European Aeronautic Defence and Space Company NV, parent of the airplane manufacturer of Airbus SAS, and ENN Group, a bio-energy company based in Hebei province, have signed a Memorandum of Understanding to work together on technology to derive biofuel from algae.

They reached the agreement at the 9th China International Aviation and Aerospace Exhibition in Zhuhai, Guangdong province. The three partners will work to promote the use of biofuel in Chinese aviation.

Their goal is to use flights to test out algae jet fuel in 2013 in China, Airbus announced on Wednesday.

Airbus will support the fuel tests and the use of alternative fuels in commercial flights.

The partners will cooperate on assessing algae oil technology, testing oil, as well as developing means to assess the environmental, economic and societal effects of the technology.

ENN has already developed a plant to produce algae-based oil. The plant is able to produce more than 10 tons of algae-based oil a year.

The real difficultly with the biofuel will come in trying to sell it commercially, Gan Zhongxue, chief technical officer of ENN Group.

The biofuel will take several years to develop because of its current high cost, said Jean Botti, Chief Technical Officer of EADS.

"Now we need to demonstrate that the industrial production of algae-based biofuel is both ecologically and economically viable," he added.

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