A bill being considered in the U.S. Senate would put algae-based biofuels on par with cellulosic biofuels in federal tax credit programs.

On Sept. 27 the U.S. House passed the Algae-Based Renewable Fuel Promotion Act (H.R. 4168), which would allow algae-based renewable fuels to qualify for the cellulosic biofuel tax credit and would allow production facilities - including wastewater treatment plants - to access a $1.01 per gallon production tax credit.

Sponsored by New Mexico Congressman Harry Teague, the bill would amend Internal Revenue Codes to include algae-based biofuel for purposes of the cellulosic biofuel producer tax credit and would allow accelerated depreciation of property used to produce algae-based biofuel.

In November 2009 the largest wastewater algae to bio-crude oil demonstration project in the world opened in Christchurch, New Zealand. The project is expected to produce 150-300 tons of algae annually from the 45-mgd municipal plant's algal ponds. The algae could be converted into 275-550 barrels of bio-crude oil.

Closer to home, Houston-based start-up Sunrise Ridge Algae Inc. is testing similar technology at the City of Austin's 1,200-acre Hornsby Bend Biosolids Management Plant, which receives sludge generated by the treatment processes at the city's two 150-mgd wastewater plants and uses it to create compost for land application and public sales.

Despite its potential, algae-based biofuel has a way to go before it's commercially successful. The U.S. Department of Energy (DOE) estimates that algal biofuels produced in large volumes with current technology would cost more than $8 per gallon (in contrast to $4 per gallon for soybean oil today).

In June, though, the DOE announced that its Biomass Program will fund $24 million for three research groups in Arizona, California, and Hawaii to work toward the commercialization of algae-based biofuels.