A FUNGUS that has the potential to "power the world" by producing a new type of diesel has been discovered growing inside a rain-forest tree.
The scientist who discovered the organism growing in the ulmo tree in a Patagonian rain forest believes this could provide an entirely new type of green fuel.
The small red fungus converts plant cellulose directly into hydrocarbon fuel similar
to conventional diesel.
Professor Gary Strobel, the 70-year-old scientist behind the discovery, who travels the world looking for new organisms in rain forests, says this could be a hugely important find.
"The results were totally unexpected and very exciting and almost every hair on my arms stood on end," he said.
Nearly 430 million tonnes of plant waste is produced from farmland each year around the world. Prof Strobel, from Montana State University, who has patented the product, said that made the potential for the fungus "enormous".
"Cellulose is the most abundant organic compound on earth. We throw most of it away, or just allow it to rot.
"It could conceivably be converted into diesel so the potential is enormous. There's enough cellulose to power the earth."
Cellulose forms the part of the plant that most animals cannot digest, such as stalks, sawdust and woodchip.
Crops normally have to be converted to sugar and fermented before they can be turned into useful fuel.
However, the Patagonian fungus Gliocladium roseum makes fuel directly from cellulose, which is the main compound found in plant waste.
"This means if the fungus was used to make fuel, a step in the production process could be skipped," said Prof Strobel.
The new fuel has been dubbed "myco-diesel".
Currently the fungus produces less fuel when feeding on cellulose than when it feeds on sugars.
However, Prof Strobel is confident new developments in fermentation technology could improve the yield.
Dr David Reay, a climate change expert at the University of Edinburgh, agrees the discovery, published in the journal Microbiology, has potential.
"It's pretty rare to make this sort of discovery, in terms of a fungus that's able to produce what we want as an end product," he said.
He said a downside of current biofuels is that they depend on crops that are grown for the purpose of creating the fuel.
"All of them have this big snag which comes in terms of replacing land that would have been used for crop growth to provide food," he said.
However, so-called "second generation" biofuels, such as myco-diesel, do not have that downside because they rely on cellulose, which can be provided by waste products.
"These types of process for biofuels are definitely the way forward," said Dr Reay.
FACT BOXBIOFUELS are derived from biological material that has recently died.
They offer the possibility of producing energy without increasing carbon in the atmosphere.
This is because the plants used in its production removed carbon dioxide from the atmosphere.
In contrast, fossil fuels come from material that has long been dead. They return carbon that was stored beneath the surface of the earth for millions of years back into the atmosphere.
This means the use of biofuels should substantially reduce the amount of carbon emissions released into the atmosphere, and therefore help tackle climate change.
However, they have caused controversy. There are fears that a major adoption of biofuels, which require land, will reduce habitat for animals and wild plants.
There may be less land to grow food, leading to an increase in prices.
And countries may be tempted to replace rainforest with more palm oil plantations.