According to Raffaello Garafalo, who is the executive director of the European Algae Biomass Association, it will take around 10 - 15 years to implement the production of fuel from algae on the large scale. Algae figure among some of the earliest living species on Earth, and it is speculated that crude oil (petroleum) may have originated from the decomposition ("cooking") of algae that had become absorbed into porous rock strata over many years. It is thought that although making fuel from algae is currently much more expensive by 10 - 30 times than standard biodiesel, the costs could be brought down to around $500 t0 $550 a tonne, which is about $68 - $75 a barrel, and close to the current price of crude oil.
I have noted previously that the escalation in the price of oil is likely to trigger another recession - a point made by another commentator today. Thus, on grounds of rising oil prices, the literal shortage of oil per se and the volition to cut carbon emissions, making fuel from algae looks to be a good move. There are, it must be admitted, a number of technical challenges that must be overcome before this becomes a practical strategy, but there has been research scale production during the past 5 years or so, and there was a major effort made in the United States, during the aferrmath of the 1973 oil shock, when the price of oil more than quadrupled in the wave of the OPEC nations, who decided to punish the West for its support of Israel over the Yom Kippur (also called the Ramadan) war by restricting the supply of oil by 5%.
Algae can be considered "carbon neutral" since as is the case for other forms of plant-life, they absorb CO2 through photosynthesis while they grow. There are additional energy costs attendant to the farming and processing of algae into fuel, for example by transesterification, as is done for other kinds of plant oil, e.g. rape- seed oil to make biodiesel. Another possible means for converting algae into fuel is through hydrothermal processing, which obviates the need to remove the water from it first, since by heating the raw material under pressure, the water it contains acts as a reactant and breaks the oil into smaller hydrocarbon fragments, which have therefore a higher thermal yield, similar to hydrocarbon fuels from crude oil, e.g. around 42 GJ/tonne over around 36 - 38 GJ/tonne for biodiesel. The energy costs for the latter process may be as low as half that required for the former, and standard procedure.
As I have noted previously, algae can be grown anywhere thus avoiding the competition on arable land between growing crops for food and crops for biodiesel.
(1) "European body sees algae fuel industry in 10-15 years." http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE5526HY20090603
(2) "$80 barrel could trigger new recession," http://peakoil.com/modules.php?name=News&file=article&sid=49343