The U.S. Department of Energy has included Pacific Ethanol in a matching award totaling $24.32 million to build the first cellulosic ethanol demonstration plant in the Northwest United States. The plant will employ a technology to produce ethanol from wheat straw, wood chips and corn stover and will be co-located at the site of Pacific Ethanol’s existing corn-based ethanol facility in Boardman, Oregon. Pacific Ethanol’s partners in winning this competitive process are, BioGasol ApS and the Joint BioEnergy Institute (Lawrence Berkley National Laboratory and Sandia National Laboratory). BioGasol ApS has developed the proprietary technology and the Joint BioEnergy Institute will be providing support and specific research and development on enzyme technology.

The pilot plant, which will be designed to produce 2.7 million gallons of ethanol annually, will demonstrate the potential of a technology developed by BioGasol ApS to produce ethanol from a diverse mixture of biomass that is readily available in the area of the Boardman plant. Current plans call for the plant’s completion in 4th quarter 2009 and matching criteria will include in-kind contributions that will be finalized with further negotiations with the Department of Energy.

“We are pleased to be working with the DOE, BioGasol and the Joint Bioenergy Institute on commercially demonstrating cellulose to ethanol production technology,” said Neil Koehler, CEO of Pacific Ethanol. “Pacific Ethanol is committed to being a leader in developing new methods to convert a variety of biomass resources into ethanol. Success in this industry-wide effort to commercialize cellulose to ethanol technology will allow our country to replace a significant proportion of imported oil with US produced renewable resources and reduce CO2 emissions by millions of tons annually, delivering long term value to the economy, the environment and our shareholders.”

“Our strategy of destination plants has always been to exploit the vast amounts of biomass that are available for use in the regions where we operate. Our objective is to utilize a successful cellulosic demonstration plant to scale up the technology throughout our network of production facilities,” Koehler added.

Birgitte Ahring, CEO of BioGasol added, “The sustainability and flexibility of our process technology could set the standard for second generation biofuels production. The cost effectiveness of our proprietary process concept has already been validated in pilot plant scale and we believe that the future production cost can be competitive with other transportation fuels when the technologies are fully matured. The DOE grant gives us an excellent opportunity to bring our process concept one step closer to commercial viability and we look forward to working with Pacific Ethanol and DOE’s Joint BioEnergy Institute to realize the full potential of this project.”

The Department of Energy’s announcement can be found here.

Pacific Ethanol’s site is here.