The biofuel is made from straw and renewable sources such as corn stalks
Royal Dutch Shell is selling a biofuel made from straw at one of their service stations in Canada.
The station in Ottawa will sell a blend of cellulosic ethanol and petrol.
Biofuels have been hailed as a way to fight climate change, but have also been criticised for their potential impact on food stocks and prices.
This biofuel, however, is made from a non-food portions of crops, such as corn stalks and corn cobs, which are renewable, according to Shell.
Such so-called "second-generation" biofuels do not compete with food sources for land - unlike some current biofuels, which are made from the edible parts of crops such as corn or sugar cane.
In principle, biofuels are a way of reducing greenhouse gas emissions compared with conventional transport fuels such as petrol and diesel.
Burning the fuels releases CO2; but growing the plants absorbs a comparable amount of the gas from the atmosphere.
Shell claims that the straw biofuel can offer 90% less carbon dioxide (CO2) emissions as compared to petrol.
However, the method of production is also important. Farming and processing the crops can make biofuels as polluting as petroleum-based fuels, depending on what is grown and how it is treated.
The UK Government has said that by 2010 5% all fuel should come from biofuels.
The European Union has gone further, setting a target of 10% by 2020.