Scientists working for Royal Nedalco, the Delft University of Technology and a firm called Bird Engineering have found a fungus in elephant dung that helped them produce a yeast which can efficiently ferment wood sugars.

"We really see this as a technical breakthrough," business development manager Mark Woldberg from Royal Nedalco, a Dutch alcohol maker, told a biofuels conference on Wednesday.

Production based on the new method can start at the firm's plant in Sas van Gent in 2009, though it will take longer for most of the new feedstocks to become commercially viable.

"For wheat residues we believe we can be cost competitive in quite a short time, I've mentioned five years," Woldberg said.