The Environment Ministry said Thursday it will launch a project to mass produce environmentally friendly biomass fuel made from materials like wood chips to power about 40,000 motor vehicles annually in metropolitan areas.

The ministry also plans to help build about 100 special gas stations in urban areas in the Kanto and Kansai regions, where people can fill up their cars with the biofuel, which is free of greenhouse-gas emissions, ministry officials said.

The biofuel can be used for vehicles that run on regular gasoline.

The ministry plans to ask the Finance Ministry to allocate about 10 billion yen to finance the project in the budget for fiscal 2007 and to consider tax incentives related to the project, the officials said.

In the project, the ministry will produce the so-called E3 fuel, or gasoline containing 3 percent bioethanol made of wood, at the world’s first facility for producing ethanol from wood refuse being built in Osaka Prefecture, they said.

The E3 fuel supply will reach 47,000 kiloliters per year, they said.

The officials said Japan lags behind many other countries in promoting biomass energy, which is useful in reducing global warming, and the plan is aimed at raising awareness about the importance of alternative energy.

The ministry plans to assist corporations entering the biofuel business and automakers developing vehicles that can run on E10 fuel, or gasoline containing 10 percent bioethanol, the officials said.

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