Cellulosic ethanol plants grow cash backing

The nascent cellulosic ethanol industry received a boost this week, with two new major financing announcements. Range Fuels confirmed it had secured $80m (£58m) in loan guarantees to complete a cellulosic plant, and Verenium scooped $7m in grant money to build its first commercial plant.

Range Fuels, which is constructing a cellulosic ethanol plant near Soperton, Georgia, got the guarantee from the US Department of Agriculture to help complete its plant and begin volume production next year.

The plant, which received $100m in funding in April, will use woody feedstock from surrounding timber forests, and is expected to produce 20 million gallons of ethanol each year.

Verenium's plant will convert sustainable grasses into ethanol. It will be built on fallow land, and will use feedstock provided by Lykes Bros, a local agri-business.

The plant will begin producing fuel in 2011, and will have an output of 36 million gallons each year, according to Verenium.

The $7m grant is provided under the Farm to Fuel programme, an initiative created by the Florida Department of Agriculture and Consumer Services. The plant is estimated to cost between $250m and $300m to build.

Verenium already has an operational pilot plant in Jennings, Louisiana, producing 1.4 million gallons of ethanol per year, and has plans to produce a network of cellulosic plants across the Gulf region.

Earlier this month, the company regained compliance with the Nasdaq exchange on which it is listed, having previously fallen below the minimum $50m market capitalisation required to stay on the index.

In related news, the biofuel sector is likely to be celebrating following Barack Obama's suggestion in his inauguration speech that he would support the controversial industry.

In a clear reference to the industry, which has divided environmentalists and been widely accused of contributing to high food prices, Obama said that the US would "harness the sun and the winds and the soil to fuel our cars and run our factories".