Wessex Grain subsidiary Green Spirit Fuels reportedly has just been given planning permission to create Britain's first bioethanol plant in rural Somerset, which will eventually convert 340,000 tonnes of locally grown wheat per year into 131 million litres of ethanol.

The BBC said Green Spirit Fuel's finance director, Arthur Llewellyn insists that bioethanol will be used to fuel a growing number of cars on British roads since the government's renewable transport fuel obligation demands that 5% of all motorcar fuel must come from renewable sources by 2010.

"The UK will need 10 production plants like the one in Henstridge to meet the government's requirements," he told the broadcaster.

Most of the bioethanol will be mixed thinly with petrol.

The BBC said that ordinary cars can run on blends of 5% biofuel and 95% petrol, and this is quickly and silently emerging as a standard fuel at Britain's service stations.

But some of the ethanol will be mixed with just 15% petrol to produce a fuel dubbed E85 (since it contains 85% bioethanol), which can be used by specially biofuel-enabled cars, like the Ford Focus flex-fuel or the Saab Biopower.

The report said this anticipated shift towards bioethanol would be particularly good news for Britain's farmers, according to Wessex Grain trader Owen Cligg.

Each year, UK farmers produce 3.5 million tonnes more grain than they can sell. If this surplus were sold to bioethanol producers, prices should rise across the board by £10-15 per tonne, Cligg estimated, according to the BBC.

"We can provide farmers with a revenue for wheat that is above the cost of production," added Llewellyn.

The report noted that bioethanol and biodiesel can be produced from a slew of other agricultural products, for example rapeseed and other virgin oils, according to Greenergy, which provides biofuel blends to Tesco [supermarket] forecourts.

Nevertheless, the BBC noted, the introduction of E85 in the UK is proving both costly and difficult.

On the face of it, "it is not that far removed from providing fossil-based transport fuel," Graham Meeks of Climate Change Capital, a specialist merchant bank, told the broadcaster, because it is a liquid fuel that is transported by road to underground tanks at service stations, where drivers fill up their cars.

However, most service stations are operated by the oil industry, which is "pathologically opposed" to going down the biofuel route, Green Spirit fuels' Graham Hilton told the broadcaster.

Even the supermarkets are loath to allow E85 pumps to take up valuable space on their forecourts, the report said. "Persuading them to take bioethanol is very difficult," Hilton reportedly lamented.

The BBC said just a handful of supermarkets in Somerset have agreed to sell E85, and only after being offered some significant incentives - the supplier pays for the pumps to be put in, a forecourt rental rents an underground tank.

The BBC added that bioethanol distribution is expensive  with stainless steel tankers costing £120,000 each, and the fuel itself costs 35 pence per litre to produce.

The report noted that the European Commission said: "Biofuels are an expensive way of reducing greenhouse  but it goes on to describe biofuel as "the only direct substitute for oil in transport", and as such it is "one of only two measures that have a reasonable chance of [reducing greenhouse gas emission] on a significant scale in the near future" - the other being reduced emissions from petroleum-powered engines.