The need for such progress is pressing.  Currently, the ethanol industry in booming thanks to it being a "low hanging fruit" in that it is relatively easy to produce from a chemical standpoint.  However, the demand for sugar crops to make ethanol is driving up food prices. 

Meanwhile, faced with high gas prices at the pump, more and more people are switching to ethanol.  Those who don't are hit with both high food prices and high gas prices.  While long-term solutions like cellulosic ethanol promise a possible eventual solution, there's no sign that they are ready for the market.

LS9 looks to take advantage of this state of crisis and use it to leverage its own unique solution.  LS9 has created special genetically engineered yeast and E. Coli bacteria.  These friendly microbes can take biowaste and weeds (instead of sugar) and use "previously undiscovered metabolic pathways" to convert the sugar components of cellulose into long chain hydrocarbons, resembling crude oil.

Such hydrocarbons are advantageous over ethanol in that they pack a high energy density at a low weight.  They could also be used to make plastic or other petroleum products and be refined using traditional techniques.  The process, according to LS9 is carbon neutral, minimizing its environmental impact.  And its energy efficient -- 65 percent less energy is required than in standard commercial ethanol production.

The company is being extremely secretive about how it modified the microbes -- about the only details available are that it appears that the microorganisms take fatty acids and break them down into hydrocarbons, which are then excreted.  From a chemistry standpoint, this likely involves either breaking off the hydrocarbon chain of triglycerides from their glycol backbones and then decarboxylating them, or cutting a hydrocarbon chain off at an unsaturated carbon bond, effectively splitting the fatty acid chains in two.

If it can live up to its bold claims, the biggest challenge LS9 faces is scaling its top-secret formula up to an industrial production level.  They current have several reactors, the largest of which can make 1,000 liters of fuel.  However to satisfy the millions of oil barrel demand, this would need to expand incredibly.

Whether LS9 can scale its product and keep costs down will likely make or break it.  It faces tough competition from the fuel cell industry and microbial hydrogen.  However, even if it can't find a home in the biofuel production business, it may still hold significant potential for relatively uncharted bioplastics market.