It is called dimethylfuran – it can store 40% more energy than ethanol, does not evaporate as easily and is less volatile.
The scientists say that fructose can be obtained directly from fruits and plants or made from glucose.
But more work needs to be done to assess the environmental impact of this new fuel.
In Britain, researchers say that the technology now exists to create biodiesel not just from palm oil but from a range of materials including wood, weeds and plastic bags.
This process is called biomass to liquid and experts say that within six years up to 30% of Britain’s diesel requirements could be met from this source.
Jeremy Tomkinson of the UK’s National Non-Food Crops Centre said this next generation of biofuels could meet many needs beyond powering cars.
"The impact on society we’re hoping will be far wider than simply ‘we can give you a fuel now with a tenfold reduction in its carbon footprint’.
"Imagine now if chemicals that we use in the chemical industry also came from the same feed stock, the aircraft that we fly to New York in also runs on this? There’s the big potential," he said.
The biggest drawback to this process is cost.
Setting up new production facilities is estimated to be 10 times higher than for current biofuel refineries.
Story by Matt McGrath, BBC Environment:
Published: 2007/06/21 01:36:05 GMT