He said wood-based biofuel production plants could become widespread by the middle of the next decade although they required an investment of around 500 million pounds (US$986 million), or 10 times the cost of a first-generation bioethanol or biodiesel refinery.

"You are looking at potentially a 10 to 12 year buyback time for the (wood-based) plant. These people need to have confidence that the market is going to remain there," Tomkinson said.

First generation biofuels are usually produced from food crops such as wheat, maize, sugar or vegetable oils. They require energy-intensive inputs like fertiliser, which make it difficult to cut the emissions of gases contributing to climate change.

The global boom in these fuels has also pushed up the price of foodstuffs.

Tomkinson said fuels based on grains and vegetable oils should not be abandoned until the second generation technology became widespread as they helped introduce biofuels to the market and provided experience on how to blend them into fuel.

STEPPING STONE

"That's a stepping stone that gets us on the race track..The real game is second generation," he said.

The new methods help turn plant cellulose into ethanol or diesel and could ease the competition between fuel and food uses for crops, which could become fierce as European countries blend in increasing amounts of biological components into fuel.

The UK requires road transport fuels to incorporate 2.5 percent biofuel by 2008 and 5 percent by 2010. Production based on UK crops such as wheat and rapeseed will be augmented by imports from major biofuels producers such as Brazil.

"We should use the wheat," Tomkinson said. "Not strategically, though."

A German company is planning to start the world's first commercial-scale second generation plant later this year, turning woodchips into synthetic diesel, and it is relying on government tax breaks and government mandates on biofuel use to break even.