Branson recently told Fortune Magazine that the Virgin Group was prepared to inject between $US300 and $400 million ($A403-537 million) into the company over the next two to three years.

Virgin Fuel will focus on developing alternative energy supplies, including solar and wind power, and seek to build or acquire ethanol plants to develop cellulosic ethanol.

“We have a team looking at building the most environmentally friendly fuel company in the world,” Branson was quoted as saying.

“In 15 years, today’s fuel will have to be phased out or replaced with 50% cellulosic ethanol, which is completely environmentally friendly.”

This process shreds switchgrass, wood chips or other plant by-products such as corn stalks, and then adds special enzymes to break down the mass of cell walls of these plants, or cellulose, into sugars. These sugars can then be used to ferment ethanol.

Branson is not the only billionaire entrepreneur looking into the cellulosic ethanol sector. Last year, Microsoft’s Bill Gates committed to an $84 million investment in US-based Pacific Ethanol of Fresno. The company plans to build five corn-based ethanol plants in California.