The initial target is for one percent of the island's annual fuel consumption on road transport to be from renewable energy resources, said Georgios Roditis from the Applied Energy Centre of the Ministry of Commerce, Industry and Tourism.

"Biofuels have been used in places like the United States for years, but it is innovative for Cyprus, even Europe," Roditis told Reuters in a telephone interview on Tuesday.

The island has an obligation to introduce renewable energy resources as a European Union member. It already widely uses solar power from its advantage of almost uninterrupted sunshine throughout the year, but most of its other energy sources are fossil fuels.

Cyprus consumes 650,000 metric tonnes of fossil fuels per year. The national target will be for an annual biofuel production target of 6,500 metric tonnes, he said.

Ethanol fuel can be used in vehicles running on normal petrol. Biodiesel can be derived from used edible oils which are now simply discarded, or mixed in with other substances and used as animal feed.

"Alcohol fuel can be derived from a number of agricultural products, grain, potatoes and fruits. And instead of sending surplus crops into pits we can use them to process fuel," said Roditis.

Authorities planned to examine the biofuel-producing potential by cultivating grain crops, including sunflower, cotton and soya, the daily Simerini reported.

Cyprus has no shortage of technological know-how in extracting ethanol because of its many wineries.

"We would like to get the wineries involved. They have some installations but further investment would be required to develop alcohol into fuel," the ministry official said.