Planes could be powered mostly by renewable fuels by the end of the decade, Sir Richard Branson has said.
The businessman made the comments as a scheme analysing options for "clean" aviation fuels was launched this week.
The Carbon War Room was founded by the Virgin Group founder and chairman to help drive entrepreneurial solutions to climate change, and is turning its attention to the aviation industry in a bid to cut a billion tonnes of greenhouse gases from the sector.
The RenewableJetFuels.org initiative analyses the leading companies who are developing green aviation fuels to assess their sustainability, economic viability and ability to scale up to commercial levels of production.
Sir Branson said innovative new aviation fuels, including fuels sourced from the carbon put out by steel and aluminium works and from algae, were being developed.
"If we can find fuels that can fuel our planes that are not polluting the environment, that is extremely good news for the planet," he said.
"I think by 2020 potentially if these suppliers can supply enough fuel we really could be flying most planes on clean fuels.
"The airline industry could be one of the first industries to go from being a dirty industry to being a clean industry and it could bring the costs of flights down, because they're already finding that producing these fuels is cheaper than the current price of aviation fuel."
The new initiative aims to drive investment towards the most innovative and sustainable options for cleaner fuels for the industry, which contributes 2-3 per cent of global carbon emissions, he said.
Biofuels, which create fuel from plant sources, have been controversial amid concerns they divert land from growing food and can contribute to the clearing of forests to supply land - which adds to emissions overall.
Sir Branson said the Carbon War Room aimed to reduce carbon dramatically in sectors such as the airline industry without causing damage to the economy, environment or food supplies.
With just 1,800 petrol pumps fuelling the world's aviation industry, the switchover was potentially quite straightforward, the Virgin Group chairman suggested.
Sir Branson said it was now a matter for fuel companies to come up with ways to manufacture enough quantities of the renewable fuels to power the industry.
In answer to critics who say moves by the aviation industry to tap into biofuels or other renewable fuels are simply "greenwash", he said attempting to reduce emissions from flying through finding greener fuels was "a better approach than giving up".
The RenewableJetFuels.org initiative lists the top five companies, with Lanzatech, which has struck a deal with Virgin Atlantic over its fuels produced from carbon emissions, and SG Biofuels, which manufactures biofuels from jatropha, leading the way.
It is estimated that in the next five years, some suppliers could be producing enough renewable fuels to supply around 10-20 per cent of the fuel of an average mid-sized airline.