Last week, the banned alcoholic drink Four Loko was being recycled into car fuel, and today, it’s non-food waste from crops and wood scraps. Cellulosic ethanol is by no means a new idea, but no one has been producing it in bulk amounts. However, Mascoma Corporation, a biofuels company, will break ground on the first commercial production cellulosic ethanol plant in the U.S. this year. This morning, they announced that Valero, the nation’s largest independent oil refinery, will take the entire commercial output of the plant, set to open by 2013.
A new EPA rule starting this year requires all gasoline companies to blend in six million gallons (annually) of cellulosic ethanol, making the need for large-scale production of the product even more pressing. Valero will invest up to $50 million in the Kinross, Mich. plant. The entire cost of the plant, $350 million, is not yet covered, but other investors include General Motors, and Mascoma’s chief executive said that the company is also seeking loans from the Energy Department. The “offtake” agreement between Mascoma and Valero is the first of its kind in the industry.