U.S. refiner Valero has agreed to invest up to $50 million in a Michigan plant set to produce ethanol from wood-waste.
As part of the deal Valero has agreed to purchase up to 40 million gallon of cellulosic ethanol from plant owner Mascoma, , which first reported the news.
Backers of Lebanon, N.H. Mascoma include, Khosla Ventures, Kleiner Perkins Caufield & Byers, VantagePoint Venture Partners, Flagship Ventures, Atlas Venture. Strategic investors�include General Motors and Marathon Oil.
Construction of�Mascoma�s $350 million biofuel refinery will begin this year to reach commercial operation in 2013.� The plant is located Kinross Charter Township, Mich.
The state of Michigan has committed $23.5 million to fund the project. A majority of the financing is expected to come from a Department of Energy $210 million loan guarantee.
While Cellulosic ethanol is more expensive than traditional corn or sugar-based ethanol, it’s also believed to be better for the environment and doesn’t lead to a tightening of food supplies.
In 2009 Valero bought from bankrupt VeraSun Energy.