Queensland Premier Anna Bligh has announced $166,000 government funding for a project to convert sea algae into biodiesel. The Australian-first project, a joint initiative of James Cook University (JCU) and MBD Biodeisel Ltd, aims to develop a sustainable green alternative to fossil fuels by producing biodiesel for transport and industry. The project would produce 290 million litres (250,000 tonnes) of biodiesel by 2010. "Considering the current debate about agricultural land being used to produce biofuels, algae may well be a significant future alternative fuel source as we set about tackling climate change", Ms Bligh said.

"While most other biodiesels come from agricultural crops like canola, soy and palm oil, algae can be grown with ease in ponds or tanks on poor quality land." According to Ms Bligh, the process, now being trialled in Europe and the United States, can also produce algal cake as a by-product for animal feedstock which could help drought-proof Australia's livestock industry. MBD Biodiesel director Marc Stammbach welcomed the Government's funding plan, saying it was a significant step towards establishing a biodiesel plant and algae farm in Townsville. "The first stage will be the identification and development of suitable algae strains to achieve stable, continuous, high yield algae production", Dr. Stammbach said.

"Next year we plan to build a 35,000 tonne algae pilot farm followed by a 400 hectare algae farm by 2010 which can ultimately consume in excess of 2 million tonnes of carbon dioxide and provide algae oil for a 250,000 tonne biodiesel plant." Professor Rocky de Nys, head of aquaculture at JCU, said the environmental benefits of using algae to create biodiesel and feedstock are enormous. "Algae require large volumes of carbon dioxide to grow which means less carbon dioxide is release into the atmosphere so it will make sense in future to situate such farms near major industry and power station," Prof de Nys said. "Companies that do produce carbon dioxide will eventually be able to claim carbon credits as the carbon dioxide can be stored or captured and released into algae farms."