The Departments of Agriculture and Energy late yesterday announced they will be doling out a dozen grants — ranging from $1 million to $4 million each — to private sector and university research projects focused on alternative fuels and bio-based products. In total, the departments will give out $24.4 million in funding, part of their standard full-year 2009 budgets, with each project expected to contribute at least 20 percent in matching funds. The projects were selected based on their potential to increase the availability of alternative fuels and bio-based products. Here’s a snapshot of five of the most interesting recipients:

Gevo: The Englewood, Colo.-based startup will receive up to $1.7 million to develop a yeast fermentation organism that can cost-effectively convert cellulosic-derived sugars into isobutanol. This liquid could then be used as a biofuel or as a chemical precursor for certain “high-value” products like PET plastic. Despite the economic downturn, Gevo hasn’t had much trouble raising funding. The startup got a $40 million investment led by French oil company Total SA in April after raising $17 million from Khosla Ventures Virgin Green Fund and others the year before.

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Something’s gotta give. In a time of uncertainty about the future supply and demand for fossil fuels, a surge of activity in energy technology and the prospect of stricter emission regulations barreling down the pike, the global market for transportation fuels is poised for disruption.

According to a new report out this week from technology and consultancy giant Accenture, one or more — but almost certainly not all — of a dozen low-carbon transportation fuels now under development could transform that market (which accounts for about half of global primary oil consumption and up to 30 percent of global carbon emissions) within a decade.

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For anyone searching for a smart critical analysis of the biofuel industry, Robert Rapier’s blog R-Squared has been like a breath of fresh air. The engineer, who has led teams creating biofuel technology at Accsys Technologies, Conoco Phillips and Celanese, has spent years crunching the numbers on the economics of various biofuels on his blog and used the medium to take startups and investors to task for some audacious claims. Well, now the avid blogger has a lead role in a new biofuel entrepreneurial venture that has its own bold vision of how biofuels will fit into the world.

Rapier told us in an exclusive interview last week that he has taken a position as the chief technology officer of Merica International, a company that is building out a vertically integrated approach to sustainable and localized biofuels. Merica, headquartered on the Big Island of Hawaii, will act as a holding company for a variety of companies, Rapier told us, including Forest Solutions, a forest management group, SunFuels Hawaii, a synthetic biodiesel provider, a yet-to-be-named company that will develop a biomass trading platform, and a company that will concentrate on acquiring and developing biomass conversion technologies. In addition, Merica owns parts of several other clean energy companies that will contribute to the company’s vision, like Choren Industries, a German company that makes waste to fuel gasification technology.

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Waiting for the cellulosic ethanol industry to move into commercial production is like watching grass grow. This morning cellulosic ethanol developer Coskata unveiled that it’s demonstration plant in Madison, Penn., is now up and running and ready to produce 50,000 gallons of the biofuel per year. It’s a big milestone for the company in terms of reaching this scale, but the demo plant, which the company is calling a “semi-commercial facility” in the press release, is a far cry from the commercial plant that’s supposed to produce 50 million to 100 million gallons per year and has been waylaid by the bad economy.

Coskata’s demo plant will be a proving ground for its cellulosic ethanol production process and will help the company see if it can reach that landmark $1 per gallon production price, which the company has been touting since it launched back in January 2008. Coskata is working with tech partner Westinghouse Plasma, which is providing the plasma gasification process for the plant, and is delivering the fuel to investor and partner General Motors for testing in flex-fuel vehicle tests at the automaker’s site in Milford, Mich.

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No fewer than 100 large-scale carbon capture and storage projects within about a decade, at a cost of some $56 billion — that’s what International Energy Agency chief Nobuo Tanaka said the world needs in order to help address climate change, Reuters reports. And it’s only the beginning of his vision for a massive carbon capture drive. At the Carbon Sequestration Leadership Forum, a conference of energy ministers taking place this week in London, Tanaka called for 850 CCS projects by 2030 and 3,400 by 2050, with a total investment of more than $700 billion over the next three decades. Those are huge numbers for an experimental technology that has yet to be proven at industrial scale.

