SAN DIEGO -- A San Diego-based company is getting $54.5 million in federal stimulus funds to turn pond scum into jet fuel, federal officials announced Friday.

Sapphire Energy will use the loan to construct a bio-refinery in New Mexico that will grow algae in ponds, then attempt to process the algae into renewable biofuels, including jet fuel and diesel, according to the U.S. departments of Energy and Agriculture.

The funding is part of $564 million in federal stimulus spending announced Friday by Secretary of Energy Steven Chu and Agriculture Secretary Tom Vilsack for 19 biofuel pilot, demonstration and commercial scale projects.

"Advanced biofuels are critical to building a cleaner, more sustainable transportation system in the U.S.," said Chu. "These projects will help establish a domestic industry that will create jobs here at home and open new markets across rural America."

The projects are part of an ongoing effort to reduce the country's dependence on foreign oil, spur the creation of a domestic bio-industry and create jobs.