Controversial genomics scientist and entrepreneur Craig Venter said last week at a conference on the future of energy at the New America Foundation in Washington, D.C. that  biofuels made from algae that will be able to scale, and compete with oil, will have to be synthesized and will not come from nature.Venter said in an interview, “It’s pretty obvious that there’s nothing in the natural world to make the levels that are needed,” and he pointed to algae oil yield volumes needing approximately 20,000 gallons per acre equivalent of algae.

Venter and his research team, of course, in spring 2010, successfully created the first synthetic bacterial cell, which was controlled completely by a synthetic genome. Or as Venter explained it in his recent interview, as the first cell “to have a computer for a parent,” or “designed DNA on a living system.” Venter now says he has increasingly realized that a fully synthetic cell is the way to go to create competitive algae fuel. When it comes to tweaking naturally occurring algae cells, he says, “you’ll never get there with that. We need a fundamental change to how we approach all this.”

To explain the synthetic aspect further, a designer organism can be developed to only perform certain tasks, like converting sugar to ethanol, which would result in a very efficient process. Natural microbes, on the other hand, have other life priorities, like replication. But a synthetic organism can be created to just perform one function only.

Venter’s realization — that creating fully synthetic cells is the way to go — puts a bit of a damper on his company Synthetic Genomic’s partnership with oil giant Exxon, which was potentially a $600 million deal if Venter met certain milestones. Turns out Venter’s current deal with Exxon is to research naturally occurring algae cells only (not synthetic ones), but Venter hopes Exxon will come around to funding the research based on synthetic algae cells. Foreign Policy reporter Steve LeVine describes Venter’s work with Exxon as potentially “stalled.”

One of the dangers of using the synthetic algae cells is the fear that the cells could somehow be let loose on the outside world, which Venter admits could wreak havoc like turning the oceans into a sea of lipids. But Venter says that designing an organism that has self-destructive properties (it can’t live outside a lab, or it dies with a certain time period) could contain such an organism.

Algae oil company Solazyme, went public   this year, and plans to commercialize its algae fuel in the coming years. Solazyme tweaks existing efficient algal strains and grows its designer algae in fermentation tanks without sunlight by feeding it sugar and then using existing industrial equipment extracts the oil. Solazyme’s stock is trading a bit under $10, way down from its IPO price of $18.

Via Gigaom