Two biofuel companies are joining forces to enhance algae's ability to deliver a cheap energy source. Algal biofuel company Solazyme has formed an alliance with transportation-focused BlueFire Ethanol Fuels to develop new oils from affordable sugars.

Solazyme is testing sugars, produced through BlueFire's method, for potential compatibility with its acid hydrolysis process. Algae naturally creates sugar through photosynthesis, but Solazyme directly feeds the algae sugar rather than relying on light, which the company claims is "1000 times more efficient."

BlueFire is one of four ethanol producers to be recognized by DOE awards. BlueFire has received grants for their biorefineries across southern California, working off sorted waste that would otherwise have landed in a landfill.

Blue Fire utilizes a brute force approach that converts a multitude of non-food feedstocks or "green waste" into sugar, which is then used in ethanol manufacturing or in the production of other chemicals. Their first plant is under development in Lancaster, CA and is expected to annually produce nearly four million gallons of fuel-grade ethanol.

Recently, BlueFire CEO Arnold Klann said about the biofuel market, "Banks are not willing to lend... they're risk averse," and he has also expressed concern about investor insecurity. With additional government incentives and popularity growing, perhaps business strategies aiming towards oil independence will receive further interest from the venture capital community.

The recent legislation aimed at establishing a Renewable Fuel Standard and the EPA's further examination of the total lifecycle emissions of creating biofuels could impact projects further funding.

Recognized as a promising innovator recently by the TiE50 competition, Solazyme has remained on the cusp of algal innovations in biofuel. Working with a buzz worthy company like Solazyme may help BlueFire receive some venture capital attention, especially due to the economic challenge of rising construction (steel) costs.

Editor's note: This article was updated to correct erroneous information about relationships between Solazyme and the Pacific Northwest National Laboratory and BP Oil.