Branson's Virgin Group has entered F1 as a sponsor of the Brawn GP team, and he made clear at the Australian Grand Prix that he wanted to create a 'clean fuel' revolution in the sport.
"I am delighted to say that they have come up with such a [clean] fuel and over the next few months we will be trying to talk to F1, talk to the various car companies and see if we can have this fuel introduced as the fuel that F1 uses, so this sport goes from a slightly polluting sport to a clean sport," he said.
But Mosley is more sceptical about plans to make clean fuel a standard in F1, because of concerns that shifting crop production away from food and onto biofuels can be detrimental.
"We're obviously just starting with serious efforts on the environment in Formula 1," said Mosley. "The danger is people get carried away with new ideas for environmentally friendly motorsport, the most obvious one being biofuel.
"We now all understand the first generation biofuels are actually a negative in that what you're effectively doing is taking fuel away from people. The source of the first generation biofuels is the same as food and, when you've got one billion people in the world who don't have enough to eat, it's really not a good thing to do.
"Second generation biofuels perhaps, but the approach we have taken in Formula 1, and we intend to take in the future in the WRC, is to try to encourage efficient use of energy rather than to dictate which source of energy it should be."
Mosley believes the introduction of Kinetic Energy Recovery Systems (KERS) in F1 this year, and more use of similar technology in the future, will have a greater benefit on the environment that just biofuels.
"If you can get more work from a given quantity of energy or fuel, then that's precisely the direction the car industry is going and needs to go," he said.
"The KERS system is an example of that. Other examples are the recovery of energy from exhausts and even from the cooling system, both of which will come into Formula 1 in 2013.
"The KERS system is an obvious thing that needs doing because anybody can see that to waste the energy you have in a car when it is moving by simply turning it into heat and putting it into the atmosphere is completely wasteful.
"If the technology exists to recover the energy again and use it again then obviously we should use that. It doesn't matter if the car is an electric car, a hydrogen car, runs on biofuel or second generation biofuel, it doesn't make any difference. At the moment almost every car on the road and certainly every car on the rally whenever they put the brake on, that energy is lost.
"To reuse the energy again and again is clearly a massive step forward. We see this with some road cars such as the Toyota Prius is the obvious example. But those cars don't absorb all the energy when you put the brake on, certainly not if you brake at all hard."
He added: "Formula 1 is developing systems that are capable of absorbing all the energy, but at the same time are very small and very light like they have to be. The problem with the road cars is the systems tend to be very big and very heavy, so that's going in the right direction.
"That can continue to the car industry and the road traffic industry as a whole, and that's something we'd like to see coming in in rallies."
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