On Monday, the latest entrant in the biofuels sweepstakes takes the wraps off a solar-powered technology designed to transform C02 and sunlight into ethanol.

“We capture the energy of the sun into a solar converter,” says Bill Sims, CEO of Cambridge, Mass.-based Joule Biotechnologies. “Inside exists a solution of brackish or gray water, nutrients and highly engineered photosynthetic organisms that directly secrete biofuels. There’s no intermediary that has to be introduced or processed.”

So far, Joule’s “helioculture” technology has only produced ethanol in the lab. But, says Sims, “We’re moving the lab outside as we speak. We aren’t expecting any surprises.” The company, backed by Cambridge venture capital firm Flagship Ventures, plans to begin construction of a pilot production plant in early 2010.

Like Solazyme and other startups that aim to produce biofuels from such things as algae and wood chips, the advantage of Joule’s technology over corn ethanol is that it does not displace agricultural land used for food production.

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“We wanted to find a way to make new classes of fuels that could be dropped into the existing infrastructure and not limited by arable land or crops,” says David Berry, a MIT-trained bioengineer and a Joule co-founder. “Algae is what we would like to think of as a classic feedstock biofuel. We are going directly from the sun to fuel production.”

Berry and Sims claim Joule can produce 20,000 gallons of “SolarEthanol” a year for every acre of photobioreactors it builds, all at a cost less than the equivalent of oil priced at $50 a barrel. They say the fuel contains 100 times the energy storage density of conventional batteries, making it a more efficient way of storing and transporting solar energy.

Joule will offer coal-fired power plants and other carbon emitters the opportunity to convert greenhouse gases into gas for transportation. But Sims and Berry said the company’s production plants won’t necessarily have to be located next to fossil fuel power stations.

“CO2 is available by rail, truck and pipeline, so we don’t feel particularly hampered,” says Sims, whose previous venture was a LED lighting company.

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Joule isn’t the only company tapping the sun to produce green fuels.

Stealth startup Sundrop of Pojoaque, N.M., last year signed a deal with solar power plant developer eSolar to use its heliostat field and power tower technology. The company, backed by marquee Silicon Valley VC firm Kleiner, Perkins, Caulfield & Byers, has remained close-mouthed about its plans. Sundrop CEO John Stevens would only tell me at the time that the startup “uses low-cost concentrated solar energy to drive renewable energy into fuels.”

Ethanol is just the first product Joule plans to produce. The company has bioengineered other organisms to create 10 chemicals and other fuels in the laboratory, according to Berry and Sims.

“Green chemicals” are expected to be a multi billion-dollar market, and startups like San Diego-based Genomatica have also created bioengineered organisms to produce petroleum-free industrial solvents. Earlier this year Genomatica announced it had made a microbe that ingests sugar and water and secretes methyl ethyl ketone, a solvent used in paint. The company designed the green solvent to be produced at defunct corn ethanol plants.

So far, the dozens of corn-free ethanol startups have produced more press releases than petroleum substitutes in any substantial volume. For their part, Joule executives say they expect to go into commercial production in the second quarter of 2010.

“At that point we’d be ready to drive commercial relationships, partnerships and the like,” says Sims.

Read Todd Woody’s past Green State columns.

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