"This is the beginning of a new industry," Sustainable Food and Farming Minister Jeff Rooker told the opening ceremony.

Officials said the biofuel produced at Wissington was equivalent to taking 35,000 to 40,000 cars off the roads in the UK in terms of their carbon emissions.

Introducing a target 5 percent of bioethanol into all UK petrol would be the equivalent of taking 1 million cars off the roads in Britain, they added.

The bioethanol produced at the plant is sold to blenders who mix it with petrol and sell it on forecourts of supermarket chains including Tesco.

British Sugar officials estimated 700,000-800,000 tonnes of sugar beet a year (equivalent to roughly 110,000-116,000 tonnes of sugar) would be consumed by the new plant.

In the past, this sugar, which was surplus to EU quotas, would have been exported, typically to the Middle East.

"We are utilising sugar that would previously have been exported onto the world market," said British Sugar CEO Mark Carr. "It will not affect world food prices."

Wissington, the world's largest beet sugar factory, supplies 400,000 tonnes of sugar a year to food and drink manufacturers in the UK and across Europe.

The company said Britain had the chance to be a market leader in sustainable bioethanol production.

"We're taking on the challenge of reducing carbon emissions from transport," it said.

British use of flex-fuel vehicles, which can be powered by a combination of petrol and biofuel, is still in its infancy, partially because of a lack of filling stations selling blends.

Saab, a market leader in flex-fuel vehicles in Europe, sells around 200 flex-fuel vehicles a year in Britain, typically costing about 600 pounds more than conventional vehicles.

Saab Great Britain Managing Director Jonathan Nash said flex-fuel vehicles would take off in Britain when there was parity in the real costs of fossil fuel and biofuel.