Posted By Steve LeVine, Foreign Policy Magazine

Prizes are a much-ballyhooed notion for how to produce big technological breakthroughs. Most recently, the federal government last week launched Challenge.gov, a website posing cash challenges from government agencies.

Tomorrow, the X Prize Foundation (above) will announce the winners of a $10 million contest for a 100-mile-per-gallon car. With all the hoopla and celebrity surrounding the idea, it couldn't have been long before venture capitalists sought a way in on the action. So it is that today a fellow named Matt Peak dropped by the office to discuss a new venture fund seeking to do just that. It's interesting for our purposes because the first prize Peak is talking about offering is $10 million for recycling the carbon emissions of coal-fired power plants.

Peak works for Prize Capital, a San Diego-based firm run by an entrepreneur named Lee Stein, whose idea is to leverage the motivations and requirements of the world's inventor class: Big Cash. In a nutshell, a $10 million prize sounds sweet, and garages have been oh-so-poetic ever since Hewlett and Packard (I wrote The Oil and the Glory next door to their garage, by the way, on Addison Avenue in Palo Alto). But these days how does one realistically finance an expensive experiment, such as recycling coal emissions? Prize Capital plans to offer up investment money to competitors in prize competitions in exchange for a passive share (meaning no voting rights) in any resulting business enterprise. (Here is an embarrassingly fawning profile of Stein from the Daily Transcript.)

As of now, the idea is in its embryonic stage. The firm is partnering with the X Prize Foundation to run the carbon-recycling competition -- in an email exchange, X Prize chairman Peter Diamandis told me that he's working with Stein on "selected projects" -- with a target launch date in 2012. Stein has raised the $10 million prize money (Peak asked me not to reveal the name of the sponsor). Now comes the tricky part: figuring out the contest rules. This is where the rubber hits the road -- competitors will vie for a prize only if the rules are compellingly intriguing, and the aim seems ultimately reachable.

In this case, the most publicized idea for reducing coal-fired pollution is to sequester it underground. Last week, Energy Secretary Steven Chu went to West Virginia to talk about such potential technology in a public forum with Sen. Jay Rockefeller. But this is politics. Big Coal is mighty powerful in Washington, and so we get these mollifying events while forces elsewhere attempt to develop clean-energy technology that actually has a fighting chance to work.

One notion, which the algae crowd has bandied about for some time, is not to bury the carbon -- which raises a host of skepticism and fearsome questions -- but transform it into something else that can be reused.  For instance, the algae folks suggest capturing carbon emissions in algae, then burning the algae again, followed by another round of algae capture.

http://oilandglory.foreignpolicy.com/posts/2010/09/15/eyes_on_the_prize

Read more on the Carbon Capture and Recycling Prize here.