(CNN) -- Pond scum. The thought typically evokes images that leave most people cringing, but it may one day occupy an important role in the nation's energy supply.
Algae needs only sunlight, carbon dioxide, nutrients and water to grow.
The current fuel crunch, driven fundamentally by a rising global demand for oil, has spurred debate among consumers, political leaders, academics and entrepreneurs about plausible alternatives.
A good bit of the discussion has focused on biofuels, commonly defined as energy derived largely from plants and crops like corn, soybeans, switch grass among other sources.
"It's become obvious that the biofuels sector is much more viable now that the prices of oil are high," said Beth Ahner, an expert in biological and environmental engineering at Cornell University.
Algae, thought of as pond scum by many people, is an intriguing biofuel prospect, some researchers and entrepreneurs say.
CNN.com producer Cody McCloy, who's driving across the United States in a biofueled diesel-powered vehicle, is a fan of algae-based fuel, after running it much of the day on Monday during his travels through California. See comparison of different alternative vehicle fuels »
"There's no difference running algae than there is running any other biodiesel fuel," says McCloy. "I've noticed very little difference in any of the biofuels that I run in this car or in my 1984 diesel Mercedes that I run at home."
McCloy says he gets a little lower gas mileage occasionally, but biofuel generally runs smoother than diesel. See McCloy's road trip blog
Algae does not need arable land, grows quickly and according to experts has low impact on the environment. Questions remain, however, about the cost of producing algae on a scale large enough to act as a practical alternative to oil for the nation's energy needs.
The simplest explanation of how it works follows this way: Some strains of algae contain high concentrations of oil when compared to other biofuel sources. The specific strains are isolated and then harvested in large quantifies in pond systems or bioreactors. The oil is then extracted, processed and refined into fuel that has the potential for a variety of uses.
The production of algae has several positives, expert say. Algae, at the most basic level, needs only sunlight, carbon dioxide, nutrients and water to grow. And though the pond and reactor systems needed for the mass production of algae require land, algae does not need land to live and grow.
Consequently, a company could set up a facility in land not used for farming, like, say, a desert. "You're not taking space that you grow food crops in and converting them over to a biofuel," Ahner said.
Algae also grows quickly, doubling in size in about a day. Additionally, it has the potential to help mitigate some of the carbon emissions produced by automobiles, households and industries because it consumes carbon dioxide, its proponents say.
But is algae, the simple-celled legend of grade-school textbooks, suitable for production on an industrial scale? "I think that's the million dollar question," Ahner said. There are considerable challenges standing in the way
One is maintaining the "ecological stability" of the algae strains being harvested for oil in pond systems, Ahner said. The strains can be can be contaminated by bacteria, viruses and other algae. You want to "control and manage that because one of the last things you'd want to have happen is a virus come in and wipe out your monoculture," she said.
The biggest obstacle might be the technical and economic viability of setting up and maintaining the infrastructure need for mass production of algae.
The Colorado-based National Renewable Energy Laboratory, a division of the Energy Department, spent more than 15 years researching the promise of algae-based fuel. The project closed in 1996 after the NREL concluded the costs were too high for practical use. The price of oil at the time was about $20 a barrel.
A 2004 study by Michael Briggs at the University of New Hampshire, using an NREL model for algae production, estimated a cost of $308 billion to build enough farms in the United States to "replace petroleum transportation fuels with biodiesel." An additional $46 billion would be needed to maintain them, the study concluded.
In the wake of the current energy crisis, those numbers are beginning to look like a bargain. The United States imported more than 10 million barrels a day last year at an average price of $72 a barrel and the average price of crude oil has hovered above $100 dollars a barrel for the past few months, according to the U.S. Energy Information Administration.
Though large-scale viability remains unclear, big companies and venture capitalists are nevertheless looking in earnest at the possibility of algae-based energy. Chevron and the NREL announced a joint research venture in October 2007, and Royal Dutch Shell announced a month later it was building a facility in Hawaii. In addition, companies like Colorado-based Solix and Massachusetts-based GreenFuel Technologies have been at it for years.
Though Ahner says questions over algae's viability may not be answered for a few more years, in light of the current energy policy rethink she says, "Now is the time to try and find some solutions."
CNN's Miles O' Brien, Marsha Walton, Rachel Oliver and Manav Tanneeru contributed to this report.
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