SAN FRANCISCO -- Big oil took a small but significant hit this week when San Francisco Bay Area motorists began filling up their gas tanks with algae, becoming the first private citizens in the world to use a domestically grown product that could revolutionize the fuel industry.
The first alternative fuel made from algae went on sale at four gas stations in what advocates insist is the first wave in a tide of clean fuel that will hit the marketplace.
"Today, at this station, we are putting a stake in the ground," said Matt Horton, chief executive officer of Propel Fuels, as he prepared to fill the first tank with the algae-based product in Redwood City.
The fuel, which is actually 20 percent algae and 80 percent petroleum, is available to any vehicle that runs on diesel, and it spews much less smog and ozone-depleting greenhouse gases, Horton said.
More than a million Californians drive alternative-fuel-ready vehicles, but there is not enough clean fuel, and the supply line is virtually nonexistent, Horton said.
The product, made from algae grown by the South San Francisco company Solazyme, has been used in trials by the military and industrial companies. The pilot program will make it available on the retail market for a month. After a month, a decision will be made on whether to continue offering the product.
The algae fuel, called Biodiesel B20, was being sold for a little less than $4.25 a gallon in Redwood City. That's the same as the average price for diesel fuel in California.
"We're talking about fuels that are offered at standard diesel pricing," said Bob Ames, vice president in charge of fuels and commercialization for Solazyme.
Ames said the algae oil is made in stainless steel vessels at Solazyme's plant in Peoria, Ill., using a fermentation process in which a specific organism, the name of which he would not reveal, is combined with sugar. He said the company tested many strains of algae over the years to determine which one they could reproduce quickly and repeatedly.
The resulting oil is processed into different kinds of fuel, including jet and marine-grade fuels, at a biodiesel plant in California. The end product produces 30 percent fewer particulates, 20 percent less carbon monoxide and 10 percent fewer hydrocarbons than other diesel and biodiesel fuels.
It is an example, he said, of how to use "some of the world's smallest microorganisms to solve some of the world's greatest problems."
The new gas falls in line with California's "low-carbon fuel standard," which forces fuel producers to lower the amount of greenhouse gas emissions in their products 10 percent by 2020. In January, the California Air Resources Board approved strict rules designed to cut in half current vehicle emissions by 2025. It means automakers will have to cut exhaust by two-thirds and begin mass-producing cars that do not run on gasoline.
The idea behind the requirements, which will get increasingly strict as the years go by, is to promote innovation in batteries, hydrogen fuel cells and plug-in hybrid technology and cut the state's dependence on oil. The goal is to have at least 80 percent of the state's fleet of new vehicles running on clean fuel technology by 2050.
Low-carbon biofuels will be part of the solution, according to experts.
Corn, cooking grease, and other products have been tried. Currently, oil companies are experimenting with biofuel blends, including cellulosic ethanol, made from grass, crop stubble or woody plants, but there are questions about whether the supply can meet demand.
There are indications that things are beginning to turn around. Emeryville's Amyris Inc. formed a joint venture late last year with French oil giant Total to bring renewable diesel and jet fuel to the global market.
Propel is trying to provide infrastructure. The company has a network of 29 gas stations where it leases space and offers different types of biodiesel.
Horton said most diesel vehicles could run on 100 percent algae fuel, but doing that would result in higher costs to the consumer. Also, he said, many automakers oppose allowing a mix higher than 20 percent. The goal, Horton said, is to increase the blend as the supply and demand increase over time.
(Contact Peter Fimrite at pfimrite(at)sfchronicle.com Twitter: @pfimrite. Distributed by Scripps Howard News Service, www.shns.com.)