Sugar beet grown in East Anglia will be fermented to produce butanol, which will be blended with petrol and sold at more than 1,200 filling stations.

The Government plans to accelerate the introduction of butanol and other biofuels by setting oil companies tough targets for producing renewable fuels that have much less impact on the environment.

Ministers are considering doubling the target for biofuels from the current requirement for 5 per cent of all fuel sold by 2010 to 10 per cent by 2015. Companies will pay a penalty for failing to hit the target.

The Energy Saving Trust, the government-funded environmental body, said butanol was more promising than other biofuels, such as ethanol or biodiesel, because it does not rely on drivers buying special cars or spending hundreds of pounds adapting their engines.

Car manufacturers currently permit drivers to fill up with fuel that contains a maximum of 5 per cent biofuel and 95 per cent ordinary petrol or diesel. They impose the limit because of concerns that biofuels can corrode tubes and gaskets in engines.

But butanol has a less corrosive effect than other biofuels, allowing suppliers to create a blend that contains only 80 per cent petrol.

Butanol also has a much higher energy content than other biofuels, delivering 10 per cent fewer miles per gallon than conventional fuel, compared with 30 per cent for ethanol.

Richard Tarboton, the trust’s head of transport, said: “Butanol is a big step forward because motorists won’t need to worry about what is going into the tank. They can fill up their cars as normal.”

He said that some biofuels were struggling to make an impact on the market because they were more expensive.

He added that drivers who bought specially adapted cars, such as the Saab 9-5 BioPower, which can run on 85 per cent ethanol and 15 per cent petrol, also paid a penalty in company car tax and vehicle excise duty.

This is because both these taxes are based on tailpipe carbon dioxide emissions, not on the whole life cycle of the raw material making up the fuel. Biofuels reduce total CO2 emissions because the crops that they come from reabsorb the gas as they grow.

British Sugar, which is building Britain’s first butanol plant near Downham Market in Norfolk, plans to produce 70 million litres of the fuel a year. Testing will begin at the end of next year and butanol is expected to be introduced in all 1,250 BP filling stations by 2010.

BP and British Sugar are also undertaking a feasibility study into building several more butanol plants with a capacity of 300 million litres a year.

Phil New, BP’s head of biofuels, said the Norfolk plant would use surplus sugar beet that can no longer be sold abroad under EU rules.

He admitted that Britain did not have enough spare agricultural land to supply all vehicles, but BP is experimenting with other crops that could produce much more of the fuel.

BP yesterday opened a website, targetneutral.com, on which motorists can volunteer to pay an average of £20 a year to offset their carbon emissions from driving. BP will pay an additional 0.2p towards sustainable energy projects for every litre of fuel bought by drivers who sign up to the scheme.

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