Japan firms look to develop cellulosic ethanol

TOKYO, Feb 9 (Reuters) - Nippon Oil Corp and other Japanese manufacturers including Toyota Motor Corp said on Monday they would set up a research body to develop next- generation cellulose-derived biofuels at comparatively low-cost.

Cellulosic ethanol uses inedible plant matter rather than crops as its feedstock. It is expected to be made from the tough woody bits of grasses and fast-growing trees as well as plant and timber waste.

Biofuels like U.S. corn-based ethanol, have widely blamed for spiking food and grain prices as well as environmental problems, but the next-generation alternatives are no quick fix as they are more expensive than gasoline.

The consortium has set itself the goal of producing 250,000 kilolitres (1.6 million barrels) per year of bioethanol by March 2014, and producing bioethanol at 40 yen ($0.437) per litre (about $70 a barrel) by 2015.

The other firms are Mitsubishi Heavy Industries, Toray Industries Inc, Kajima Corp and Sapporo Engineering Ltd, a wholly owned subsidiary of Sapporo Breweries. ($1=91.57 Yen) (Reporting by Osamu Tsukimori; Editing by Edwina Gibbs)