Now the National Science Foundation has ponied up 2 million dollars to see if the research can be advanced to a stage where a bio-fuel can be produced from wood chips with the help of the endophytic fungus Gliocladium roseum. According to MSU receives $2 million to further study diesel-producing South American fungus:

Peyton, Strobel and biological engineering professor Ross Carlson will coordinate their research with Yale professors Mitchell Smooke and Scott Strobel — Gary Strobel’s son — who are mapping the fungus’s genes to learn just how it produces its hydrocarbon-rich vapors.

MSU will use that genetic information to experiment with the fungus’s growing conditions, attempting to get G. roseum to produce hydrocarbons as fast as possible, Peyton said.

“If it takes a ton of wood chips to make a gallon of fuel, that’s one thing. If you can make a half ton of fuel from a ton of chips, that’s another thing … that’s part of what we are trying to find out,” he said.

More on Gliocladium and mycodiesel:

Myco-diesel: The Mushroom Powered Car (uh, no…)

Mycodiesel at Small Things Considered

Obscure Fungus Produced Diesel Fuel Components (from NSF)

Gliocladium  Taxonomy