Tuesday, October 7, 2008

Mascoma wins $26M in DOE funds for Michigan plant

By Efrain Viscarolasaga

Boston-based Mascoma Corp.’s proposed cellulosic ethanol plant in northern Michigan got a shot in the arm today as the company, in conjunction with Michigan Gov. Jennifer Granholm and assorted state luminaries, announced the project has been awarded $26 million in funding from the U.S. Department of Energy.

The funding, which was originally slated for a Mascoma plant in Tennessee, spurred the state of Michigan to increase its previously announced investment of $15 million to $23.5 million, bumping the total amount of funding raised for the project to almost $50 million.

The facility is expected to be built in Kinross, in the state’s upper peninsula. It is expected to draw a final cost of $250 million or more, though Mascoma executives said the construction could be completed in phases, eliminating the need to wait for all the funding before becoming operational.

In addition to the state and DOE funding, the project faces additional opportunities in the U.S. Department of Agriculture’s Farm Bill, which was passed last May, according to Michigan state officials.

The facility will be Mascoma’s first full-scale facility and is expected to have a capacity of approximately 40 million gallons of ethanol per year. The company has a pilot facility operating in upstate New York, with a capacity of about 500,000 gallons per year.

Mascoma is partnering on the project with Michigan-based timber, mining and project management company, JM Longyear. According to officials, the pair will form a new company, Frontier Renewable Resources, which will own the project.

The Michigan plant will use locally available wood chips and wood waste products as a feedstock for the creation of ethanol using the company’s single-step fermentation process, which it calls consolidated bioprocessing.

Construction of the facility is expected to create about 150 jobs in Michigan’s upper peninsula, while the spin-off jobs created once the plant is operational could reach 700, according to statements from Gov. Granholm.

With a site chosen and funding in hand, Mascoma is currently in the process of acquiring additional land in the area and obtaining the required permits. If all goes according to plan, construction on the plant is expected to begin in under a year, with its first operations beginning in about 18 months.

Also participating in the project are Michigan State University and Michigan Technological University, as well as the Michigan Economic Development Corp., and Mascoma investors General Motors Corp. and Marathon Oil Corp.