A fungus that makes biodiesel as part of its natural lifecycle has attracted the attention of American scientists wishing to tap into its potential.

The fungus has been discovered living in trees in the Patagonian rainforests and is believed to be unique in its ability to synthesize a variety of substances useful in fuel production.

"This is the only organism that has ever been shown to produce such an important combination of fuel substances," said Professor Gary Strobel from Montana State University.

"The fungus can even make these diesel compounds from cellulose, which would make it a better source of biofuel than anything we use at the moment."

The fungus, which has been named Gliocladium roseum, produces a number of different molecules made of hydrogen and carbon that are found in diesel.

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Supplied by Climate Change Central.