The aim is to encourage private industry and universities to find ways of creating motor fuel from renewable sources such as soybeans, wood chips and agricultural waste.
If the plan meets with congressional approval, it will see US$25m a year set aside for two separate biofuel research facilities that would conduct basic biological research on how to release energy from plant fibres or cellulose.
Energy Department contracts are expected to be awarded next summer, with centres operational by 2009.
