Loss-making green energy group Oxford Catalysts says it is withstanding the downturn, thanks to its £56m takeover of US rival Velocys.

The company, set up to commercialise research by Prof Malcolm Green at Oxford University's chemistry department, aims to provide the technology for next-generation synthetic fuels.

Chief executive Roy Lipski said they had secured a £3m US government grant and a £2m low-cost loan since buying the US company last autumn.

He said: "The Obama administration is committing actively to provide substantial support for biofuels development and demonstration projects through grants, investment tax credits, production tax credits and loan guarantees.

"Additionally, individual US state administrations are investing heavily in schemes that protect or create jobs, especially where these have a potential environmental benefit."

He added: "Oxford Catalysts remains positioned to capture significant market share and emerge as a leader in the technology market for next generation synthetic fuels."

Losses for the half year rose to £3.75m from £1.3m for the same period last year.

Chairman Pierre Jungels said: “Medium and long-term prospects for the group remain strong, and the pipeline of opportunities is looking healthier now than at any time in the past year.”