I saw this today at TPM and got a little bit of that SIWOTI syndrome.
I'm basically an algae fuel skeptic, primarily as a result of knowing and speaking to people involved in algae fuel research and development. There are plenty of different approaches people are trying to extract fuels from algae, but broadly speaking some companies try to use photosynthesis of the algae to create fuel, while others use feed stocks like sugar to grow the algae in tanks. On the back end, some companies try to extract extract the lipids while others try to ferment the biomass. There are significant drawbacks to all such approaches, and they are only economic in so far as the value of the liquid fuel is at a large premium to the actual energy content thereof. Furthermore, the scale of co-product markets is simply not commensurate with the scale of co-products to be generated were algae based fuels to be produced at real scale, and so one shouldn't expect to get much value from selling them.
Whether photosynthetic or chemosynthetic, algae (or any biological system) is very inefficient converter of sunlight into energy: on the order of 0.1% to 1% efficient. By comparison, even cheap Chinese multi-crystalline solar panels are already 12%-15% efficient (of course, electricity is not equivalent to fuel). Chemosynthetic algae feed from grown feedstocks just passes the buck upstream with additional losses (and way more water consumption). My own personal hope for a renewable fuels to supply our liquid fuel infrastructure would be either thermochemical reactors or photochemical processes, as are being explored at the new DOE energy hub the Joint Center for Artificial Photosynthesis.
So yeah, as long as the Navy or some large airline wants to be particularly "green," they'll be willing to spend the money for some algae fuels. But I think the odds are very long that you'll ever fill up your sedan with the stuff.
