In an Australian first, a 400-litre bag of algae has been installed at a Sydney brewery to reduce carbon emissions and produce food, pharmaceuticals and even bio-plastic.

Key points: Algae is up to five times more effective at absorbing carbon than trees

Algae is up to five times more effective at absorbing carbon than trees The 400-litre bag of algae produces as much oxygen as a hectare of Australian bush

The 400-litre bag of algae produces as much oxygen as a hectare of Australian bush Scientists believe an expansion of this project could positively impact climate change

Like all breweries, when Newtown's Young Henrys ferments its beer, carbon dioxide (CO2) is released into the atmosphere.

While crop cultivation and transport are a major part of the industry's emissions, the CO2 from fermenting just one sixpack takes a tree two days to absorb.

Scientists believe algae's ability to consume CO2 and release oxygen could change this.

"One 400-litre bag can produce as much oxygen as one hectare of Australian bush, so it can actually clean up a lot and provide a lot cleaner air," said Leen Labeeuw, a University of Technology Sydney research associate.

"We're actually counteracting part of what we are putting out into the atmosphere and that's really exciting," brewery co-founder Oscar McMahon added.

"So basically, [the algae] is the Yin to the brewery's Yang."

Scientists say utilising algae could make a huge difference to climate change. ( ABC News: Harriet Tatham )

Working towards carbon neutrality

For the brewery, signing on to the project was a decision fuelled by the desire to eventually become carbon neutral.

"We're an owner-operator independent company, and that allows us to run the company in the way that we see fit," Mr McMahon said.

"We see that we should take responsibility for the outputs — the carbon emissions — that our business creates."

Every two to three weeks, the scientists return to the brewery to replace the bag and add the algae organism.

As algae feeds on the C02,it deepens in colour.

"People are coming through and they're asking: 'What is this thing? What's the growing green tube you've got in the brewery?'" Mr McMahon said.

"In sci-fi movies, where they're growing an alien embryo in like a big test tube — it kind of looks like that," head brewer Jesse Searls added.

As the algae feeds on carbon, its colour turns deeper and deeper. ( Supplied: UTS Science )

Plastic made from algae?

While this algal bio-reactor is reducing the carbon floating around the brewery, the ultimate aim of the project is to prove that carbon emissions can be used to create products like food, pharmaceuticals and plastic.

Dr Janice McCauley said despite being at the early stages, researchers were demonstrating that they could produce plastic, but were still working to perfect the product for mass use.

The food and pharmaceutical research, however, was much further advanced, she said.

"Algae use a fraction of the amount of water that's used to produce the equivalent amount of product that could be attained from a soy crop.

"But my research in particular looks at using algae to make human supplements that can improve our health.

"Algae can potentially improve our health because they have these molecules that could potentially reduce inflammation within our bodies.

"If we can educate other industries to adopt such technologies, we could have a great effect on our climate," Dr McCauley added.