Green energy investment is booming in Washington state, and Seattle-based biodiesel company Imperium Renewables Inc. is helping lead the way. For example, 27 companies focused on alternative energies in Washington raised nearly $400 million in venture capital in early 2007, up from roughly $80 million in early 2006, according to Dow Jones Venture- One and Ernst & Young. One of those companies, Imperium Renewa b l e s , alone raised $113 million to complete a biodiesel refinery in Grays Harbor and to begin work on three more planned by the end of 2008.

The company, founded in 2004 and backed by, among others, Paul Allen, who has the kind of wealth that creates its own weather system, is betting American consumers increasingly want to curb greenhouse gas emissions and develop alternative and local sources of energy to help wean the country off foreign oil.

There are doubters who point to market and infrastructure hurdles. Feedstock is hard to come by, with ethanol's dominance prompting farmers to jettison soybeans - the main source of biodiesel in the U.S. - for corn. Meanwhile, a relatively small number of American automobiles are actually equipped to run on biodiesel. Nevertheless, Imperium leaders say the biodiesel market will come around and they'll be ready to capitalize on it.

Biodiesel consumption is growing rapidly, according to company filings with regulators, increasing from 500,000 gallons in 1999 to an estimated 250 million gallons in 2006. Last August, Imperium completed its Grays Harbor facility, with an output capacity of 100 million gallons a year, and its customers now include Royal Caribbean Cruises, which agreed to buy 15 million gallons of biodiesel in 2007 and 18 million gallons annually for the next four years. And the federal government is helping spur the production of biodiesel by granting a 99-cent-per-gallon subsidy.

A confluence of sky-high oil prices, a desire to develop domestic energy sources and concerns over climate change are opening markets for biofuel development. But prices for corn and canola are also at all-time highs, making it tough on biofuel companies. Imperium's CEO and chairman Martin Tobias resigned suddenly in December (no reason was given), and the company pulled its plan for a $345 million IPO in early January. Nonetheless, Imperium leaders "hope their efforts will further develop economic and environmental localism," says company spokesman John Williams. "By building that [Grays Harbor] facility and creating a market for locally grown canola, they're removing one of the classic constraints to agriculture: 'If I make this investment, how am I going to sell it?'"