More hot news from the world of algae. Hey, there’s no oxymoron there: algae is hot, hot, hot. And, apparently, oily.

Sapphire Energy has worked out a way of turning CO2 and water into oil with a little help from their friends, photosynthetic microorganisms like algae. With just three magic ingredients, Sapphire can turn out ‘green crude’, which it dubs “a renewable 91 octane gasoline that conforms to ASTM certification”.

The algae fuel, says Sapphire, is chemically identical and fits with “existing petroleum infrastructure, from refinement through distribution and the retail supply chain”.

It’s got investors all hot under the collar and they’ve decided to spend $50 million on the company.

ARCH Venture Partners is the founding investor, with fellow VCs Venrock and research charity Wellcome Trust getting stuck in.

ARCH managing director Robert Nelsen gushed:

“Sapphire’s interdisciplinary team hit milestones within three months that everyone thought were impossible.We realized at that point we could change the world, so we sat them down and told them, ‘the checkbook is completely open; tell us what you need’.”

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