A centre that will act as the hub for biofuels research has been launched by Science Minister Lord Drayson.
The £27m institute has been tasked with developing economically competitive and environmentally sound alternatives to fossil fuels.
Last year, the government delayed its plans to increase the amount of biofuel blended into petrol and diesel.
According to government figures, the transport sector accounts for about 25% of the UK's greenhouse gas emissions.
The Sustainable Bioenergy Centre, which will have hubs at six universities - including Cambridge, Dundee, York and Nottingham - has been established by the Biotechnology and Biological Sciences Research Council (BBSRC).
"The UK has a world-leading research base in plant and microbial science," said BBSRC chief executive Professor Douglas Kell.
"The centre draws together some of these world-beating scientists in order to help develop technology and understanding to support the sustainable bioenergy sector," he added.
"By working closely with industrial partners, the centre's scientists will be able to quickly translate their progress into practical solutions to all our benefit and ultimately, by supporting the sustainable bioenergy sector, help to create thousands of new 'green collar' jobs in the UK."
While other sectors have curtailed or reduced overall emissions, CO2 from transport has continued to rise.
In an attempt to address the problem, the UK government introduced the "Renewable Transport Fuel Obligation" in April 2008, which required 2.5% of all the fuel sold at petrol stations to be biofuels.
Ministers originally had intended to increase this to 5% by 2010, but accepted a recommendation by the Gallagher Review to delay this until at least 2013.
Non-food crops, such as jatropha, do not distort food prices
Mounting pressure from environmentalists has also led to the European Union revising its targets.
It had stipulated that 10% of transport fuel had to be biofuels by 2020, but this was modified in December 2008.
Now, the 10% target can be met by any renewable source, including fuel cells, hydrogen or solar power.
Once widely viewed as an acceptable alternative to fossil fuels, biofuels have fallen foul of environmental concerns in recent years.
The global surge in biofuel production led to questions being asked about how the impacts of the supposedly green fuel.
Some production methods, especially in South-East Asia, led to huge areas of old-growth rainforests being felled and burned, only to be replaced by vast oil palm plantations.
Not only did it undermine efforts to curb carbon dioxide emissions, conservationists said it threatened the long-term survival of many endangered species, such as orangutans.
Another impact was the effect biofuels were having on global food prices. As the demand for the biodiesel and bio-ethanol grew, many farmers were selling their crops to fuel producers rather than food producers.
This, combined with a series of poor harvests around the world, led to prices reaching unprecedented levels.
However, scientists at the BBSRC centre plan to focus their efforts on "second generation" biofuels.
These fuels can be generated from a wider range of feedstocks, meaning any plant-derived materials, or biomass, not just food crops.
This means that second generation biofuels are generally more efficient, are not in conflict with food supplies, and have a smaller environmental impact.
However, as this process is much more complex, it is also more expensive and struggles to be commercially competitive.