DOE shifts grant to Mascoma's Michigan project

By Susanne Retka Schill | October 06, 2008
Web exclusive posted Oct. 9, 2008 at 11:09 a.m. CST

Mascoma Corp.'s cellulosic ethanol plans are back on track with the Oct. 7 announcement that the U.S. DOE has agreed to transfer a $26 million grant originally awarded for a project in Tennessee to one in Michigan. Calling it a home run for the state, Michigan Gov. Jennifer Granholm said, "It's going to create next generation ethanol using wood waste from our sustainable forests." The state of Michigan will contribute $23.5 million to the project as well.

In July, Mascoma announced they were considering sites in Michigan's Upper Peninsula for a proposed 40 MMgy cellulosic ethanol plant. A site at Kinross Township in the Upper Peninsula has been chosen near a closed Air Force airfield, which contains roads, railroad and other infrastructure already in place.

Mascoma Chief Executive Officer Bruce Jamerson said the plant engineering and construction analysis have begun. Pending completion of the engineering and acquisition of needed permits, construction is likely to begin within a year and be completed within 12 to 18 months. Jamerson added that construction at the company's demonstration plant under construction in Rome, N.Y., is also on schedule.

Mascoma is partnering on the Michigan project with Marquette, Mich.-based JM Longyear, a timber, mining and project management company. The collaboration will involve the formation of a new company, Frontier Renewable Resources, which will own the project. In addition, Mascoma will team up with Michigan State and Michigan Tech Universities to tailor Mascoma's technology and supply chain options for the specific Michigan feedstocks used in production.

Mascoma Chief Executive Officer Bruce Jamerson said the grants will accelerate the company's plans by a year or more. "The grants help in uncertain capital markets," he said. "We will be raising capital next year for the balance of the funding." A total of $700 million is needed for the full project, although Jamerson said it can be built in phases as funding permits.

The company received a $15 million grant to become the state's first Center of Energy Excellence. Michigan State University and Michigan Technological University are assisting Mascoma with research projects on pretreatment, feedstock development and sustainable forestry practices. Earlier in the year, Mascoma announced equity investments from another Michigan cornerstone, General Motors Corp., along with Marathon Oil Corp.

April 18 Mascoma was a recipient of the DOE's second round of cellulosic ethanol funding. At the time, the company was in negotiations with the University of Tennessee to build a 5 MMgy plant in Vonore, Tenn. The University of Tennessee announced in late July that it had discontinued those discussions and had reached an agreement with DuPont Danisco Cellulosic Ethanol LLC to construct a pilot-scale cellulosic ethanol plant at the site.