That floating green stuff atop the neighborhood swamp may not just be "pond scum" anymore.

In fact, it could be the key building block of a new fuel that potentially could help quench the country's thirst for imported oil, according to preliminary research at the University of Minnesota.

"The success of this technology is extremely significant, since algae could completely replace our petroleum fuel use and improve our environment simultaneously," said Roger Ruan, a U researcher.

After several years of laboratory experiments, Ruan is about to begin a pilot project using wastewater from a sewage treatment plant south of St. Paul on the Mississippi River.

"Harvesting algae for the cosmetics and pharmaceutical industry is already done,'' Ruan said.

This morning, Xcel Energy Inc., in cooperation with the university and the Metropolitan Council, will announce a $150,000 grant toward Ruan's algae-to-biofuels research. The Minneapolis-based utility, the nation's leading supplier of wind-generated electricity, has invested $4.5 million toward algae and other alternative energy work through the university's Initiative for Renwable Energy and the Environment (IREE).

Ruan estimates that it costs him about $20 to produce a gallon of oil-equivalent product now. But he expects costs to drop markedly as he expands to field testing.

The study will start small, using about 200 gallons of wastewater daily to grow and harvest algae, out of about 250 million gallons of wastewater that flows to the plant for processing daily. Ruan, fellow researcher Paul Chen and scientists at the sewage treatment plant see potential for cultivating "vast amounts" of energy-producing algae using increasing amounts of effluent.

"The traditional process of growing algae, using large open ponds, works in warmer climates, but isn't well-suited to colder locations like Minnesota," said Dick Hemmingsen, IREE director. "A closed-loop system utilizing wastewater and the heat produced by treatment plants to grow algae for fuels production is of particular interest for northern regions of the country."

In testimony before a Minnesota legislative committee earlier this month, Ruan estimated that an acre of oily algae will produce 5,000 or more gallons of oil a year. That compares with 18 gallons from an acre of corn, 48 from soybeans and 635 from palm.

The researchers are hopeful that production costs will drop sharply, just as wind-power costs became competitive with oil and gas as production and technology improved over the last 15 years.

A second benefit of algae research lies in reduced greenhouse gas emissions. Along with using nitrogen and phosphorus, carbon dioxide emitted by the wastewater-solids incinerators at the treatment plant will increasingly be captured and used to stimulate algae growth.

That could have significant implications for algae farms adjacent to coal-fired power plants, which generate large quantities of carbon dioxide and waste heat -- both needed to stimulate algae growth. Other researchers, particularly in the Southwest, are working on open-pond algae farms.

Eventually, Ruan believes, domestically produced oil from algae will be competitive with increasingly expensive oil.

Bill to extend wind credit

In front of a new 150-foot wind-energy turbine at the new Maple Grove headquarters of Great River Energy on Monday, Sen. Amy Klobuchar, D-Minn., announced new legislation to promote further development of wind power and other renewable energy sources.

When the Senate reconvenes later this month, Klobuchar plans to introduce the American Renewable Energy Act. The legislation will "create strong, consistent incentives for private-sector investment,'' in renewable energy by extending the federal wind-production tax credit for five years, she said. The credit, which applies to electricity generated from certain renewable energy sources, including wind and solar, is set to expire at the end of 2008.

Klobuchar's legislation would void several "tax giveaways to major oil companies" to pay for itself, she said. A second key provision of the legislation would establish a nationwide standard that requires utility companies to produce at least 25 percent of their electricity from renewable sources by 2025, similar to a bill signed into Minnesota law a year ago by Gov. Tim Pawlenty.

The extended credit and subsidy cuts to the oil industry were stripped from a Senate bill last December after intense lobbying from traditional energy interests and the threat of a veto by President Bush.

Neal St. Anthony • 612-673-7144 •