Governor Gary Herbert rolled out the details of the new program at his Annual Governor’s Energy Development Summit at the Salt Palace.
He believes energy is a key cornerstone of Utah's strength.
The industry provides more than 18,000 jobs, jobs that pay nearly half the state's median income.
With our abundant natural resources, the governor says Utah is a national leader in energy development.
That's why we were selected along with Colorado and Pennsylvania to pilot the new project.
"We're just more of a facilitator and just say that they are welcome. We applaud those who are innovators of new ideas and new processes and developing new technology. In this case we are developing a new fuel," said Herbert, (R) Ut.
For now the project won't cost Utah taxpayers anything.
Instead private partners are investing millions.
Joe Cannon, President of Fuel Freedom Foundation is one of them.
"The idea is to take cheap, abundant natural gas and convert it, use it as a feedstock to produce ethanol and methanol, which are liquid alcohol fuels that can go directly into your gas tank," said Cannon.
The governor also unveiled the Utah Energy Efficiency and Conservation Plan.
It includes 26 recommendations to improve efficiency for industry, housing, transportation and agriculture.
"It's as simple as better transportation, better fuels, more efficient automobiles," said Herbert.
The governor says it's about a balanced approach.
Renewable energy advocacy groups attending the summit say they are encouraged, but say it is too biased in favor of dirty energy sources.
"If you survey Utahns, and it doesn't matter what political affiliation they have, they want to see more solar and they want the opportunity to buy cleaner power that won't pollute the air, but unfortunately we haven't seen that development yet in Utah," said Christopher Thomas with Heal Utah.
The governor also addressed the plan announced this week by President Obama to cut back on emissions at power plants.
He is concerned it could cost jobs, but he's also optimistic, because our state has been proactive and started working toward this about eight years ago.