While alternative fuels are being heavily studied for automobiles, we’re now seeing a push from a different direction. The aviation industry has taken an intense interest in the subject, and this might be enough to push biofuels over the edge into economic viability.

The aviation industry produces only about one-ninth as much carbon dioxide as motor vehicles do. However, environmentalists are vocal about emissions from aviation, because they tend to go into the upper atmosphere, where some scientists say the impact is greater. Plus, the industry is growing quite rapidly.

Unlike the automotive industry, airlines have actively sought to reduce their emissions. Over the last 30 years, U.S. car manufacturers haven’t cut motor vehicle emissions at all – while civil aviation has cut its environmental impact by 70 percent (as measured per passenger mile).

More to this point, the industry is eager to continue its aggressive carbon-cutting. The Air Transport Association wants to cut emissions by 30 percent per passenger by 2025. Meanwhile, the Commercial Aviation Fuels Initiative (an alliance of industrial companies, university researchers and various government agencies), is working to establish a purely biological jet fuel by 2013.

So why should we care? Because this is a huge technical challenge. Jet fuel has to be very energy-dense since a plane has limited volume and weight capacities in its tanks, and a fuel containing less energy will reduce the aircraft’s range. This means ethanol and other currently available biofuels won’t work as jet fuels.

Plus, ethanol and other biofuel crops can’t be cultivated in large enough quantities for the volume of fuel required. According to some estimates, we would need to convert the entire continental United States over to corn production if we wanted to fly airplanes with corn ethanol.

Aviation companies know all this. That’s why they are intensely studying “second generation” biofuels, such as nut oils from jatropha curcas (Barbados nut) and babassu. These oils are more energy-dense than ethanol. As a bonus, many of these oils cannot be consumed by humans, so we wouldn’t be making fuel from food.

Even these oils can’t supply all of aviation’s needs, though. Most industry experts agree that the best long-term solution is likely to come from algae. Algae can produce an oil yield up to 15 times that of other biofuel plants. In theory, every airplane in the world could be supplied by a total cultivated area the size of West Virginia. Plus, some algae actually consume greenhouse gases during their cultivation, rather than producing it (as corn ethanol production does).

Industry experts say the upside is tremendous.

“Airlines, along with airframe and engine manufacturers, have made enormous strides regarding efficiency, but the industry still runs on oil,” said Seth Kaplan, managing partner of Airline Weekly, an industry publication. “It makes environmental and economic sense to reduce dependency on this one commodity, and whoever can develop a viable alternative will have a lot of eager customers.”

A huge amount of money is about to be spent on this problem. The solution that emerges will be deployed on a worldwide scale. The company that creates that solution will be the next Microsoft or Google.

James DiGeorgia is editor and publisher of the Gold and Energy Advisor Newsletter and the author of the popular book, The Global War for Oil.