Virgin Atlantic Airways and LanzaTech are developing an aviation fuel that will cut in half the carbon footprint of conventional flights.

Instead of using plant stock for the fuel, waste gases are being captured from steel mills. The gases, which would otherwise burn up in the atmosphere as carbon dioxide, are fermented and chemically converted into jet fuel.

A test facility is already in operation in New Zealand.

Virgin, the first commercial airline to test a bio-fuel in flight, plans to begin using this new fuel in two to three years, with a ‘demo' flight planned in 12-18 months.

LanzaTech estimates its process to be useful for 65% of the world's steel mills and believes it can also be applied to metals processing and chemical industries.

"With oil running out, it is important that new fuel solutions are sustainable, and with the steel industry alone able to deliver over 15 billion gallons of jet fuel annually, the potential is very exciting."

He said the new technology is "scalable" and able to be commercially produced at a comparable cost to current jet fuel.

A larger demonstration facility will be commissioned in Shanghai this year, and the first commercial operation will be in place in China by 2014. Following successful implementation, a wider roll-out could include operations in the UK and the rest of the world.

Dr Jennifer Holmgren, Chief Executive of LanzaTech, said, "While there is still work to be done and logistical hurdles to cross, we have excellent partners in Virgin Atlantic, Swedish Biofuels and Boeing and we are confident that we will have a facility with the capacity to produce fuel for commercial use by 2014."