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SAN FRANCISCO (Reuters) - U.S. biofuel company Solazyme Inc said on Thursday it will be providing its algae-derived jet fuel to the U.S. Navy for testing and certification.
Privately held Solazyme will sell 1,500 gallons of the green fuel to the U.S. Navy, which is buying fuel from the San Francisco-based company for the second time.
Earlier this month, Solazyme was awarded a separate contract from the Navy to provide research, development and delivery of over 20,000 gallons of renewable algae-derived fuel for use in Navy ships.
The ship fuel contract is worth about $8.5 million while the jet fuel contract was worth about $200,000, said Jonathan Wolfson, the company's chief executive and co-founder, in an interview.
"This is a step on the road to broad scale adoption," he said.
Both the U.S. military and commercial airlines are keen for new types of green fuels because their ships and planes are less likely than cars to run on batteries or other alternative fuels in the future.
Companies are also racing to find economic ways to turn algae, one of the planet's oldest life forms, into vegetable oil that in turn can be made into biodiesel, jet fuel and other fuels. Such fuels are considered to be net carbon neutral because the algae absorbs greenhouse gases when it grows.
Wolfson said both the airline sector and the Department for Defense were very interested in algae-based fuels.
"They realize jet fuel produces a lot carbon dioxide," he said.
Solazyme, founded in 2003, is currently working to bring down the cost of the green fuel to the level of petroleum, and hunting for a partner to set up a factory for large scale production.
"Since producing the world's first algae derived jet fuel in September 2008, we have focused our research on developing a process to scale production at a commercial level while driving down costs," he said.
Wolfson said the aim was to get a production facility running by 2012 with commercialization by 2013.
The other target was to bring down the cost of the fuel to a range of about $60 to $80 per barrel.
"We are quite close," he said.
(Reporting by Poornima Gupta, Editing by Phil Berlowitz)