It's not new. As a matter of fact it's produced today from products such as corn, sugar cane, kudzu, etc. etc.
You're burning in your car right now.
Ethanol.
The government is actually pushing the technology very heavily. Nevada is being considered a very likely source for algae farms to produce Ethanol. You still need gasoline to produce a consumable product. Nevada has enough unused government land to produce enough Ethanol to meet the countries automotive needs. There are problems with running Ethanol however. It has very low lubricity which shortens the life of the engine and compared to gasoline it will take more to burn. It's on a 1.42:1 energy ratio compared to gasoline.
What we will find is the application of alternative fuels will increase. The rising price of gasoline will eventually intersect the falling prices of alternative fuels. That's in regard to the technology to efficiently produce the quantities needed to meet our demand. Interestingly enough the one player in the alt. fuel argument that I don't see making it in the foreseeable future is Hydrogen. Be it ICE or Fuel Cell applications I think there's still not enough infrastructure to consider it a viable source at this point in time.