Today’s alternative energy entrepreneurs may still be early-adopting pioneers, but the the weight of the federal government is rapidly catching up. Nowhere is this more visible than the push for algal fuels – biodiesel and comparable fuels made entirely from the digestion processes of algae.

Two years ago, algae-baed fuel production was just starting out. The industry was speculative, and a few venture capitalists dominated the field. Now the Department of Energy is releasing a $57 million tidal wave of funding for 33 small businesses specializing in alternative fuel production, among them algal biodiesel and algae-based jet fuels for the Pentagon.

Algae is just one of many potential investments for the forward-thinking venture capitalist. Some bioengineers are even aiming for the holy grail of the so-called “Third Generation Biofuels” – producing ethanol from algae without damaging the algae itself. With fewer environmental and economic problems than corn-based ethanol, the case for hard-working algae is beginning to grow on America’s policymakers.