This Small Business Innovation Research (SBIR) Phase I project will employ an innovative approach to metabolically engineer algae and enable low-cost, carbon-free hydrogen production at medium to large scale. One approach to achieving high hydrogen production involves the use of green algae, which produce hydrogen by using sunlight to split water. Hydrogen production in green algae is based on the existence of highly active hydrogen-forming enzymes, hydrogenases. Accordingly, the processes for hydrogen production in algae have utilized mechanisms to prevent the generation of oxygen, which inactivates hydrogenase. However, these processes, based on anaerobic sulfur-deprivation in light have resulted in low yields. The investigation herein will assess the feasibility of applying a novel strategy to direct metabolic flux toward hydrogen production in the presence of sulfur. During Phase I, chimeric genes encoding a hydrogenase and maturation proteins will be introduced into the algae genome. Engineered strains will be evaluated for hydrogenase activity, and hydrogen production levels under typical sulfur-deprivation and sulfur-containing conditions will be determined. We anticipate that this innovative strategy will enable abundant accumulation of hydrogenase in an active form that shifts competition for an electron donor in favor of hydrogenase to continuously generate hydrogen at high rates. The broader impact/commercial potential of this project is the impact on our nation's ability to reduce its use of foreign oil and create many new jobs. This project will expand our fundamental understanding of the function of hydrogenase and light-powered generation of hydrogen in algae. The innovation will enable commercial generation of cost-effective, renewable, and environmentally clean hydrogen. The commercial hydrogen production currently is burdened by major dependence on electricity and carbon dioxide emission. The proposed approach, if successful, provides a commercial process for hydrogen production, which will generate electricity and sequester carbon dioxide. The abundance of low-cost, renewable hydrogen should expand hydrogen markets to generate electricity and fuel vehicles. Just 200,000 ha of algal ponds using improved strains could displace 20% of imported crude oil. Thus, the project will have great commercial impact by enhancing national energy security. Moreover, this technology will promote diversification and sustainability of agricultural production in the U.S. through development of algae farming, which will not require arable land. Potentially, this technology will produce the most ecologically clean biofuel theoretically available. Therefore, this project could have great social impact by decreasing carbon footprint and promoting economic diversification in rural areas