US Department of Energy (DOE) has selected Honeywell subsidiary UOP to develop technology to convert cellulosic biomass into green transportation fuels.

The project involves using cellulosic biomass feedstocks like forestry and agricultural residuals or algae residuals to produce the liquid biofuel pyrolysis oil, to be finally converted into green transportation fuels.

Using a $25m DOE grant, the company will build a demonstration plant in Hawaii, which is expected to begin operations in 2014.

According to Honeywell, the new technology has the potential to supplement the existing supply of petroleum-based fuels and reduce greenhouse gas emissions by up to 70% compared to petroleum-based fuels.

The grant is part of DOE’s plans to develop technologies that could help reduce the country’s dependence on foreign oil.