Stories like this provide inspiration for those of us who see a future without reliance on fossil fuels, particularly oil from the Middle East or Russia.

When this city vowed a decade ago to wean itself from fossil fuels, it was a lofty aspiration, like zero deaths from traffic accidents or the elimination of childhood obesity.

But Kristianstad has already crossed a crucial threshold: the city and surrounding county, with a population of 80,000, essentially use no oil, natural gas or coal to heat homes and businesses, even during the long frigid winters. It is a complete reversal from 20 years ago, when all of their heat came from fossil fuels.

But this area in southern Sweden, best known as the home of Absolut vodka, has not generally substituted solar panels or wind turbines for the traditional fuels it has forsaken. Instead, as befits a region that is an epicenter of farming and food processing, it generates energy from a motley assortment of ingredients like potato peels, manure, used cooking oil, stale cookies and pig intestines.

A hulking 10-year-old plant on the outskirts of Kristianstad uses a biological process to transform the detritus into biogas, a form of methane. That gas is burned to create heat and electricity, or is refined as a fuel for cars.

Once the city fathers got into the habit of harnessing power locally, they saw fuel everywhere: Kristianstad also burns gas emanating from an old landfill and sewage ponds, as well as wood waste from flooring factories and tree prunings.

Over the last five years, many European countries have increased their reliance on renewable energy, from wind farms to hydroelectric dams, because fossil fuels are expensive on the Continent and their overuse is, effectively, taxed by the European Union’s emissions trading system.

But for many agricultural regions, a crucial component of the renewable energy mix has become gas extracted from biomass like farm and food waste. In Germany alone, about 5,000 biogas systems generate power, in many cases on individual farms.

This is one of many ways we could be taking advantage of recycling all of the waste we have in this country.

Get ready to hear about the Bloom Box. Beginning with this segment tonight on 60 Minutes, Bloom Energy, a fuel cell company backed with roughly $400 million in venture capital, is unveiling a product that it’s CEO claims can help make the energy grid obsolete. The entire segment is fascinating. On Wednesday the company will have a big press event in Silicon Valley to show off the technology.

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According to Bloom Energy, a Bloom Box is like a small power plant located in your back yard. One of the more fascinating parts of the segment had CEO K.R. Sridhar hold a small stack of plates that he claimed could power a typical American home. If you stack up more of them, you get the Bloom Boxes we saw in the segment that are now being tested by companies like eBay and Google. If everyone has a Bloom Box or something like it, the electrical grid is no longer necessary. That may seem to be far-fetched, but having this option would revolutionize the production of electricity here and around the world.

One innovation seems to be the use of oxygen as opposed to hydrogen, which differentiates this from fuel cells offered by other companies. We’ll probably learn much more in the weeks to come as the world begins to digest the claims being made by the company. How does it work?

Hydrocarbons such as natural gas or biofuel (stored in an adjacent tank) are pumped into the Bloom Box – ceramic plates stacked atop each other to form modules that can be assembled into a unit of any size – and out comes abundant, reliable, cleaner electricity. The company says the unit does not vibrate, emits no sound, and has no smell.

Sridhar, an India-born PhD who once led a team of NASA scientists trying to develop the technology to sustain life on Mars, holds one of the modules in his hand. Stacking them into a bread loaf-sized unit, he says, can produce one kilowatt of electricity, enough to power an American home. Sridhar explains that it has taken so long to produce this contraption because he is building not just a company but an entire industry. “You are used to market sizes that start with a ‘B’,” he told venture capitalists when the company launched in 2002. “This is a market size that starts with a ‘T’.”

This Forbes article goes on to explain that there’s still some healthy skepticism about Sridhar’s claims and they note that the company has lost millions, but that really isn’t relevant. The key here is cost, and if these boxes produce energy cheaply, the sky is the limit.

There are all sorts of rumors about a huge government contract and big orders from other companies, along with possible DOE stimulus funds.

This part of the 60 Minutes segment tells me that the Bloom Box can be a game-changer.

Another company that has bought and is testing the Bloom box so Sridhar can work out the kinks is eBay. Its boxes are on the lawn in the middle of its campus in San Jose.

John Donahoe, eBay’s CEO, says its five boxes were installed nine months ago and have already saved the company more than $100,000 in electricity costs.

“It’s been very successful thus far. They’ve done what they said they would do,” he told Stahl.

eBay’s boxes run on bio-gas made from landfill waste, so they’re carbon neutral. Donahoe took us up to the roof to show off the company’s more than 3,000 solar panels. But they generate a lot less electricity than the boxes on the lawn.

“So this, on five buildings, acres and acres and acres,” Stahl remarked.

“Yes. The footprint for Bloom is much more efficient,” Donahoe said. “When you average it over seven days a week, 24 hours a day, the Bloom box puts out five times as much power that we can actually use.”

If costs are that low, the impact might be close to the Company’s aggressive claims.

Read this article about the battle between natural gas and solar power in Colorado and you’ll get a great idea of the complexity surrounding the clean energy issue. Over time, this stuff will get sorted out, and the subsidies for clean energy clearly have a positive impact. That said, there’s legitimate concern that all the competing interests will create a nightmare set of regulations once Congress gets through with the new climate bill.

This presents another compelling case for a simple carbon tax over cap-and-trade legislation.

The New York Times has a cool new story about the development of algae for use as a biofuel. The article explains how a new start-up company co-founded by a Colorado State University professor recently introduced a strain of algae that loves carbon dioxide into a water tank next to a natural gas processing plant.

The story is interesting as it also focuses on the involvement of the Southern Utes Indian community as an investor in the project. But the most interesting element involves the interrelated efforts to develop alternative energy.

One of the keys to new projects is eliminating waste and taking advantage of heat and other byproducts of one energy-generating process and using these byproducts in another process built next to the first process. Here’s a summary of how this will work regarding this algae process.

Solix’s facility project is next to the natural gas processing plant for access to the carbon dioxide waste stream, which will be used to nourish the algae — a kind of biological recycling of carbon dioxide before its discharge into the atmosphere as the vegetable fuel is burned.

The plant also produces waste heat, which could be used to warm the algae beds in winter. In addition, the high desert plateau of southwest Colorado is one of the sunniest spots in the nation, providing solar radiation that accelerates algae growth.

Central to Solix’s business model, Dr. Willson said, is the hope that power plants and other factories now venting carbon dioxide will allow the company to build an algae farm next to their carbon dioxide vent pipes. A plant could sell the oil or biodiesel, and Solix would earn its return by being a part owner-operator, or by licensing the technology.

Conservation and efficiency are the new buzzwords in the renewable energy field (among many). Energy should never go to waste, and many projects that were once too difficult to make commercially viable can have a new life when one examines how to exploit byproducts from well-established processes. The possibilities are endless.