SANTIAGO (Reuters) - Biodiesel made from microalgae could power buses and trucks and reduce greenhouse gas emissions by as much as 80 per cent, Chilean scientists said, possibly curbing pollution in contaminated cities like Santiago.

Experts from the department of Chemical Engineering and Bioprocesses at Chile's Catholic University said they had grown enough algae to fragment it and extract the oil which, after removing moisture and debris, can be converted into biofuel.

"What is new about our process is the intent to produce this fuel from microalgae, which are microorganisms," researcher Carlos Saez told Reuters.

Most of the world's biodiesel, which reduces dependence on petroleum, is derived from soybean oil. It can also be made from animal fat, canola or palm oil.

Saez said a main challenge going forward would be to produce a sufficient volume of microalgae. A wide variety of fresh and salt water algaes are found in Chile, a South American nation with a long Pacific coast.

The scientists are trying to improve algae growing technology to ramp up production at a low cost using limited energy, Saez said.