Joule Biotechnologies says it' engineering microbes that can make two types of fuel, won't require expensive feedstocks like sugar, and don't have to die after making a batch of fuel.

In the fuel industry's quest for a superbug, it seems to come close.

"We believe we are doing something that is very unprecedented," said David Berry, a partner at Flagship Ventures and Joule's co-founder. "We are not dependent on agricultural land because we don't need a crop."

Joule, of course, will have to prove it can produce fuel on a massive scale – a daunting challenge. The biofuel industry is largely in pre-commercialization stages (see Biofuels: Are We There Yet?). Developing the right technologies and raising enough money to build commercial plants remain big hurdles. And although it's a crowded market, Joule has a few things going for it that make it noteworthy.

First is its ambitions. Cambridge, Mass.-based Joule says that its microbes can make either ethanol or a hydrocarbon, two types of fuels, giving the company greater flexibility in facing fluid market conditions. Most companies are concentrating on one fuel. It will also grow microbes on carbon dioxide and sunlight, potentially cheaper than sugar feedstocks. And it involves fewer steps to coax fuels out of organisms, Berry said. He declined to provide more information about the engineered organisms, though he said they are not algae.

Additionally, the hydrocarbons will not be intermediate chemicals. They will be fuels, which will reduce refining steps. Algae fuel maker Sapphire Energy, concentrating on hydrocarbons, is trying this similar trick. And, like another algae specialist Phycal, Joule won't squeeze the life out of the organism to produce fuel. As a result, Joule won't have to regrow organisms each time it wants to fill tanks, further reducing production costs. Added up, Joule is trying to leap over several goals at once.

The second thing to note is experience. Flagship has already invested in two biofuel companies, LS9 and Mascoma and Berry was a co-founder of LS9.

And, true to the microbial fuel code, Joule it also selective when it comes to handing out details. Founded in 2007, it has already proved that the concept works at its lab in an undisclosed location in the American southwest, said Bill Sims, Joule's CEO. Sims declined to disclose the scale of the lab production.

"There is a big step to go from laboratory to pilot scale to full scale production," said Harvey Blanch, chemical engineering professor at UC Berkeley. Blanch said he suspects Joule's microbes are bacteria. "Whether the whole thing is economical is too early to say."

There are two key parts to making biofuels. They must first convert plants or other types of biomass into sugar. Sugar is then fed to algae, yeast or other microorganisms for the fermentation process. This step typically yields lipids or chemical compounds that would then need further processing to become commercial products.

Some companies have worked out ways to reduce those steps and even engineered their microbes to secrete fuels that do not need that last step of refinement.

Mascoma, Amyris Technologies and LS9 all claim to have a more simplified process. Amyris and LS9's bugs could secrete hydrocarbon as a direct petroleum product replacement (see Amyris: We're Better Than Biodiesel, Ethanol or Gas). LS9, by the way, was co-founded by Berry, who declined to compare LS9 with Joule.

But all three companies' processes still require sugar derived from biomass as feedstock. Making sugar is not a simple process and adds costs to the overall fuel production (see Cellulosic Sugar Could Be Next Sweet Investment).

Joule's process, on the other hand, doesn't require sugar. The organisms would live in a four-foot by eight-foot enclosure that the company has dubbed "Solar Converter," a setup that Berry said would make it easy for Joule to scale its production.

Each Solar Converter would be filled with water and carbon dioxide to spur the organisms' growth. The organisms don't need clean water – the brackish kind would do just fine, Berry said.

Plastic, instead of the more expensive glass, would be used to build the Solar Converter.

Each batch of organisms could secrete either ethanol or hydrocarbon. The microbes and the broth they live in would be taken to a central plant to harvest the fuels, after which the organisms and the broth can be returned to the Solar Converters, Berry said.

Controlling growth and harvesting could pose a serious challenge, Blanch said. GreenFuel, which also used carbon dioxide to grow algae, had a hard time controlling its algae's growth and shut down after it couldn't raise enough money to continue (see GreenFuel Technologies Closing Down).

"It's going to be expensive to recover the materials out of the water – that would be a major difficulty, I suspect," Blanch said.

Keeping the broth free from contamination would be another challenge. Joule also would have to make sure the carbon dioxide from power plants and refineries to have the right concentration, Berry said.

The company aims to produce fuels at a commercial scale for less than $50 per barrel, Sims said. Each commercial plant would occupy "hundreds of acres," Sims added.

Joule's technology could produce 20,000 gallons of fuels per acre per year, Sims said. That's 10 times more than what Exxon said algae could produce per acre when it announced a $600 million investment to both carry out internal research and development and invest in an algae fuel maker last week.

Joule plans to start building a pilot plant in the first quarter of 2010, Berry said. The pilot plant, which would be consisted of 10 Solar Converters, would then be scaled up to a commercial scale for ethanol production by the end of 2010.

The company expects to build a demonstration plant for hydrocarbon production by 2011.

Sims said Joule has "under 30 employees." He declined to disclose the amount of funding the company has raised, except to say that it is "substantially less than $50 million" and came from him, employees and Flagship Ventures.

The company has applied for a $10 million grant for research and first plant construction, Sims said.