Audi is expanding its biofuel initiative with an investment in Global Bioenergies, a French company that can make synthetic gasoline from sugar, and do it both faster and cheaper than other biofuels. And most importantly, the fuel, called bio-isooctane, doesn't require any modifications to the cars it powers, making it a drop-in replacement for gasoline refined from petroleum.

Global Bioenergies' big advancement is making gasoline by fermenting sugar using generically modified E. coli bacteria without the expensive and energy-intensive step of distillation. By modifying E. coli bacteria to produce isobutane gas, the yeast used in the process is not poisoned by the fuel production – a persistent problem with ethanol production. That allows the bacteria to keep churning along for a longer period. The process works with more than food feedstocks like corn and sugarcane, too. It can be adapted to use biomass like wood chips with a high level of glucose.

Bio-isooctane can be used as a direct replacement for gasoline, or blended with conventional gasoline much like ethanol. The company has demonstrated the process in a lab, and is in the process of building two production plants. The goal is to produce more than 100,000 liters of gasoline annually – a pittance from a global perspective, but the program is a working proof-of-concept, and that's where Audi's investment comes in.

The automaker has formed a strategic partnership with Global Bioenergies to help fund the company's rollout. It's the latest part of the German automaker's branded "e-fuel" strategy that includes ethanol and biodiesel. By adding a bio-gasoline to the mix, Audi is now backing a complete suite of alt fuels for use throughout its vehicle lineup.

Audi is not alone in betting on alternatives to fossil fuels. General Motors has invested heavily in ethanol, for example, and many of the major players are backing battery ventures.