Could the next green fuel be pea-green pond scum?

Supporters think algae could someday be turned into cheap fuel for automobiles and airplanes, and are betting heavily with infusions of venture capital money and intensive research.

About $180 million in venture capital money has been raised for algae research, with more than half coming in the third quarter of this year, according to Cleantech, an industry research group.

Some academic institutes have set up dedicated algae research centers, and a handful of startups are planning to test algae on larger demonstration projects in coming months.

"I'm convinced algae will work, but it'll take a different, out-of-the-box approach," said Silicon Valley billionaire Vinod Khosla, delivering the keynote address at the Algae Biomass Summit in Seattle last month.

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The potential for algae to compete with fossil fuels is there, but it will take scientific breakthroughs to bring down costs and solve climate change, said Khosla, co-founder of Sun Microsystems, whose Khosla Ventures has invested in renewable energy, though not algae.

That hasn't tempered interest in the field.

The federal government is starting to throw money into it. The Department of Energy has invested $2.3 million in algae-to-fuel grants so far this year. It invested $2.2 million in algae research in 2006 and 2007, though it wasn't specific to fuel production.

The Defense Advanced Research Projects Agency, the research arm of the Defense Department, is launching a new program to study algal feedstock material, said Jan Walker, an agency spokesman.

About two dozen startups and researchers are developing ways to maximize growth and reduce costs — including growing it in the dark, increasing the amount of sunlight that reaches the organisms and experimenting with oil-rich strains.

Algae offer the promise of a nonfood feedstock with extremely high yields per acre. But how to grow it cheaply on a large scale is one of the biggest challenges facing the industry.

"We can grow algae. It's been demonstrated," said Al Darzins, a manager at the National Bioenergy Center at the National Renewable Energy Lab in Golden, Colo.

But it costs anywhere from $10 to $100 a gallon now, and "obviously that's not cost-effective," he said.

The Colorado lab led a $25 million study of algae from 1978 to 1996, before money dried up and government research shifted to ethanol.

The lab is now working with Chevron Corp. on a five-year project to research transportation fuels from algae.

But "people are starting to make the move from small little ponds to thinking about acres," Darzins said. "It's starting to scale up."