The next decade represents a “key ‘make or break’ period” for carbon capture and storage technology, according to a 52-page CCS “Technology Roadmap” out today from the International Energy Agency, and it could open significant opportunities for startups. While large established power companies will likely dominate industrial storage projects, startups with novel chemical conversion technologies like GreatPoint Energy, and startups that recycle the carbon, like algae fuel firms like Solazyme, will likely benefit from the intergovernmental agency’s call to arms.

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Can a plant that grows on arid land and sips salt water be a solution for the growing environmental impact of air travel? That’s what Boeing, Honeywell’s UOP, the Masdar Institute and Yale’s School of Forestry & Environmental Studies are wondering. The group said this morning that it plans to study the use of halophytes, or plants that can grow in salty areas, as feedstock for bio-jet fuel.

Halophytes have been investigated as a third-generation form of biofuels before because the plants don’t compete with food crops for arable land and fresh water (they can grow in oversalinized agricultural land, coastal deserts and other salty areas where few food crops can thrive) and can have a high oil content. Salicornia bigelovii, for example (pictured), which the Boeing-Masdar group plans to study, has about 30 percent oil — making it a potentially rich feedstock for fuel.

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Amyris Biotechnologies, which is developing synthetic organisms to make chemicals and biofuels, is closing in on its third round of funding. The Emeryville, Calif., company announced Thursday it has raised $41.75 million of a targeted Series C round of approximately $60 million. The announcement represents an additional $17 million raised in less than two months.

The news that Amyris was working on the round came out in August, after the company reported to the U.S. Securities and Exchange Commission that it had raised $24.7 million toward an anticipated $62 million round. A few days later, the company said it raised $2.4 million more.

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We’ve heard hardly a peep from BioFuelBox, a 3-year-old biofuel startup backed by Draper Fisher Jurvetson and Element Partners, since it raised its first round of $9.46 million back in 2007. But now the San Jose, Calif.-based quiet company says it’s ready to hit the market in a big way. On Monday BiofuelBox announced it has opened – and begun operating – its first biodiesel refinery, a 1-million-gallon-per-year plant that turns waste grease, oil and fat into low-sulfur biodiesel.

It’s an interesting move at a time when other biodiesel plants are being idled, shuttered and put up for sale. But BioFuelBox says its biodiesel is cost-competitive with diesel from petroleum, that it’s already bringing in revenue, and that it expects to have 10 factories up and running by the middle of 2011, with its first profits early in the same year.

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Judging from the flurry of venture-capital deals, big oil company investments, and attention from politicians on startups creating biofuels from algae, it might seem like the world has fallen in love with the technology to power vehicles with pond scum. But after all of the algae euphoria this summer, we’ve started seeing a few signs of an algae fuel backlash, with several prominent investors publicly questioning the economics of algae fuel.

At the AlwaysOn’s GoingGreen conference, outspoken cleantech investor Vinod Khosla said his firm has aggressively been looking at algae technologies, but hasn’t found one viable plan after looking at “maybe two dozen.” “The economics of algae don’t seem to work,” he said. (You can watch the video here by clicking on “Renewables at Scale.”)

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LS9, a company which is using a genetically modified version of e.coli bacteria to make diesel from biomass, on Thursday announced it has raised $25 million in its third round of funding. Chevron Technology Ventures’ venture capital arm, CTTV Investments, participated in the round, making this the latest biofuel project from the big oil company. In 2008, Chevron announced a development deal with algae-based fuel company Solazyme, and has been working on a cellulosic ethanol joint venture, called Catchlight Energy, with forest-product company Weyerhaeuser.

While having a big oil backer is a good sign for a young startup, LS9’s round was markedly smaller than the $65 million the company was seeking back in February and well below the $75-$100 million it had hoped to raise last October.

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