While refiners have been making ethanol from cellulosic material for a while, a Japanese-government affiliated research institute is working on turning grass clippings and wood chips into biodiesel.
This story on CattleNetwork.com has more details:
The Research Institute of Innovative Technology for the Earth is aiming for commercial production in three years. RITE was established in 1990 by the government and leading Japanese firms in such industries as automobiles and power.
The biodiesel fuel in question uses a type of alcohol known as butanol made using genetically modified microorganisms. The biobutanol was created by cultivating a large number of these microbes in a vat and adding sugar produced by breaking down such plant fibers as grass and tree cuttings, wood and rice straw.
Light oil is generally used in diesel fuel. But in testing commissioned by RITE, Honda Motor Co. (7267.TO) subsidiary Honda R&D Co. confirmed negligible effects on vehicle performance when biobutanol was mixed with light oil.
Researchers believe that once mass production gets underway, production costs will be about the same as cellulosic ethanol.