen's proposal and the Coalition for Green Bank. Inslee's provision to add the Clean Energy Deployment Agency to the climate change bill was popular in the Energy and Commerce committee, passing by 51-6.
Gillian Caldwell, campaign director of 1Sky, a non-profit organization advocating government action to stem global warming, says 1Sky supports a green bank, along with a price on carbon.
"We need to be underwriting the clean energy of the future, particularly renewable energy that is plentiful in this country – whether it's wind, solar or geothermal," Caldwell says.
"The growing trend towards corporate social responsibility and socially minded investment is important. If we get the price on carbon right, you'll see private capital flowing in the direction of a clean energy economy."