"Although we have only produced tiny amounts so far, the fuel we have produced is ready to be used in an engine straight away," said Patrik Jones of the department of life sciences at Imperial College London, who worked on the research.
He said while work is at a very early stage, possibly 5-10 years from the point where commercial production would be possible, his team's findings were proof of concept for a way of producing renewable fuel now only accessible from fossil reserves.
Propane is an inherently clean burning fuel due to its lower carbon content. Its development would also be convenient because it has an existing global market.
In its current form it makes up the bulk of liquid petroleum gas (LPG), which is used to fuel everything from cars to central heating systems to camping stoves. It is already produced as a by-product during natural gas processing and petrol refining, but both of these are fossil fuels that will one day run out.
"Fossil fuels are a finite resource and...we are going to have to come up with new ways to meet increasing energy demands," Jones said in a statement about the research.
He said a major challenge for scientists is to develop a renewable process that is low-cost and economically sustainable.
At the moment algae can be used to make biodiesel, he said, but that process is not commercially viable because the harvesting and processing requires significant energy and money.
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