Countries and investors are rushing to jump on the biofuel bandwagon.

Last month, the world's top two producers of ethanol - the United States and Brazil - signed a deal to promote its use during a visit by US President George W. Bush to Latin America.

No less than 77 per cent of new Brazilian cars run on ethanol - a fuel substitute produced from sugar cane at a fraction of the cost of petrol - and ethanol is available at virtually every petrol station.

Mr Bush is aiming to slash US petrol consumption by 20 per cent over the next decade and wants to enlist Brazil's help. There are 114 ethanol distilleries operating in the US, with a further 78 plants under construction.

In December, China - the world's third-largest producer of ethanol - set rules requiring eager investors to get state approval for bio-ethanol projects in an effort to stop the biofuel sector from over-heating.

Biofuels include liquid fuels such as ethanol, made from agricultural crops like sugar or grains, and biodiesel, made from vegetable oils or animal fats.

They are blended with gasoline and diesel to reduce pollution from vehicle engines. China National Petroleum is among companies planting Barbados nuts, yams and other crops that can be turned into fuels for cars.

Crops such as rapeseed, corn, soya bean and maize can also be used. America has identified prairie grass, which grows wild in most of the US, as a potential contributor.

In Asia, Malaysia is making efforts to boost the use of palm oil for biofuel production.