I’ve got a big feature up on Wired Science about the Aquatic Species Program, an R&D effort at the National Renewable Energy Laboratory (née Solar Energy Research Institute) through the 80s and into the early 90s. It’s a case study on how uneven funding can destroy even promising programs. And with the end of the stimulus funding for science in sight, we’ve got to be careful that we don’t yo-yo more good ideas into oblivion.

Another point I tried to make is that we don’t do R&D just to know what works. We also do R&D to know what doesn’t. In fact, the failures are going to outstrip the successes by a wide margin. If billions of dollars go into algae biofuels and they are a long-term loser, that’s a very bad thing for green technology. On the other hand, if algal biofuels are a long-term winner but there is a lot of risk involved in their production because of scanty R&D, then that’s terrible too because our lack of foresight increases the cost of capital and therefore the cost of the fuel itself. Either way, stopping and starting or ramping it up and then letting it trickle away is the worst way of developing these technologies.

Here’s the conclusion:

Just $25 million was invested over the life of the Aquatic Species Program, which is just 5.5 percent of the total money the DOE dedicated to biofuels over that time. Adjusted for inflation, the program’s total budget in today’s dollars was less than $100 million. To put this tiny number in oil industry context, Exxon Mobil made $142 million in profit each day of 2008.

“They came up with this idea and in four years, they almost demonstrated the technological feasibility, and then the funding fell out,” said Johansen, the phycologist who collected algae for the program. “The maximum of funding was about $4 million a year. When I left, it was $800,000 a year. Now, there is all this biofuel work going on, and they are all going back to that public domain research. It kind of drives me crazy.”

The neglect of the Aquatic Species Program and subsequent resurgence of algal biofuel interest is one of many examples that show that the lack of coherent, consistent energy policy has left the world’s most oil-dependent nation scrambling in times of crisis.

Johansen even went so far as to say that “if the Reagan and Bush administrations had not ended” the growth of the algal biofuels program, our country would have algal biofuels now.

Even under far less optimistic scenarios, if the Aquatic Species Program had been fully funded from its start until now, there is no question that we’d know a lot more about the potential, and limitations, of algal biofuels.

Instead, we’re left with some lessons learned, a partially missing library of microorganisms, and a lot of questions that investors and entrepreneurs want answered before the next oil price spike.