WorldAutoSteel released the study this week.

The report will lift the pressure for an 85pc ethanol fuel blend, with the ethanol feedstock coming from high cellulosic content agricultural by-products, rather than from food crops, such as corn.

Potential cellulose feedstocks include stubble, sugarcane by-products, wood waste and specially-grown high cellulose grasses such as switch grass, which can be cultivated on land not suitable for arable crops.

New processes are rapidly being developed for the complex job of fermenting the less readily available high cellulose content in such plants.

Until now, this has been a much more difficult and more expensive than producing ethanol by fermenting food crops, such as corn (US), sugarcane (Brazil) and sorghum (Australia).

US Growth Energy CEO Tom Buis says the report reinforces the promise of ethanol as the cleanest, greenest fuel for cars.

Currently in the US, a government cap on the amount of ethanol that can be blended with gasoline (10pc) is stifling second-generation biofuel development and commercialisation of cellulosic E85 fuel, he says.

Buis says the cap needs to be increased.

Buis also says automakers need to manufacture more flex-fuel vehicles, which they can use these higher blends of ethanol, as can most of the cars being sold in Brazil, which are already flex-fuel.

He says these common sense solutions can speed the introduction of cellulosic ethanol to the marketplace.

At the same time, it would create green collar jobs and reduce the nation's dependence on foreign oil.