Ethanol maker Mascoma heads for the forests

Mascoma, a start-up developing ways to convert wood chips to ethanol, has said that it intends to build initial production plants in New York and other spots in the northeast U.S.

The Cambridge, Mass.-based company on Wednesday announced a partnership with Tamarack Energy which will work with Mascona to site and develop the plants. It raised a second round of $30 million in funding earlier this month.

Mascoma is designing microbes and production techniques for making what is called cellulosic ethanol, a fuel made from woody substances like wood chips or grasses.

Corn-based ethanol is already being manufactured and distributed in large quantities. Cellulosic ethanol is not yet considered as mature as an industry because the production costs are higher.

"The technology to make ethanol from cellulose has been around for many years. The question is can it be done cost effectively," said Colin South, the president of Mascoma.

The company is developed specialized microbes and equipment that can compress the multi-step cellulosic ethanol production process. Ultimately, the company hopes to create ethanol from biomass in a single tank which will lower the cost, South said.

The company has decided to focus on wood chips as its feed stock for its first plants, which will be constructed next year and operational in 2008, South said.

Siting in the northeast United States will allow the company to get wood chips from lumber mills. Initially it intends to build in New York and explore Pennsylvania and New England.

Ethanol can be used in so-called flexible fuel vehicles that can run on gasoline or ethanol. The fuel is cleaner than gas because it emits less pollution.

Advocates argue that cellulosic ethanol is more promising than corn-based ethanol because it promises to use less fuel and water in the production process and emit less pollution.