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• Is Bacteria Fuel the Next Big Thing?
  

LS9's world headquarters looks like a dorm room on move-out day. The reception area at the biotech company's San Carlos, California, digs is stark white, unashamedly bare. No one has bothered to spring for prints or posters for the walls, not even from Ikea. Haphazard stacks of boxes line every corridor. It's no surprise LS9 doesn't put much of a premium on appearances--after all, its most important employees are patented microbes too small to be seen. "This is where we grow the bacteria," says Steve del Cardayré, the company's vice president for research and development, leading me to a lab space no bigger than your typical college double. He points to a vat containing an oatmeal-like slurry--carbohydrates derived from plant matter that feed the microbes. "After they're finished growing, all we have to do is take the mixture out and spin it, and density makes it separate into its components."

The most important of those components is 21st-century black gold: a compound chemically identical to the diesel fuel that powers millions of U.S. cars and trucks. LS9 leads the newly emerging pack of companies that, with DNA-engineering technology, are custom-creating potentially lucrative species of bacteria that can manufacture fuel on command. LS9's biggest competitor, Emeryville, California-based Amyris Biotechnologies, recently started making bacteria-based diesel in addition to its longtime focus on developing a bioengineered malaria drug. And biotech's big daddy, Craig Venter, a champion of modifying microorganisms to make fuel, has entered the fray; his latest brainchild, Synthetic Genomics, plans to create bugs that excrete hydrogen and ethanol--though, due to the complexity of engineering completely new organisms, the company likely won't produce any fuel for years. But LS9, founded in 2005, has a head start on its rivals--and is closest to putting bacterial gas in your tank.

As crude-oil prices have risen toward the $100-per-barrel mark, the arguments for alternative fuel sources have grown stronger. "What intrigued me was the strong economic case for bacteria fuel," says LS9 president Robert Walsh, who joined the startup after 26 years at Royal Dutch Shell. Because the fuel produced by LS9's microbes is virtually pump-ready--requiring only a simple cleaning step to filter out impurities--making bacteria fuel uses 65% less energy than making ethanol, which needs extensive chemical processing that drives up its price and damages its good-for-the-planet cred. LS9's finished product also has 50% more energy content--a gallon of bacteria fuel would last your car about 50% longer than a gallon of ethanol. "LS9's fuel has a number of advantages in terms of cost, security of supply, and impact on the environment," says Noubar Afeyan, CEO of Flagship Ventures, one of the VC firms that contributed to the startup's $20 million of funding in 2007. "It offers a commercially attractive path to sustainability."

That path began unexpectedly at Codon Devices, Harvard geneticist George Church's rapid-DNA-synthesis company. Church and his lab staff had regular brainstorming sessions in which they liked to muse on out-of-the-box applications for the technology they'd developed, which allowed them to redesign the genomes of existing organisms with a few mouse clicks. One day, someone suggested engineering a bacterium that could make fuel, since the lab had just been awarded a Department of Energy grant. "We're dependent on petroleum, so we don't need some alternative to petroleum. We need a way to make petroleum itself," del Cardayré says. "Biology can do it. Over the course of billions of years, cells have figured out that hydrocarbons are a good way to store energy."