Tests at Scunthorpe's Tata Steel works using tiny bubbles and algae to help develop cheap fuel have been a success.

The research, carried out by scientists at the University of Sheffield, used algae that was mixed with carbon dioxide emissions from the steelworks.

Now a plant will be built at the steel works to carry out more tests that could eventually see the firm grab a slice of the growing biofuel market.

Biofuels are an alternative to fossil fuels and the market in them could be worth as much as £15 billion.

The scientists' research reveals a cost-effective method of harvesting and removing water from the algae for it to be processed effectively.

The Sheffield team leader, professor Will Zimmerman, said the next stage was to develop a pilot plant at Scunthorpe.

But he believes the research has given Tata Steel the edge in a market potentially worth £15 billion.

He said: "We are working with Tata Steel using carbon dioxide from flue-gas stacks and we plan to continue this partnership to test the new system."

The system developed by the Sheffield scientists team uses up to 1,000 times less energy to produce the micro-bubbles.

The cost of installation is also predicted to be much less than existing systems to produce the fuel-rich algae.

Dr Bruce Adderley, the manager of the climate change breakthrough technology at Tata Steel, said: "Professor Zimmerman's micro-bubble- based technologies are exactly the kind of step-change innovations we are seeking as a means to address our emissions in the longer term. We are delighted to have the opportunity to extend our relationship with Will and his team in the next phase of this pioneering research."