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San Diego, Silicon Valley of Algae Innovation?

San Diego, Calif., has one very high-profile player in the algae game — Sapphire Energy, which counts Bill Gates and the Rockefeller family among its backers and has the ambitious goal of producing a million gallons of algae-based diesel and jet fuel per year by 2011. But does the San Diego region have what it takes to become the Silicon Valley of algae innovation?

San Diego Mayor Jerry Sanders, along with scientists and administrators from UC San Diego and the local Scripps Research Institute, seem to think so. They announced plans this week to build up a broad public-private effort to develop transportation fuels from algae, primarily through the recently created San Diego Center for Algae Biotechnology.

Of course, innovation happens all over the world — but those who reap the rewards of it in a particular industry at a particular time in history tend to be centered in a relatively tight geographic area. As reporter Pascal Zachary put it in a 2007 New York Times piece that’s still well worth the read, “Give birth to an information-technology idea in Silicon Valley and the chances of success seem vastly higher than when it is done in another ZIP code.”

So, if you give birth to an algae idea in San Diego during the next decade (the time frame UC San Diego Chancellor laid out for the region to become “a major center for renewable energy development”), will the chances of success be vastly higher than they might be in other areas? We can’t say for sure, but according to the non-profit National Algae Association’s founder and executive director, Barry Cohen, the region will at the very least have some serious competition.

Sanders said in this week’s release from the university that San Diego boasts a “unique combination of life science research institutions, biotechnology companies and venture capital support to lead the nation in the development of this environmentally friendly source of transportation fuel.”

But Cohen thinks it’s missing a critical piece that Texas has in spades: Big Oil. Chevron (s cvx), Shell (s rds.b), ConocoPhillips (s cop) and BP (s bp) have all invested in algae fuel research over the last two years, and if they manage to commercialize it, Cohen said the oil pipelines, heavy manufacturing equipment and other infrastructure in Texas could lure them to set up production in the Lone Star state.

The federal government, meanwhile, is putting its money — well, $2 million-$5 million of it each year for five years — on St. Louis, Mo. The Department of Energy announced this week that the Center for Advanced Biofuel Systems in St. Louis was awarded one of 46 Energy Frontier Research Center Awards (we wrote on Tuesday about two of the 46 awards, for carbon capture at the Berkeley Lab).

What San Diego does have is the Imperial Valley, a desert that has been used for algae ponds. But as the industry moves toward closed-loop photo-bioreactors and away from open ponds in pursuit of more algae per acre and less risk of contamination, Cohen said, that natural resource may not mean as much when it comes to building up production.

Then again, Silicon Valley doesn’t do much of its own production anymore, either. Chip-making shifted largely overseas more than a decade ago. So how about the intellectual capital? San Diego’s biotech industry and scientists could develop algae strains and processes with higher yields. They could patent them, too, Cohen said, “but somebody has to be able to produce at commercial scale for those patents to have value.”

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