Branson to put $400m into making 'green' fuel

Ethanol from new factories could power Virgin planes

Sir Richard Branson is to invest up to $400m (£230m) in factories producing environmentally friendly ethanol fuel, which he hopes to use in his trains and, potentially, his planes.

His Virgin Group will announce its first investment this year, putting $30m to $40m into a bio-ethanol scheme in the US. Further projects in the UK and continental Europe will follow.

Will Whitehorn, Virgin's development director, said that the schemes would produce fuel from plant-based material - such as rape or coppice - to be specially grown for the purpose. "Richard's view is that the oil price is going to remain high and this will be a good thing as it will speed the pace of ecological change in the industry," he said.

High oil prices have made ethanol, traditionally an expensive fuel made mostly from sugar and grain products, economically viable. Green power experts say that using so-called "energy crops" makes ethanol cheaper to produce, but that farmers will not grow them unless there are power plants that will use them.

Sir Richard is lobbying the Government and air regulators to allow him to use ethanol to power his Virgin Atlantic aircraft. Currently, jet fuel is made entirely out of oil, but tests by the company suggest that up to 5 per cent of it could be made from ethanol.

His submission to the government-backed review by Sir Rod Eddington, the former chief executive of British Airways, into the future of transport in the UK has focused on more environmentally friendly ways of providing travel.

Airlines have been heavily criticised by environmentalists over the amount of fuel they burn and their effect on pollution.

Green campaigners are bitterly opposed to the expansion of Heathrow and Stansted airports proposed by the Department for Transport.

Sir Richard met former US vice-president and environmental campaigner Al Gore last week to discuss ways of increasing the use of bio-ethanol in cars, buses, trains and planes.