Algae: the big idea for future energy

Sorry, Africa, but I need your next meal to run my pick-up down to the mall. Just shove your corn in my tank, will you? This thing only does 20 miles to the gallon. Don't blame me, blame all those middle-class Indians and Chinese who want to live like us. They're the reason food prices are rising. What, you're hungry? Can't you call the UN?

The moral dimensions to food and energy prices, and the links between them, are becoming inescapable. There is huge resentment about biofuels at this week's World Food Summit, even though prosperity is the main reason for higher food prices. There was outrage in India recently, when Condoleezza Rice appeared to blame its middle-class for costlier food.

Why shouldn't we eat the same as you, asked Indian MPs. We're still thinner. And why should the West suck up prime agricultural land to grow subsidised biofuels just to keep driving cheaply? It's bad enough that a high oil price makes fertiliser and tractor fuel more expensive. It's utterly irresponsible to burn food to make fuel.

The same blame game is being played with climate change. You've put more carbon dioxide into the atmosphere than we have, say the Chinese. Don't tell us to cool it. Britain, according to Jim Hansen of Nasa, has a greater stock of carbon dioxide on its conscience than any other country, since it industrialised first. You lot started the first industrial revolution, a Brazilian once raged to me. Why can't you start the second? Maybe we can.

While governments wrangle, entrepreneurs and scientists are in a race to reinvent energy, including biofuels. Dot-com billionaires such as Vinod Khosla, of Sun Microsystems, and Paul Allen, of Microsoft, are ploughing their fortunes back into schemes that probably sound as crazy as Google once did. Giant mirrors are tracking the Sun in New Mexico, powered by microprocessors to concentrate the rays. Enzymes are breaking down the non-edible parts of plants to make fuel in Canada.

Algae, that green stuff in your pond, is being used to make biodiesel in New Zealand. Algae can grow almost anywhere, even in deserts. And some species grow so fast that they double in size three or four times a day. According to Fred Krupp, author of the excellent Earth: The Sequel, it would take only 47 million acres of algae to produce fuel for half of America's cars, compared with 1.5 billion acres of soy beans. I never knew pondlife was so exciting.

Algae also eat carbon dioxide at a similarly prolific rate. That makes them multitasking miracle-workers: both a fuel and a way to clean up power-plant emissions. Not surprisingly, several companies are now trying to move from relatively small algae beds to industrial scale.

Solar is another example where science and venture capital converge. Last year I spent a frustrating afternoon with physicists at Imperial College who patiently explained how to make thin films, fabrics, even paint, capable of capturing energy from sunlight. The technology was beyond me. But I did grasp the economics. Making thin films from synthetic materials will dramatically reduce the cost of solar technology.

There are still technical problems with many technologies. With algae, it is how to harvest at scale. With solar, it is how to store the energy efficiently. But the biggest challenge is no longer in the lab. It is lack of capital to get these ideas to scale. Successful internet companies such as Google were launched with millions of dollars. But building solar power plants or biofuel refineries requires hundreds of millions. That means investors taking much bigger risks, in a sector where profits are enormously influenced by government regulation.

What's the answer? You can subsidise particular industries, as Japan and Germany have done with solar. But that means picking winners. Or you can put a price on carbon dioxide. That changes the way that companies compare the costs of building a dirty coal plant with, say, a clean solar one. The EU has already put a low price on carbon dioxide, which it is gradually ratcheting up. John Doerr, the legendary investor who first backed Google and Amazon, has said that a similar cap on carbon in America would make thin-film solar technology competitive with conventional electricity in only two years. Which is why historians may come to see Monday night as a turning point.

The US Senate voted to debate the Climate Security Bill, which seeks to set an overall limit on greenhouse gas emissions, and auction tradeable permits to pollute. The coal states hate it. So does the White House. A vote to debate is not yet a vote to pass. But it is the first time that a Bill to cap greenhouse gases has moved to the Senate floor since it stopped Bill Clinton from ratifying the Kyoto Protocol in 1997. Kyoto was seen as handing an economic advantage to India and China. But this Bill would also penalise imports from countries without an emissions cap. So the unions that fear losing jobs to China and India are now in the same lobby as the greens.

Both Barack Obama and John McCain have promised similar schemes. It looks as though they will face a more sympathetic Senate than Mr Clinton. This is not because America has lost sight of its economic interests, but because its economic interests are now more closely aligned with energy security. And because the race for low-carbon profits is global. China is already the third-largest producer of solar cells, behind Japan and Germany. Denmark is the world's largest producer of wind turbines. Last year Singapore launched plans for the world's largest solar manufacturing facility, to be built by Norwegians.

Everyone wants to clean up on carbon. If we could all stop resenting each other's prosperity, we might just build an economy where the price of oil no longer matters. And where the humble algae could, at the very least, power one person to the shops without taking someone else's food off the table.

Camilla Cavendish