Genes copied from a common fungus could simplify the production of ethanol from abundant materials such as grass and wood chips, a development that could one day help ethanol compete with gasoline.

Scientists have taken genes from a fungus that grows on grass and dead plants, and transplanted them into yeast that is already used to turn sugar into ethanol. The genes let the yeast ferment parts of plants that it normally can't digest, potentially streamlining the production of ethanol.

"It's just a more efficient process," says Jamie Cate, a biologist at the University of California, Berkeley and at Lawrence Berkeley National Laboratory. "Shaving off every dime that you can could make it compete with oil," says Cate, who led the work.

Most ethanol is produced using simple sugars, like the glucose derived from corn kernels or sugar cane. Ethanol producers would like to use glucose from more abundant sources, such as corn husks and stalks, switchgrass, wood waste, and other tough plant materials. But those plant parts are made of cellulose, a carbohydrate built from long chains of sugars. For yeast to produce ethanol from these materials, the complex carbohydrate has to first be broken down into very simple sugars, a process that takes time and normally requires the addition of expensive enzymes.

With the new technique, ethanol makers would no longer have to break cellulose down into simple sugars. Instead, they would only need to break down cellulose into an intermediate material called cellodextrin. The modified yeast can work with this, instead of waiting for it to be broken down all the way to glucose, removing steps that cost time and money.

Yeast takes a simple molecule such as glucose and digests it as food, producing alcohol as a by-product. The Berkeley researchers, along with a colleague from the Chinese Academy of Sciences in Tianjin, found that a fuzzy orange fungus called Neospora crassa that grows on dead plant matter produces two different proteins that help transport more complex cellulose molecules into cells for digestion. In addition, they found that the fungus produces an enzyme that can help further break down those molecules. The researchers then pored through the genome of a Neospora crassa to find the genes responsible for these abilities