After more than 20 years and $110-million worth of research, a Canadian company has found a way to make "greener" gasoline on a commercial scale.

Iogen Corporation of Ottawa has developed enzymes to break down waste straw and wood chips into ethanol on a commercial scale.

"This is our big Eureka moment, because this is the first time in the world that such large quantities of cellulose ethanol have been made," said Jeff Passmore, vice president of Iogen on Wednesday, the eve of Earth Day.

Jeff Passmore

Until now, the ethanol blend used in commercial gasoline was made from the food portion of crops like corn.

Critics said conventional corn and grain-based ethanol requires as much energy to produce as it releases when burnt, once the energy for tractors and pesticides are taken into account.

Environmentalists prefer cellulose ethanol because it is made from farm waste and produces fewer greenhouse gas emissions.

"Iogen has figured out how to weave gold out of straw," said Elizabeth May, executive director of the Sierra Club of Canada, who was among the invited guests, including Prime Minister Paul Martin.

The federal government has stressed the importance of alternative fuels to meet Kyoto protocol targets. It has invested $21.1 million in the company, of which $10 million is repayable.

"The government of Canada will continue to support the development of clean energy technologies, technologies that pay not only environmental dividends but economic ones as well," said Martin.

The first shipment of 5,000 litres of cellulose ethanol will be blended with regular unleaded gasoline at a Petro-Canada refinery in Montreal. It will then be shipped to some of the company's gas stations.

Both Petro-Canada and Royal Dutch Shell are supporting the project with $24.7 million and $46 million respectively.

Iogen plans to build a full-scale commercial plant next year.