Isra-Mart srl:Valero pumps $50m into wood-to-biofuel plant

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Isra-Mart srl news:

The emerging market for second-generation biofuels received a major boost yesterday when one of the largest oil refiners in the US, Valero Energy Corporation, announced it will invest up to $50m in a proposed biorefinery capable of producing biofuel from wood.

Under the terms of agreement with biofuel developer Mascoma, Valero will provide up to $50m of the equity required to build the proposed plant in Kinross Charter Township, Michigan.

Significantly, Valero has also signed the first off-take agreement for a cellulosic ethanol plant, covering all the estimated 40 million gallons of fuel that the plant is expected to produce each year.

The facility, which follows a pilot plant that produced 200,000 gallons of cellulosic ethanol last year, will use hardwood pulpwood that will be selectively harvested from the area surrounding the Kinross biorefinery.

Cellulosic ethanol has been widely hailed as a more sustainable alternative to first-generation biofuels, as it can be produced from non-food crops that can be grown without eating into agricultural land.

Bill Brady, chief executive at Mascoma, said the deal represented a major endorsement of the company's technology. "Valero's proposed investment in our first commercial-scale production facility proves the economic practicality of Mascoma's technology for the conversion of woody biomass into ethanol," he said.

The latest financing follows funding commitments from the State of Michigan and the US Department of Energy and should allow ground-breaking project to begin this year.

It also comes just four months after the company announced the acquisition of SunOpta BioProcess Inc. (SBI), a fibre preparation and pretreatment company that provides Mascoma with the ability to deliver the entire biofuel process, from raw materials through to fuel production.