Cyanotech, a maker of nutritional supplements, grows natural algae in outdoor ponds at its facility in Kailua Kona, Hawaii.

Algae fuel or Algal biofuel is an alternative to fossil fuel that uses algae as its source of natural deposits. Several companies and government agencies are funding efforts to reduce capital and operating costs and make algae fuel production commercially viable. Harvested algae, like fossil fuel, releases CO2 when burnt but unlike fossil fuel the CO2 is taken out of the atmosphere by the growing of algae and other biofuel sources. The energy crisis and the world food crisis have ignited interest in algaculture (farming algae) for making vegetable oil, biodiesel, bioethanol, biogasoline, biomethanol, biobutanol and other biofuels, using land that is not suitable for agriculture. Among algal fuels’ attractive characteristics: they can be grown with minimal impact on fresh water resources, can be produced using ocean and wastewater, and are biodegradable and relatively harmless to the environment if spilled.