Coming Soon: $2 a Gallon Diesel From Algae?

Rapidly growing algae and streamlined processes could mean $2 diesel by 2011 or 2012. But hurdles await.

Aurora Biofuels says it has a species of algae that breeds like a rabbit.

The Alameda, Calif.-based company has identified and optimized a genetic pathway in a species of wild algae that effectively turbocharges the growth and breeding cycle of the single-celled creature. As a result, the company says it will be able to double the oil production, and ability to sequester carbon dioxide, of its algae ponds.

“This gets us to 5,000 gallons per acre a year, which we think is economically viable,” said CEO Bob Walsh in an interview.

Just as important, the algae can grow in open air racetrack ponds