Second-generation biofuels developed from willow and straw at sustainable bioenergy centres may be used to power cars of the future.
Thanks to a £27million grants from the Biotechnology and Biological Sciences Research Council (BBSRC), Britain will be at the forefront of ground-breaking research.
It involves converting plant sugars into butanol and ethanol, which is more efficient and environmentally friendly than first-generation fuels made from maize.
Scientists have said that the motor industry will need to modify engines if they are to run entirely on these second-generation biofuels.
But science minister Lord Grayson, who runs a specially converted racing car on second-generation biofuel, said he hoped the new fuel could provide an answer to the UK's energy needs.
He said: "Our target is to generate 10% of energy production from renewables by 2010, part of our overall target is to reduce by 80% our CO2 emissions by 2050."
He said that the BBSRC investment not only addresses climate change but also plays to a UK strengths in basic research, development and manufacturing technologies.
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