By Al Yoon

BOSTON (Reuters) - British billionaire Richard Branson said on Monday his Virgin Group hopes to produce clean biofuels by around the start of the next decade and early next year will test a jet plane on renewable fuel.

Virgin hopes to provide clean fuel for buses, trains and cars within three or four years, Branson told a Mortgage Bankers Association meeting in Boston.

In the meantime, Virgin will be conducting a test jet flight on renewable fuels. "Early next year we will fly one of our 747s without passengers with one of the fuels that we have developed," Branson told the annual conference.

Virgin is developing biofuels for aircraft in conjunction with Boeing Co and engine-maker GE Aviation, a unit of General Electric Co . Previously, Branson had said the company would test the fuel sometime next year and that some people had said it would be late in the year.

Air New Zealand has said it plans to test a flight on a combination fuel of biofuel and kerosene in late 2008, but Virgin is trying to beat that airline by testing biofuels first.

Branson pledged last year to spend all the profit over the next 10 years from his 51 percent stake in Virgin's airline and rail businesses on fighting global warming.

He also created Virgin Fuels, which is investing $400 million over three years in renewable energy initiatives, as part of the pledge.

Biofuels, at this point mostly ethanol and biodiesel, have witnessed explosive growth this year amid record oil prices and concern about global warming. They are believed to emit less greenhouse gases because they are made from plants like corn and soybeans that absorb carbon dioxide, the main heat-trapping gas, when they grow.

Cutting emissions of heat-trapping gases from transportation sources is more difficult than cutting them from stationary sources like power plants. Power stations can switch from coal, the heaviest greenhouse gas emitter, to cleaner burning natural gas.

On Monday, Branson said jets may have problems using ethanol, the most common biofuel, which is made mainly from corn in the United States and sugar cane in Brazil.

He said ethanol freezes at 15,000 feet and that butanol, a fuel similar to gasoline that can be made from biomass, may be a better alternative. It is also less corrosive than ethanol.

Virgin Fuels has invested in a small number of U.S. ethanol projects and hopes eventually to produce branded biofuels, the company's managing partner said earlier this year.

Separately, Branson said Virgin would name one of its Galactic crafts -- planned for use in space tourism -- after his friend Steve Fossett, the millionaire adventurer who disappeared in a small private plane in the U.S. West early last month.

Test flights of the Galactic crafts begin next year and passenger service is expected to begin in 2009.
© Copyright 2007 Reuters.

Photo:
Richard Branson (C), Chairman of Virgin Atlantic Airways, holds a model of an airplane at a news conference in Nairobi March 19, 2007. Branson said on Monday his Virgin Group hopes to produce clean biofuels by around the start of the next decade and early next year will test a jet plane on renewable fuel. REUTERS/Antony Njuguna