An artificial foam inspired by the meringue-like nest of a South American frog has won the 2010 Earth Awards. The foam, which could help to tackle climate change, soaks up carbon dioxide from the atmosphere and generates sugars that can be converted into biofuel.

The Earth Awards were set up in 2007 to bring together green start-ups strapped for cash with investors. Between March and May, over 500 designs were submitted to a panel of judges that included Richard Branson, Jane Goodall, David de Rothschild and Diane von Furstenberg.

The panel awarded $10,000 each to six finalists in August. Tonight, the winning design – a photosynthetic foam developed by David Wendell and Carlo Monetmagno of the University of Cincinnati – was awarded $50,000 at Marlborough House, London, as part of the Prince of Wales' Start Festival.

The foam, which will be installed in the flues of coal-burning power plants, captures carbon dioxide and locks it away as sugar before it has a chance to enter the atmosphere and contribute to climate change. Due to its frothy structure, the foam can be up to five times more efficient than plants at converting carbon dioxide into sugar.

Wendell knows that the foam is manufacturing sugar – glucose – but he hasn't yet managed to extract the sugar in order to convert it into biofuel. Wendell says creating a biofuel like this is desirable as it reduces the pressure to grow biofuel crops on land for crops, and keeps the price of staple foods like cereal and rice down.

The secret to the foam's success is a protein that the Tungara frog uses as scaffolding in its foamy nests. "I read about a protein that the frog uses that allows bubbles to form in the nest, but doesn't destroy the lipid membranes of the eggs that the females lay in the foam, and realised that it was perfect for our own foam. The foam contains a mixture of over 11 different enzymes harvested from bacteria, plants and fungi. It fixes carbon dioxide as sugars like fructose and glucose at a rate that exceeds that found in plants," Wendell said.

According to Rick Fedrizzi, chief executive of the United States Green Building Council, one of the award judges, Wendell's idea and those of the other finalists were "amazing but wouldn't necessarily have seen the light of day without the Earth Awards".

"Cash prizes are great but the real benefit of the Earth Awards is that your idea or technology is recognised by your peers," says Fedrizzi. "Plus you get to network with venture capitalists, who might choose to invest in you at a later stage when your idea is more tangible."

Fedrizzi's favourite entry was the Sustainable Shell, a biodegradable home that can be built from the soil on which it sits. "You might be living in the Serengeti in Africa with access to nothing but mud and water, but by using these design principles anyone can build a strong, sustainable shelter," he says.

Designed by Michael Ramage of the Department of Architecture at Cambridge University, the home will probably be a hit among NGOs seeking to rebuild regions like Haiti that have been devastated by natural disasters. It's also very beautiful, says Fedrizzi: "It brings to mind centuries-old Moorish temples."

Among the other finalists is Jamie Lim, a Malaysian ethical designer who has created a range of sunglasses hand-crafted from bamboo – a fast-growing, biodegradable and low-carbon alternative to plastic. For every pair of "KAYU" sunglasses bought, Lim donates $20 towards surgery that restores sight in the developing world.

Another design recognised by the awards was Arthur Huang's Polli Bricks – a low-carbon form of cladding made from recycled plastic bottles that can be wrapped around buildings to insulate them. They come studded with solar-power LED lights and cost around ten times less than conventional cladding.

Not all of the entries into the Earth Awards were tangible structures, however. The Biomimicry Institute in Missoula, Montana, submitted Ask Nature – an open source digital library that allows people to find out how nature has solved problems that now confront humanity.