The federal government believes Hawai'i has great promise for developing fuel from crops, and has committed to spending more than $12 million over the next five years to help propel research forward in the area.

The Office of Naval Research and the Department of Energy will contribute a combined $4 million to kick off the work this year in a partnership involving the University of Hawai'i, U.S. Department of Agriculture and Maui's Hawaiian Commercial & Sugar Co.

Other participants are likely to share in the research work, but HC&S, which is the largest agricultural operation and last sugar plantation in the state, is expected to serve as a key proving ground for the work.

HC&S has spent millions of dollars in recent years studying biofuel opportunities using a variety of crops including sugarcane, sweet sorghum and jatropha. The company is trying to reverse big financial losses from sugar production and preserve its access to water as it tries to make a transition to producing fuel from sugarcane or another crop on its 35,000 acres in Central Maui.

Chris Benjamin, HC&S general manager, said the federally funded research is a vote of confidence for HC&S but also could help bring lots of fallow land statewide once farmed in sugarcane back into production.

"We see our emerging role as a working laboratory for Hawai'i and the rest of the country to test the potential of biofuel production," he said.

The research partnership was announced yesterday at HC&S by U.S. Agriculture Deputy Secretary Kathleen Merrigan.

"Hawai'i, with its semitropical climate, is among the states with the greatest potential to produce biomass," she said in a statement.

U.S. Sen. Daniel K. Inouye, D-Hawai'i, who joined in the announcement, said the state with its lasting sugar industry infrastructure is the perfect laboratory for developing alternatives to fossil fuels.

The research funding commitment follows an agreement signed in January between the the Navy and the USDA to increase biofuel crops and other renewable energy sources to reduce dependence on foreign oil and provide a source of fuel for the military.

Under the research initiative, the Office of Naval Research will provide $2 million a year through 2015 for work directed by the USDA. The Energy Department is providing $2 million of potentially annual funding for work conducted by UH's College of Tropical Agriculture and Human Resources. Subsequent years of Energy Department funding are subject to annual appropriation.