While tens of millions of dollars are being spent on refining the process of turning cellulose into ethanol and using algae to produce biofuel or hydrogen, one company is diving deeper into the biological building blocks.

Researchers are trying to genetically modify existing organisms such as algae or corn to improve their efficiency in creating energy. But Synthetic Genomics, Inc., run by gene doctor Craig Venter, wants to custom make the basic building blocks of DNA and use them as the basis for new life forms -- microbes that can turn organic feedstock such as plants or water into fuel.

So rather than take the best of the known biological world and tweak it with better genes, Venter's crew is starting with a clean slate and building the most desirable organisms for producing energy one DNA strand at a time. This idea is a scary as it is potentially lucrative. Genetic engineering has its detractors because of the potential for unexpected consequences such as GMO crops growing out of control or unknown health problems once the organisms are let loose in the environment. Creating new life forms magnifies these valid concerns even more. The potential for generating nearly free energy from "nature" is huge, but we need to proceed in developing new microbes very cautiously.

The folks at VC firm Draper Fisher Jurvetson are paying attention (you can watch their comments at about 5 minutes into this interview via GigaOM TV) as are many others in the investment and science communities.