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Summary:

There’s a quiet race going on to be the first in the U.S. to turn the country’s waste and biomass into next-generation ethanol at a large scale; as companies make progress it’s getting louder. Ethanol producer Verenium said today it has officially opened a demonstration facility […]

There’s a quiet race going on to be the first in the U.S. to turn the country’s waste and biomass into next-generation ethanol at a large scale; as companies make progress it’s getting louder. Ethanol producer Verenium said today it has officially opened a demonstration facility in Jennings, Louisiana, which will produce 1.4 million-gallons-per-year of cellulosic ethanol. The company says their demo plant is now in the commissioning phase (the final testing and evaluation phase) and the company is on track to start construction of a 30 million gallon-per-year commercial plant “in the middle of next year”.

Verenium says the opening of their cellulosic demo plant is “a first for the U.S.” and its commercial plant will be “the first of its kind,” located in the southeastern United States. The company is publicly traded on the Nasdaq, and its stock rose slightly this morning to $2.40. Last time we looked at Verenium’s stock it had dropped 12 percent in February on its weak earnings: for the quarter ended Dec. 31, Verenium posted a loss of $21.6 million, compared with $6.1 million, for the same period a year earlier.

Verenium might claim it is the first with a demo plant and will be first to construct a commercial plant, but other companies are fighting for that title, too. Range Fuels, a startup backed by Khosla Ventures and other investors, is in the process of completing the initial first 20 million-gallon-per-year phase of a commercial plant in Soperton, Ga, which it expects to finish in 2009. When that plant is fully up and running it’s expected to produce 100 million gallons of ethanol a year from wood waste out of Georgia’s pine forests.

Range Fuels had to push back completion of the plants initial phase from the end of 2008 to 2009, but Range Fuels CEO Mitch Mandich told us “the plant is the first of its kind and even though pushed back we have a multiple year head start over the competition.”

Coskata, which is also backed by Khosla Ventures, as well as GM, plans to scale up a pilot project to a 40,000-gallon demonstration facility by the end of 2008. In April Coskata said that pilot plant would be built in Madison, Penn., just northeast of Pittsburgh, and cost $25 million to build. The company says it is also working on a 100 million-gallon-per-year facility somewhere in the U.S. that they hope will go online by early 2011.

Interestingly enough, Verenium was also previously a Khosla investment. Founded in 1994 as Celunol, the company reportedly raised more than $60 million from Khosla Ventures, Braemar Energy Ventures, Charles River, and Rho Ventures. In 2007 Celunol was bought by Diversa for over $100 million and was renamed Verenium in 2007.

Regardless of which company is technically first, any company that can start producing cellulosic biofuels in the U.S. will get a boost from the government. The Farm Bill and the Energy Bill are providing companies with tax credits, loan guarantees and research and development incentives.

By Katie Fehrenbacher

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