A fungus responsible for the rapid deterioration of military clothing and canvas tents during the Second World War could significantly improve the production of biofuels, say U.S. scientists.

Once the bane of soldiers fighting in the South Pacific, Tricoderma reesei is a hungry fungus that quickly digests plant fibres into simple sugars.

In a paper published Monday in Nature Biotechnology, researchers at the Los Alamos National Laboratory and the U.S. Department of Energy Joint Genome Institute say the fungus's genetic sequence gives important clues about how it breaks down plant fibres.

The finding could lead to processes that more efficiently and cost effectively convert corn, switchgrass and even cellulose-based municipal waste into ethanol. Ethanol from waste products can be a more carbon-neutral alternative to gasoline.

However, there is an ongoing global debate over fuel and food production. Groups like the Sierra Club of Canada point out that while more ethanol and less gasoline makes sense, it has to be the right kind of ethanol. The environmental group says it takes five hectares of cornfields to produce enough ethanol to run a car for a year. The same land could feed seven people for a year.

The Sierra Club of Canada has urged government to switch from relying on ethanol derived from corn and grains to ethanol produced from waste straw and wood chips. It argues that producing ethanol from those sources doesn't take farmland out of food production and achieves greater reductions in the emission of greenhouse gases.

Meanwhile, the Los Alamos researchers and their colleagues say they decoded the genetic sequence of T. reesei in an attempt to discover why the deep green fungus was so good at digesting plant cells. The scientists say it could be used to secrete enzymes that can be purified and added into a watery mixture of cellulose pulp and other materials to produce sugar. The sugar can then be fermented by yeast to produce ethanol.

"Using this information, it may be possible to improve both of these properties, decreasing the cost of converting cellulosic biomass to fuels and chemicals," Joel Cherry, director of research activities in second-generation biofuels for biotech company Novozymes, said in a release. Denmark-based Novozymes is a collaborating institution in the study.