Imagine a process that converts carbon dioxide–a greenhouse gas!–into a biofuel while growing in a pond or in sea water. This would be biofuels nirvana, and it may not be too far from becoming a reality.

Here are a few companies to watch.

Aurora Biofuels is using a genetically modified algae developed at the University of California at Berkeley to efficiently produce biodiesel using CO2 as the feedstock. The Aurora claims the technology can create biodiesel fuel competitive with $50 per barrel oil.

Synthetic Genomics approach does not use algae, but rather, specially created micro-organisms that are built by redesigning the genome almost form scratch. The ultimate goal is the conversion of carbon dioxide into fuels or commodity chemicals using energy from the sun to drive the process. Craig Venter, of genome-sequencing fame, leads this effort with up to $300 million in funding form Exxon Mobil. That kind of financial support gives Synthetic Genomics a good shot at success.

Solazyme was named the Biofuels Digest “Company of the Year,” ranking number one on their list of the 50 Hottest Biofuels Companies. Solazyme has also announced a near-term focus on launching food products produced by algae, with a food oil similar to olive oil as a lead product. This probably stands a better chance of  near-term commercialization since the prices are about 25 times higher than for a fuel. The hope appears to be that cash flow from a large-volume food product will help fund even larger-volume fuel production.

Sapphire Energy is developing a product the company calls Green Crude. The product is green because it is produced by algae from sunlight and carbon dioxide. If successful, Sapphire’s crude product will be refineable into the three most important fuels in use today: gasoline, diesel, and jet fuel. With more than 100 employees and blue chip venture capital support, Sapphire bears watching.

Compared to bio-ethanol companies, algae companies have been lurking in the shadows, but they may be about ready to pounce.

1 Solazyme,2 Poet, 3 Amyris, 4 BP Biofuels, 5 Sapphire Energy, 6 Coskata, 7 DuPont Danisco, 8 LS9, 9 Verenium, 10 Mascoma.

There were a few new names on the list: BP Biofuels was unranked last year and showed up at number 4 this year. Other newbies were further down the list.  Algae companies were strong this year, along with companies showing ability to scale up production for ethanol. We will take a closer look at some of these players in upcoming posts.

The processes uses a material the company calls Recyllose-sewage sludge solids that are high is cellulose. Turning sewage sludge into ethanol offers a big opportunity for Qteros, which is partnering with Israel-based Applied CleanTech to develop the technology. Recyllose is a particularly good type of cellulosic feedstock as it contains very low amounts of lignin, the plant cell wall component that is difficult to degrade. Qteros-ACT scientists claim 120-135 gallons of ethanol per ton of Recyllose, and titers of 9% ethanol currently.

Quoting from the press release: “Our customer is every municipality that has a wastewater treatment plant,” said Jeff Hausthor, Qteros co-founder and senior project manager. “It will provide a value-added product for municipal wastewater plants, thereby making treatment plants much less expensive to run and helping local governments throughout the world with their constrained budgets.”

Israel Biran, ACT’s CEO, added, “It also helps answer the question of what municipalities can do with their sewage sludge, a major challenge now facing every wastewater treatment plant operator.”

There has been a PR blitz over the past 24 hours, and it appears to be well-merited.

I started thinking about this recently when I ran across a phrase on the web site of Joule Biotechnologies. According to the company’s web site, Joule is developing “SolarFuel^TM liquid energy.” I guess it just wouldn’t sound as impressive if they called it a fuel (and the company is assiduously eschewing the term biofuel). But if the so-called “ liquid energy” is not a fuel, what is it? And, just to be clear, the first “liquid energy” product Joule is aiming for is ethanol. This got me thinking that there must be other examples, and some I found are quite creative.

Below is a listing of some phrases from various biofuels companies, followed by my translation of what the phrase really means.

“Liquid Energy” (Joule Biotechnologies): biofuel such as ethanol

“99.7% pure ethanol” (Coskata): ethanol of similar purity to that made by every other bio-ethanol company, after refining

“Tightly protected Intellectual Property” (various): patents are pending

“Consolidated Bioprocessing Method” (Qteros): Their own particular sequence of bioprocessing steps to produce a biofuel

“The New Oil” (Range Fuels): biofuel (but really ethanol in this case)

“Green Crude” (Sapphire Energy): biofuel

“Pond to Pump” (Live Fuels): making biofuel from algae (I kind of like this one)

No Compromise^TM (Amyris): The trademarked name of Amyris’ new biodiesel product that is more like petroleum-based diesel (I like this one, too!)

If you have some other examples, please post in comments.

Sims was only announced as CEO of Joule yesterday, but he is wasting no time in trying to shine a public light on the company, although his comments are not always very illuminating. Joule has developed what it calls a HelioCulture system that concentrates sunlight and relies on a “highly engineered synthetic organism” that is unidentified but is “not algae” to convert CO₂ and nutrients to produce fuels and chemicals. But since no biomass is used, Sims is trying to avoid the “biofuels” moniker and what he considers to be the negative PR that comes with it.

The basic concept is termed “revolutionary” by Sims, and appears to be similar to that of Craig Venter’s company Synthetic Genomics, which recently announced a large commercialization agreement with Exxon Mobil.

According to Sims, Joule hasn’t worked out its business model yet, preferring to wait for the market to determine whether it is better to produce and sell fuels or license the technology to fuels producers, but that didn’t stop Flagship Ventures from making an initial investment that is termed “substantially less than $50 million.”

It all sounds great, but I see one drawback right away. Ethanol is planned to be the first product, and ethanol is a lousy fuel. And, I am sorry about this Bill, but I am tagging this post under biofuels and biofuels companies. I really wouldn’t know how else to categorize it.

A lot of attention has focused on the development of more efficient cellulases and hemi-cellulases to convert cellulosic feedstocks into fermentable sugars. Once this step becomes efficient, biofuels come much closer to a practical reality. Well, a company called HCL Cleantech has just received investments from high profile VCs Burrill & Co. and Khosla Ventures based on a different, enzyme-free approach. HCL Cleantech claims a low-cost biomass to sugars conversion using good, old concentrated hydrochloric acid, offering a process that uses little water and is self-sufficient energetically. As a path to fermentable sugars, the methods would help biofuels development broadly, whether the product is ethanol, butanol, or hydrocarbons. R & D is ongoing in Israel currently, with a pilot plant slated for the USA in 2010. Read the full story here.