US refiner/marketer and ethanol maker Valero Energy has signed definitive agreements to fund most of the $232 million needed to build a cellulosic ethanol plant in Michigan, project partner Mascoma said Friday.
The Department of Energy and the state of Michigan will help fund the plan, which calls for a 20 million gal/year plant to be built in Kinross by year-end 2013.
The facility will use a technology created by Mascoma, a biomass-focused renewables company, that turns hardwood pulp into ethanol. Hardwood is an "underutilized, abundant resource in the surrounding area," said Mascoma.
The plant will be constructed so it can expand to 40 million gallons if needed. Valero, which will hold a majority interest in the plant as well as operate it and market the ethanol, will have the option to boost the capacity to 80 million gal/year.
Mascoma said it will receive royalties based on unspecified ethanol yield milestones.
A Mascoma-Valero joint venture called Kinross Cellulosic Ethanol has been created and the two companies have developed a framework agreement for partnering on additional cellulosic plants.
"This partnership provides an exciting opportunity to combine Mascoma's innovative CBP [consolidated bioprocessing] technology platform and expertise with Valero's project management, operating, distribution and marketing capabilities," said George Stutzmann, vice president of alternative energy at Valero, in a statement.
"We view this first commercial-scale cellulosic ethanol facility in Kinross and our partnership with Mascoma as an important foundation for potential expansion beyond Kinross," he said.
Valero currently owns 10 US corn-fed ethanol plants with combined capacity of 1.2 billion gal/year.