(CBS NEWS) -- Professor Juergen Polle is packing up his laboratory on a swelteringmorning in New York City, but the beakers and test tubes aren't going onsummer break. The professor of biology at Brooklyn College has run outof funds for his research, and is shutting down his lab until a newround of funding can be found. Polle joins some of the top minds in thenation working to find an alternative for oil -- and he's placing hisbet on algae.

"We cannot fly planes with ethanol. Weneed oil. And algae can make oil as a drop-in replacement for fossilfuel," Polle told on a recent tour of his lab.

Proponentsfind algae appealing because it can be grown in salt water. The race tofind a sustainable alternative to oil has mainly focused on other typesof biofuels, like corn-derived ethanol or vegetable oil, but theseoptions compete with food crops. What makes algae ideal is that it canbe grown in non-arable land. And while it burns carbon dioxide (CO2)like fossil fuels, it requires CO2 to photosynthesize, making it carbonneutral.

So much confidence was placed on the green alternative to oil thatthe U.S. Energy Department has made several investments in algaeresearch. President Obama touted the potential algal biofuel in a 2012speech, when he announced $30 million in funding for similar research.

Obama cited a 2011 report by the Pacific Northwest National Laboratory (PNNL), which suggested that the United States could replace up to 17 percent of imported oil with algal biofuel.However, researchers are challenged by the amount of resources it takesto produce algae oil. The same study said it would take 350 gallons ofwater to produce one barrel of oil.

Polle says researchers are faced with the trial and error ofdeveloping a new process or finding a new way of using algae. Hisresearch mainly focuses on finding the most productive strain of algae,and testing how they grow in different environments.

"It'sthe first time, and the first time is always more expensive than if Irepeated that process," Polle said. "And all of the errors that aremade, they are expensive."

Professor Paul Falkowski,director of Rutgers Energy Institute, says the plight to replace fossilfuels is a battle of man versus nature.

"When we takepetroleum out of the ground, we are buying a resource that was createdmillions of years ago and we don't pay for it. We're using nature'sinventory of carbon," Falkowski told on a tour of RutgersUniversity's Institute of Marine and Coastal Science.

Rutgers,which is one of the largest algae research centers in the nation, istaking a different approach to making algal biofuels competitive withpetroleum. Falkowski's team is working to genetically modify plant cellsto create a more efficient and productive way to derive oil from theautotrophic organism.

"What I'm trying to do here ismake algae make oil for us, 1 million times more efficiently -- tocompete with the product that's in the ground," Falkowski said.

Petroleumcurrently costs about $100 a barrel, while algae oil is about $300 abarrel. Falkowski believes the primary challenge algal biofuels face iseconomics. Either the fuel would to have to be subsidized by thegovernment, or the price of petroleum would have to go way up to makealgae oil a cost-effective alternative.

"Economicsdoesn't trump nature, nature trumps economics," Falkowski said. "Wecan't put carbon dioxide back into the ground faster than we can extractit. But we sure as hell can make fossil fuels go away. It's only amatter of will power, it's not a matter of know-how."

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