September 23, 2011 / 8:46 PM / 6 years ago

UPDATE 1-US DOE finalizes loan aid for POET ethanol plant

2 Min Read

* Cellulosic fuel not commercial yet

* $105 million in loan aid for plant in Iowa

* DOE loan aid program under fire for Solyndra controversy

(Adds details, quote from CEO)

WASHINGTON, Sept 23 (Reuters) - Private U.S. ethanol maker POET said on Friday the Department of Energy has finalized approval for $105 million in loan aid for building a cellulosic ethanol plant to make fuel from corn waste.

The Obama administration has been under fire from Republicans who say it missed key warning signs before the DOE issued loan aid for the start-up solar company Solyndra, which went bankrupt.

POET, the biggest ethanol producer in the world, said its the loan aid would allow it to construct Project Liberty, a 25 million gallon per year cellulosic plant in Iowa.

"Financing has been a key hurdle to getting the first commercial-scale cellulosic ethanol plant up and running," POET CEO Jeff Broin said in a release. "We're excited to show the world the tangible results of a decade of work by our researchers and engineers."

Cellulosic ethanol backers hope to make commercial quantities of motor fuel distilled from crop waste and non-food crops like switchgrass. Currently the fuel is too expensive to compete with traditional motor fuels, without incentives. (Reporting by Timothy Gardner; Editing by Marguerita Choy)

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