One of the challenges is selecting a species that produces the right lipids at the right rate, said Mark Riley, professor and head of the department of agricultural and biosystems engineering.

"We can look at algae that grow very quickly, but they generally make very little oil. Or there are algae that grow really slowly, but they make a lot of oil. So the challenge is how to mix the two of those characteristics to maximize the amount of oil."

"One of the ways to try to stimulate the algae to produce a lot of lipids is to deprive them of one resource," said Riley. "The idea is to give them some sugar or a lot of sunlight, and then not give them nitrogen because they need nitrogen to make protein and they can't replicate unless they can make protein. What happens is the algae keep running photosynthesis and instead of being able to replicate they store all of those compounds inside their cells."

"Ideally what we want to do is control how the algae work so that they grow a whole lot, and then we say: ‘OK, you're done growing, now it's time to start making lipids,'" said Riley.

"We also look at life cycle assessment," said Ogden. "We look at the impact of the entire process on the environment, everything from the nutrients that the algae need, such as phosphate, nitrogen and carbon dioxide, through the actual processing. We're trying to understand how to optimize production from what we learn in the lab and apply that knowledge to methods for mass production of algae."

Obviously, if you want to produce enough biodiesel to power a truck, you're not going to get very far on a few flasks of algae.

There are two ways to mass produce algae: In outdoor open ponds or inside a container called a bioreactor.

The researchers are experimenting with the first option at an outdoor facility in Tucson, Ariz. However, controlling environmental factors becomes much more difficult with the larger-scale, outdoor operation.

"The water, the sunlight and the ambient temperature are all factors you want to keep in a fairly narrow range," said Riley. "One of the problems in these large ponds is just the temperature change from day to night. If the liquid gets too hot, then you kill the algae. If it gets too cold, then you decrease their rate of growth and their rate of metabolism."

The second option to mass-produce algae involves a bioreactor.