Three years ago, Virgin Atlantic Airways grabbed some headlines when it experimentally ran one of its 747s on a mixture of standard jet fuel and biofuel. While some called it a publicity stunt, it was the first time that a commercial airliner had flown using biofuel - albeit only in part of one of its four fuel tanks. Today, however, the airline announced that it's developing an aviation fuel that will have half the carbon footprint of conventional fuel. The carbon savings won't result from how cleanly the fuel burns, but from how it's obtained.

One of Virgin's partners in the project, LanzaTech, begins the process by capturing waste gases from steel mills. These gases, which would otherwise have been burnt into the atmosphere as carbon dioxide, are instead fermented and chemically converted into jet fuel, using technology developed by another partner, Swedish Biofuels. It is estimated that the system should work with about 65 percent of the world's steel mills, and that it could also be applied to metals processing and the chemical industry.

Virgin plans to begin using the fuel in two to three years, on flights from Shanghai and Delhi to London Heathrow. A pilot plant is currently producing the fuel in New Zealand, with a larger demonstration plant scheduled to be commissioned in Shanghai later this year, and the first commercial plant to begin operation in China by 2014. After that, if all goes according to plan, additional facilities could be built in the UK and other locations around the world.

"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" said Sir Richard Branson, president of Virgin Atlantic. "This new technology is scalable, sustainable and can be commercially produced at a cost comparable to conventional jet fuel."

A demo flight using the new fuel should be taking place within 12 to 18 months.

The video below outlines the fuel-production process.