We are still years away from the simple demonstrator (that does nothing else than divide and eat sugar). We're decades from pharmaceutical applications. Biofuel application will arrive after all cars are electric or gone. Venter is only after money to toy with.
I haven't checked the thermodynamics, but I bet if you already have sugar to feed bacteria, you're better of turning it into ethanol with off-the-shelf technology. Bacteria would be useful only if it makes the fuel (whether polysaccharides or methane) from the sun or from wood (digesting cellulose). We're decades away from that. Digesting wood with GM termit symbionts would probably get to the market first. Photosynthesis of diesel through "high lipid" (optionnally GM) algae too. Venter is just a "me too" with a overly expensive pathway on these applications. He may be somewhat more efficient in the end, but he will be there 15 years later (and possibly too late for any kind of market to remain). Pierre
Venter's designers bugs will need a completely closed, sterile environment or they'll croak against the first yeast passing by.
Closed systems algae/bacteria biomass has been tried many times since the 70s. The latest high profile attempt is called GreenFuel and it went splat last July with the VCs firing half of the company and taking over the management to salvage what they can.
The problem is not really the bugs, it's the logistics, making the thing work in real life. Bioreactors are very prickly machines even in perfectly controlled environment like pharmaceutical labs so when you can't control the temperature and the energy input - there, the light -, it becomes a nightmare: explosive growth, die-offs, fouling ...
Plus the economics don't look truly great, just looking at power density. With a good location (300W/m2 avg over 24 h) and a mind-blowing 20% end-to-end conversion efficiency, you get 56 liters of gasoline (34 MJ/l) per year per m2 of bioreactor ground surface (300 * 3600 * 24 * 365 * 0.20 / 34,000,000). That's really not a lot to pay for a fully sterile bioreactor and all the back end, the bug processing and the CO2 capture, even co-located with a CO2 source like a coal power plant.
Unless Venter has a major breakthrough on photosynthesis efficiency and - even more important - on the system integration side of the affair, it's bullshit.
By the way, Venter has competition on the designer bug front, for instance with Solazyme. Interestingly, it looks like Solazyme is moving towards product transformation in closed reactors - bio-diesel from glucose - rather than solar bioreactors. May be Venter should take a hint.
There are also companies like LiveFuels which is trying to revisit the low-cost open-pond approach with lipid-producing algae. Crappy web site but they got $10M funding last year and they have an interesting cast.
