And then there's algae. While bacteria digest carbon in the form of organic matter, algae can suck it straight from the air, like a freshman with a bong. Here's an organism that can slurp up our biggest waste problem and, through photosynthesis, turn it into two high-value commodities: algae meal, a protein that's already sold in health-food stores as spirulina and chlorella, and algae oil, which can be turned into biodiesel. "Where do you think petroleum came from—ancient dinosaurs?" says Isaac Berzin, an Israeli-born chemical engineer whose Cambridge, Massachusetts–based GreenFuel Technologies has run algae-to-biofuels test projects at power plants in Louisiana, Arizona, and Kansas. "No, from ancient organic material, which was mostly algae. It's how God created the world, right?"

Scientists like Berzin tend to get a little moony over algae: Its cells can divide every six hours and it thrives everywhere from the geysers of Yellowstone to the Arctic to the Dead Sea. "They're very, very adaptive," Berzin says. "And they're kind of cute when you look in the microscope and see them swimming around with their little mustaches." He sent me a video clip that showed algae cells "kissing," and I had to admit they were adorable.

But what really makes biologists salivate is algae's off-the-charts energy potential. If emissions could be pumped right from a power plant's smokestack to an on-site "algae farm"—beds of microalgae suspended in water and exposed to the sun—the algae, with their scandalous replication rates, could turn every two tons of carbon dioxide into 1,500 pounds of protein and 500 pounds of oil.

"If you used algae to mitigate just 20 percent of the carbon dioxide emissions from U.S. power generation," Berzin says, "you'd be producing 2.8 million barrels of biodiesel per day—that's, like, 20 percent of our oil imports. How much do we buy from Saudi Arabia? Less than that." Down the road, a coal plant could get carbon credits for reducing its emissions—the equivalent of, say, $30 per ton saved—while the farmer could sell the algae meal and oil for hundreds of dollars a ton. "That's why the symbiosis is so wonderful," Berzin says. "It's perfect love."

Perfect love, of course, is elusive: Attempts in the 1980s by government researchers mostly used open ponds that required tons of water and raised more questions than answers: What about evaporation? Can you just sieve out algae that's suspended in water? How about flocculation (letting the algae clump and settle)? Most important, how can you bring down "farming" costs enough to deliver the algae oil for $1 to $2 a gallon? Some 200 startups are racing to answer these questions, running pilot projects, chasing investors, and chasing investors some more. To add incentive, the Defense Advanced Research Projects Agency (DARPA), the research arm of the Pentagon, is seeking proposals for affordable ways to churn out thousands of gallons of a JP-8 jet fuel alternative from either algae or biomass.

Researchers, of course, are closely guarding the innovations they're hatching to make algae-based fuel a reality. But some may be closer than you think. Entrepreneurs at one California company, Solazyme, use genetically modified algae to turn switchgrass and woody debris into biofuel, which they're testing in a Mercedes. Berzin's GreenFuel Technologies used giant water-and-algae-filled plastic bags suspended from frames to test different algae species for local site conditions; he calculated yields of up to 1.7 million gallons of fuel a year for every 250 acres of land devoted to algae farming. (Soy, he says, yields 11,700 gallons in a similar space, and rapeseed, a European favorite, 42,800 gallons.) Berzin just signed a $92 million deal to install an algae farm at a cement plant in Europe, and expects to have a commercial contract with an American power plant this year.