Could algae power your car? In the search for new energy sources, scientists are turning the green goo into oil.

While the technology itself is not new, Japanese scientists say they believe oil from aquatic algae could become an important raw material as biomass technology improves and the world looks for oil sources other than those in the ground.

Experts also say algae will be a more sustainable biomass source than sugar cane or corn as the global population expands.

“In the short term, we can use farm crops to produce oil, but in the long term, algae will play a vital role because crops will be needed as food,” said phycologist Makoto Watanabe, a professor at the University of Tsukuba’s Graduate School of Life and Environmental Sciences.

While the Fukushima nuclear disaster has prompted vigorous discussion about alternative energy in Japan, Watanabe laments the lack of a parallel debate on replacing crude oil.

According to the Agency for Natural Resources and Energy, more than half of all energy in fiscal 2011 was provided by petroleum, while that generated by man represented a little over 20 percent.

“Where do we find a replacement for petroleum?” Watanabe asked. He believes algae oil is the best alternative.

There are possibly hundreds of thousands of species of algae in nature. Those most suited to oil production are fast-growing species with an oil-rich structure that resists attack by fungi, experts say.

Watanabe works with two species of microalgae, the photosynthetic Botryococcus braunii, and Aurantiochytrium, which feeds on organic matter and can grow without light. Both produce oil that is relatively compatible with existing energy infrastructure.

Researchers and algae oil producers worldwide are trying to bring down production costs so it can compete with crude oil.

“This research development is about how much lower you can drive production costs,” said Tomohiro Fujita, who heads Kanagawa-based Neo Morgan Laboratory, which studies how to improve algal strains.

Comparable to crude oil, algae oil can be refined to produce auto and aviation fuel and can be turned into cosmetics and plastics.

Neo Morgan has teamed up with IHI Corp. and startup Gene and Gene Technology to establish IHI NeoG Algae LLC, a joint venture that researches algae oil production.

Through Neo Morgan’s breed improvement technology, the company modified a strain of Botryococcus braunii suitable for simple, cheap incubators, Fujita said.

He said the firm believes it can produce oil from algae at a cost of ¥500 per liter. Refined regular gasoline sells at around ¥160 per liter.

Discovered by Taira Enomoto, a professor of microbiology at Kobe University, the Botryococcus braunii strain grows so rapidly it can double its volume in two days. It is probably the fastest-growing species identified so far, Fujita said. Other types of Botryococcus braunii typically take about two weeks to double in size.

Moreover, Neo Morgan has come up with a more efficient incubation system. Oil is usually extracted from algae with a centrifuge, but Fujita said the modified algae can be collected using a simple straining method, keeping production costs down.

Still, scientists are struggling to bring costs down to the level of crude.

“Producing oil for fuel is the hardest part . . . if we were asked to make oil that sells for several thousand yen (for uses such as cosmetics), we could do it now. But it is really difficult to bring down the production cost to ¥50 or ¥100 (per liter),” said Fujita.

He said crowded Japan lacks the space needed for large algae plants, so Japanese firms should focus on honing their technology and seek land overseas to keep costs down, adding that IHI NeoG Algae aims to bring production costs down to less than ¥100 per liter by around 2020.

Watanabe of the University of Tsukuba meanwhile, is trying to create hybrid incubation systems that make use of sewage.

He said Aurantiochytrium can feed on sewage treatment byproducts, such as active sludge, while effluent that has gone through primary treatment contains the nitrogen and phosphorus needed for Botryococcus braunii to thrive.

By utilizing these byproducts, which usually go waste, the production costs of algae oil can be reduced, said Watanabe.

Watanabe believes a commercial-scale incubator using existing technology could produce oil at a cost of between ¥500 and ¥740 per liter. He aims to bring that down to between ¥200 and ¥300 by 2020.

“I think we’ll be seeing a price competition of about ¥200 per liter in 2020,” Watanabe said, citing academic studies and forecasts by the U.S. Department of Energy.

But regulations and Japan’s lack of land pose problems for the sector here. Although Japan has much farmland lying fallow, it is protected for agricultural use.

Watanabe said Japan should nurture the algae oil industry by developing uses for its end product instead of only focusing on cutting costs.

For example, since algae oil can be used in the manufacture of high-end cosmetics, there is scope for business models using current production methods, he said.

The government also could work harder to promote the technology, Watanabe said, noting that the annual budget for algae oil research is only a few tens of millions of yen.

Watanabe attributes the lack of government interest to its previous failures with algae. In the 1990s, it unsuccessfully invested about ¥13 billion on the development of algae production technology.

“The Ministry of Economy, Trade and Industry is still traumatized by this”, he said.

But Watanabe warned that Japan needs to act quickly, as other countries, the United States in particular, have been pushing algae oil since around 2007, as oil prices are expected to keep rising and emerging economies will hunger for more petroleum.

The U.S. has spent tens of billions of yen on algae research and on supporting companies involved in it. The Japanese government estimates that algae oil will be in commercial use around 2030.

This lack of drive frustrates Watanabe.

“It’s as if Japan has world-class actors, but there is no stage for them to act on and no script to perform,” he said.

Fujita of Neo Morgan Laboratory said while it is true that the Japanese government invests less than the U.S., it merely reflects a government culture that shies away from spending heavily on projects still under development.

This section, appearing on the second Monday of each month, features new technologies that are still under research and development but are expected to hit the market in coming years.