Can pond scum become big business?

The general path a new industry follows sees companies form to test an untested concept and then develop methods to make a product to sell. Then an industry association forms and competitors come together to influence policy and build a market. Things are moving so fast in the race to create renewable fuels from algae, proponents of the idea leapfrogged directly to the forming of an industry association phase in May 2008.

In Seattle last week, a group led by representatives from Boeing (NYSE:BA) formed the Algal Biomass Organization (ABO). Along with the Texas-based National Algae Association, which formed late last year, the burgeoning algal biomass industry now has at least two industry associations, although no company is yet able to produce a marketable product or process.

The association’s goal is to help accelerate the development and commercial application of algae biomass. Meanwhile, a handful of market players on the West coast are frantically trying to beat each other to market with the results of their efforts.

One San Diego-based company took the lead in that race on the same day the Algal Biomass Association was announced. Sapphire Energy said it can turn algae into a green-colored crude oil which it can refine into what it says is a renewable gasoline. The company also said its investors were willing to bankroll the company to the tune of $50 million to scale the effort.

ABO was formed to support, and eventually help market, products like Sapphire’s. “Given the…possibilities for algae, and the growing number of companies, technologies and products being developed to address them, it is becoming increasingly important to harness their potential  for use across multiple industries now,” said Billy Glover, managing director of environmental strategy for Boeing and co-chair of the new organization’s steering committee.

ABO grew out of an Algae Biomass Summit held in November 2007. More than 400 people gathered at that meeting and agreed to work together “to collectively push for algae-based energy solutions.” ABO will host its second Algae Biomass Summit in Seattle in October 2008.