Enterprise Rent-A-Car has stepped up its research into next-generation biofuels, hiring a leading US scientists to oversee research work that the company claims is essential to its long-term success.

Dr Richard Sayre has been named director of the Enterprise Rent-A-Car Institute for Renewable Fuels in the US and will focus on developing so-called third-generation biofuels made from algae.

"Extracting oil from algae to produce a more sustainable biofuel is one of the most promising and exciting areas of biofuels research today," explained Sayre. "Algae have significant potential as a clean, renewable and economical fuel source and they do not compete with the food supply."

Andy Taylor, chairman and chief executive officer of Enterprise Rent-A-Car said developing biofuels was key to the ongoing success of the company. "For Enterprise, our company's success depends on the availability of vehicles and fuel, and both must be acceptable to society – that is why we are taking steps now to invest in the future," he said.

The Institute was created in 2007 with a $25m (£13.7m) gift from the company’s founding family, the Taylors of St Louis, who also own Enterprise, National Car Rental and Alamo Rent A Car.

The research facility has already undertaken work on first-generation biofuels made from corn, as well as second-generation fuels using the non-food parts of the corn plant to create cellulosic ethanol, but it is now turning its attention to algae-based fuels which it claims could be used in cars, ships and even planes.

Supporters of algae-based fuels claim algal oil yields higher energy density than corn and requires less space to grow, placing less pressure on agricultural land and food supplies.