Approximately 17% of the oil imported into the U.S. for cars, trucks and buses could be replaced by algal fuel by 2020, according to a study by the Pacific Northwest National Laboratory.

Granted, it couldn’t happen overnight. Bringing a new fuel in large quantities into a large economy requires a decade or more and billions of dollars. The U.S. consumes about 21 million barrels of oil a day and over 65 percent comes from outside the country's borders.

Still, biofuel demand, due to rising oil prices and federal and state policies, will grow, and algae remains one of the more promising feedstocks.

"Algae has been a hot topic of biofuel discussions recently, but until now, no one has taken such a detailed look at how much America could make and how much water and land it would require," said Mark Wigmosta, lead author of the study and a PNNL hydrologist. "This research provides the groundwork and initial estimates needed to better inform renewable-energy decisions."

Focusing on open, freshwater ponds, the researchers analyzed the amount of algae that could be grown using current technology and estimated how much water would have to be replaced due to evaporation over a span of 30 years.

Analyzing 30 years of meteorological data, the team determined the sunlight needed for the algae to grow and how warm the ponds would become, enabling the team to calculate hourly algae production at each site. They concluded that 21 billion gallons of algal oil could be produced by 2022 in the U.S. To achieve this production level, algae would have to be grown on land the size of South Carolina. The amount equals 17% of the unrefined oil imported by the U.S. in 2008. In 2009, slightly more than half the petroleum consumed by the U.S. was from foreign oil.

Less Water

Biofuel production requires very large amounts of water. According to the study, producing 21 billion gallons of algal oil requires 350 gallons of water per gallon of oil, a quarter of what the country now uses for agricultural irrigation. Considering the gasoline efficiency of a standard light-utility vehicle, the researchers estimated that growing algae uses 8.6 to 50.2 gallons of water per mile driven on algal biofuel.

By comparison, data from previously published research indicated that corn ethanol can be made with less water, but showed a larger usage range: 0.6-61.9 gallons of water per mile driven, with the range varying due to several factors, including the differing water needs of specific growing regions and different assumptions and methods used by various researchers.

The study also showed that up to 48% of current transportation oil imports could be replaced with algae, but higher production levels would require more water and land, though, as noted in the study, water requirements could be reduced drastically by choosing facility sites in sunny and humid climates, for example the Gulf Coast, the Southeastern Seaboard and the Great Lakes.

Despite the amount of water needed for biofuel production, algae sources offer several advantages over other biofuels. Algae can produce more than 80 times more oil per hectare per year than, for example, corn. What's more, algae are not a widely used food source and are CO2-consuming organisms, making them a carbon-neutral energy source. Additionally, algae can feed off the CO2 emission from power plants and digest common water pollutants such as nitrogen and phosphorous.

"Water is an important consideration when choosing a biofuel source," Wigmosta said. "So are many other factors. Algae could be part of the solution to the nation's energy puzzle, if we're smart about where we place growth ponds and meeting the technical challenges of achieving commercial-scale algal biofuel production."

Environmental concerns and rising oil prices are boosting research and investment in algal oil. Many observers consider algae the best feedstock for producing biofuels. Over 100 companies have announced plans to use algae as a fuel source; some have already completed small manufacturing and refining centers.

Algae Business Rush

Some companies, such as Solazyme, grow algae indoors. Others want to harness sun power to grow algae in ponds or plastic bags. Joule Unlimited, Amyris and Sapphire Energy claim to have genetically modified organisms (GMO) that can produce hydrocarbons with algae, eliminating a production stage, while Solazyme has created genetically-modified microbes that feed on sugar in fermenting kettles.

Whether and how these technologies scale will be worth watching. Joule said that it recently patented a microorganism that can produce the equivalent of 15,000 gallons of diesel per acre annually. Amyris and Gevo have successfully undertaken IPOs, while Solazyme, an algae leader, and Kior, have filed for IPOs. Alltech Algae opened the world’s largest algae production plant in February 2011, in Kentucky. The algae will be used to produce biodiesel and ethanol, as well as value-added feed products.

But algae go further than just biodiesel. Some companies, such as Aurora, have started to develop algae for the food and cosmetic markets.