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Summary:

Algae into fuels: It might be one of the great green hopes for weaning ourselves off fossil fuels, but it sure won’t come cheap. Aurora Biofuels, an Alameda, Calif.-based startup using biotechnology to create algae strains for biodiesel production, has just announced a new funding round […]

Algae into fuels: It might be one of the great green hopes for weaning ourselves off fossil fuels, but it sure won’t come cheap. Aurora Biofuels, an Alameda, Calif.-based startup using biotechnology to create algae strains for biodiesel production, has just announced a new funding round of $15 million. This third-round financing brings the startup’s total fundraising to $40 million.

This announcement comes on the heels of news that longtime oil exec Robert Walsh has stepped down from the chief executive post at Aurora, and that the startup’s chief financial officer Joe Geesman has retired. Today Aurora’s new chief financial officer, Scott McDonald, (also announced today), said in a statement that the startup has “ample reserve in the bank.” Even so, this latest round will be “critical,” he said, for the company as it “expands its field of operations and further optimizes its technology.”

Aurora says the funding will be used to support “the continued path to commercialization,” a destination that as recently as last summer Walsh said the company could reach in 2011 or 2012.

Aurora — now in its fourth year — has previously told us that it aims to be among “the lowest cost producers” of algae for biofuels, producing algae with 125 times higher yields at half the cost of existing production methods. Some of its biggest competitors, notably political darling Solazyme, have recently won huge government awards that could make that a tough race for Aurora.

The startup is cultivating algae in seawater, on land not suitable for other farming. It plans to build commercial plants next to industrial buildings, such as power plants and factories. Carbon dioxide emissions from the facilities’ smokestacks can then be injected into Aurora’s algae ponds.

Oak Investment Partners led the funding round announced this morning, with additional investment from Gabriel Venture Partners and Noventi Venture.

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