Swings in desert temperatures were very disruptive, hostile to many species
This is not a serious problem, because over time the best species will colonize the ponds and you simply harvest the dieoffs.
No, the goal is not to simply get something to grow. The point is to get specific species that produce desired byproducts efficiently to grow. Selection for the environment is one thing, selecting for efficient industrial production is something else. This is one of the differences between basic scientific research that demonstrates feasibility and engineering that produces a product, in academia a certain amount of hand waving, of leaving secondary problems for the next researcher (or engineer), is allowed.
Because the military will do something slow and expensively, it can't be done right?
Like it or not the military is leading the effort to industrialize biofuels and do large scale production. Historically many scientific and engineering advances have come from the military. When the military wants a technology then that field generally advances faster than when left purely to academia and industry. Military involvement is probably very good news for biofuels.
Actually, the best solution would be to produce Butanol. We'd be able to buy that already but a holding company owned jointly by BP and DuPont is suing a company owned by GE ventures to prevent them from selling it to us. It's a less polluting 1:1 replacement for gasoline made by bacteria since the 1800s. The patent should have been denied on the basis of obviousness and it relates to copying the gene for the ABE process from the original organism into basically anything else that might be suitable to carry it, and it was developed at a public university and therefore partly with our money (yours and mine.)
Many public universities retain patents related to any research done by their faculty or students. Licensing is a source of revenue, in theory reducing the amount of taxpayer revenue to run the place. At the University of California 50% of licensing fees go to the statewide university system, 25% to the department of the researchers and 25% to the researchers themselves. Researchers are required to report anything that is remotely patentable, a special department handles all the legal BS. The university does give small and/or local companies preferential pricing and consideration with respect to licensing fees, hoping to promote a local cluster of expertise.