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The algae biofuels sector got a shot in the arm this Tuesday when South San Francisco’s Solazyme (NASDAQ:SZYM) began making its biofuels available for motorists at four Bay Area gas stations.

Solazyme’s product, called Biodiesel B20, is comprised of 20 percent algae and 80 percent petroleum. The best part is that any diesel-fueled vehicle can use this instead — and produce much less emissions as a result.

In Redwood City, this alternative fuel costs slightly less than $4.25/gallon, SFGate reports. That’s quite crucial since that price is nearly identical to the average cost of diesel fuel in the state of California — meaning the cleaner algae biofuel won’t cost an arm and a leg.

The biofuel is created in Solazyme’s Illinois plant and involves a fermentation process based on sugar reactions. The end product can be processed into jet and marine-grade fuels as well as automobile fuels at a biodiesel facility in California, vice president Bob Ames told SF Gate.

Net benefits: 30 percent lesser particulate matter, 20 percent reduction in carbon monoxide, and 10 percent fewer hydrocarbons.

All of this is great news for the State of California, which has emissions regulations that gradually tighten over time — encouraging fuel producers to develop more efficient or alternative fuel technologies. Ultimately, California hopes to transition 80 percent of all new fleet vehicles to clean fuel tech by 2050.

Algae biofuels have long commanded special curiosity and interest from alternative fuels folks. A highly viable alternative to corn-based fuel, specific strains of algae can be grown in enormous ponds, and when fed certain kinds of sugars, they generate combustible oils that can be processed into fuel additives.

This resultant biodiesel, as described earlier, is significantly cleaner than conventional fuels. The real question is how such production can be scaled up to the levels required to supply American demand.

Shell (NYSE:RDS.A), Exxon (NYSE:XOM), and other Big Oil companies are exploring just that; Solazyme, too, has more than $100 million in funding and is presently developing a biofuel facility in Brazil, according to NBC News.

  • Solazyme hopes to commercialize Biodesel B20 sometime in 2013.
  • Solazyme was up 16.36% in morning trading on Wednesday to $8.25.
Source: Solazyme Develops Vehicle-Ready Algae Biofuel