Professor Wim F. J. Vermaas has just explained to me how his algae “bugs,” as he calls them, can produce the raw constituents of jet fuel as a completely renewable resource.

It’s part of Arizona State University’s Lightworks program, bringing together a slew of disciplines to develop clean power from the sun.

Right now Vermaas and his group, which includes researchers at North Carolina State University (who actually make the fuel from the byproducts of Vermaas’s genetically engineered cyanobacteria) can produce fuel at a cost of about $10 a gallon.

Getting green fuels cheap enough to compete with fossil fuels is a major topic here at the ARPA-E Energy Innovation Summit just outside of Washington. It’s partly a chicken-or-the-egg problem. New power technologies have to be produced in quantity to be cheap enough to compete against well-established petroleum supplies, but they can’t scale up until there is a sufficient market for them.

Participants on a manufacturing panel earlier today proposed a range of government incentives to help things along, including tax breaks for innovative products developed and manufactured in the U.S.