Blue Sun Energy is working on a project, funded by a federal grant, to find a way to turn the seaweed into a high quality jet biofuel.
"It's probably still several years away before we're going to get to that point," explained Steve Bond, Blue Sun Energy's marketing manager.
The idea of making biodiesel out of algae is not revolutionary, but finding the production process that makes it affordable can make a big difference.
"Algae costs $20 a gallon to produce right now, which is not feasible for regular use. Our goal is to get it under $2 a gallon. We think that's feasible to do," Bond said.
Biodiesel can actually be made from a variety of products from vegetable oil to animal fat. Currently, Blue Sun Energy uses high quality virgin oil from soybean and canola. The company says algae and another option, camolina oil, are both attractive options because they require little water, can be grown during the winter season and are not food crops.
Still, even without the advances expected with algae and seaweed, the company says their biodiesels are already greener and more versatile than other biodiesels on the market.
"We produce a premium fuel that takes care of a lot of the shortcomings of generic bio diesel," Bond said.
The company says its product reduces emissions of pollutants including global
Blue Sun Energy also claims its additive helps boost fuel economy by 7 percent, reduce wear in fleet vehicles and even improve performance in cold-weather conditions.
"Our DTX additive will take you down to -20 degrees," Bond said.
The fuel can be used in any diesel car or truck without making any changes.
"You can pull right up to a retail pump and start using it," Bond said.
That is exactly what the city and county of Denver's trucks do everyday. In 2004, the city hired Blue Sun Energy to provide biodiesel for its fleet of diesel vehicles.
"It's a very easy fuel to implement. You don't have to retrofit your equipment or retrofit your facilities. You just put it in your tank," explained Nancy Kuhn, Denver's fleet administrator.
She says the city decided to switch to biodiesel as part of its Greenprint initiative, an effort implemented by Denver Mayor John Hickenlooper to improve the environment but cutting down on the city's greenhouse gas emissions.
"It's a cleaner burning fuel so we're not putting as many harmful things into the air. The other benefit is it reduces the city's dependence on foreign oil," Kuhn said.
Blue Sun Energy was one of the 50 businesses chosen for the 2009 Colorado Companies to Watch award by the Colorado Department of Economic Development and International Trade. Every Friday 9NEWS is reporting on a new company.