For decades, scientists have been trying to harness tiny plants called algae to make fuel. This algae-based fuel could be a viable alternative to the traditional petroleum-based fuel we use today, studies have shown.
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These algae are a huge group of microorganisms that grow naturally over the world, in many different environments — some examples are seaweed (a multicellular form) and pondscum (single-celled algae). Like other plants, algae use the energy from the sun to create sugars, which they live off of. Some of them contain a high amount of fatty molecules, similar to vegetable oils, that can be converted into biodiesel.
Although algae produces some carbon dioxide when burned, unlike fossil fuels, it's carbon dioxide that the algae take in while they are growing. This is great, because when algae farms grow huge lakes and vats of algae to be turned into biofuels, they actually suck the greenhouse gas out of the air.
Algae has many other benefits. Unlike corn for ethanol or soybeans for biodiesel, algae can be cultivated in ponds or even tubes in a fluid containing vitamins, minerals and everything else it needs to grow — it doesn't need soil or fresh water to grow. Huge vats of algae can produce more energy per hectare than any land crop can.
The University of California at San Diego has been at the forefront of this algae biofuel movement over the last year. The center grows algae to show how commercially viable and revolutionary the process is.
Note- The slideshow was corrected for photo and factual errors on 7/30/12.
UC San Diego built these huge ponds along with corporate partner Carbon Capture to cultivate algae and show how feasible it is to turn algae into biofuel.

Source: UC San Diego Center For Algae Biotechnology
These white buckets you see out front are 800-liter ponds used to test out the feasibility of growing algae in different regions. There are 320 mililiters of fuel extracted for each of these ponds.

Source: UC San Diego Center For Algae Biotechnology
These microscopic chains of cyanobacteria (a simple ancestor of algae) produce fuel that could offer a sustainable energy source for the future.

Source: UC San Diego Center For Algae Biotechnology
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