Waste materials could be turned into a 'green' fuel for transport using a new process being developed by an Oxfordshire biotechnology company.

Green Biologics, of Milton Park, near Abingdon, has been given a £250,000 Government grant to develop a low-cost 'next generation' biofuel, with another £310,000 coming from shareholder investors and business angels.

Its chief executive, Dr Edward Green, is an expert on using heat-loving microbes, called thermophiles, to ferment the sugars found in plant material into chemicals and biofuels like biobutanol.

Unlike the oil which provides our current petrol and diesel, biobutanol is renewable and does not contribute significantly to carbon emissions and global warming.

Green Biologics has isolated thermophiles from compost and built a "library" of modified microbes that efficiently convert waste plant material such as paper pulp residue into valuable chemicals.

Dr Green said: "Bio-fuels, based on butanol, represent the 'next generation' of liquid biofuels for transportation. We believe butanol will replace ethanol and biodiesel as the bio-fuel of choice within 10 years.

"Butanol is superior to ethanol and offers similar energy per litre to petrol."

He added: "Our production methods will be cheaper, faster and cleaner than conventional processes, which are reliant on the petrochemical industry. And, best of all, our products will be derived from sustainable resources."

Announcing the grant from the Department of Trade and Industry, Minister for Science and Innovation, Malcolm Wicks, said: "The development of biofuels is expected to play a major part in reducing transport emissions post 2020.

"We need companies like Green Biologics to work on developing the technology now needed to make new types of biofuel to help meet our future goals. "Tackling climate change is a huge global challenge.

"We believe the UK must put its best efforts towards developing the new technologies we need to help cut carbon emissions.

"There's also a great economic opportunity for UK businesses in investing in this area."

Biobutanol was commercialised in 1916 to produce acetone for armaments, but displaced in the 1950s by a cheaper petrochemical method. It can be blended with petrol up to 40 per cent without any need for engine modification.