Biomass will add to ethanol pool in 2-3 years

CHICAGO (Reuters) - The first commercial-scale cellulosic ethanol plants should come on line by late 2009 or early 2010, and the industry remains poised to meet a U.S. government goal to increase biofuels use five-fold by 2022, the head of a leading energy crop company said on Monday.

"We should see the first commercial-scale plants coming on line in late-2009, early-2010," said Richard Hamilton, President and CEO of California-based Ceres, speaking at the Reuters Global Agriculture and Biofuels Summit.

Widely touted as the future of biofuels production, cellulosic ethanol is made from non-food sources such as wood chips or plant stalks and leaves.

Ceres develops high biomass yielding crops such as switchgrass and miscanthus for future use as dedicated energy crops.

The majority of ethanol produced in the United States is currently made from corn grain. It currently costs at least twice as much to make ethanol from cellulosic feedstocks than from corn.

Those high costs have thus far limited expansion of cellulosic technology beyond the demonstration phase, but an injection of government funding has sped the process in recent months.

The U.S. Department of Energy rolled out about $1.1 billion in funds to research bioenergy and build six commercial-scale biorefineries to help achieve the goal of increasing renewable fuels use to 36 billion gallons over the next 15 years.

Some or all of those six plants should be up and running in about two years, Hamilton said.

Those and other first generation plants will be small and costly to operate, but later generations will be much larger and much more efficient, he said.

"I sometimes refer to a cellulosic biorefinery as the ultimate flat-screen TV. The first few that roll off the assembly line are pretty expensive, but the costs come down once they shake out those operating costs," Hamilton said.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Karl Plume; editing by Carol Bishopric)