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'Green' gas and diesel get boost in biofuel grants

Federal government pumps more than $600 million in projects to demonstrate advanced biofuels, including cellulosic ethanol and plant-based replacements for diesel, jet fuel, and gasoline.

When it comes to the U.S. biofuels strategy, it's no longer just about ethanol.

The Department of Energy and Department of Agriculture announced on Friday that $564 million in stimulus act funding would be used toward constructing biorefineries to make liquid fuels from plants. Out of the 19 projects receiving funding, nearly half focus on the development of "drop-in" replacements for gasoline, diesel, or jet fuel. The rest focus on technologies for making ethanol or chemicals from sources other than corn. (Click this PDF for a full list of recipient projects).

Green crude from algae Sapphire Energy

In one example, San Diego-based Sapphire Energy, which counts Bill Gates as an investor, received a $54.5 million loan guarantee to build a pilot facility to convert algae into "green crude" that can replace jet fuel and diesel.

These fuels are the chemical equivalents of petroleum-based gasoline, diesel, and jet fuel so they can fit into the existing distribution fuels infrastructure, backers say.

The Energy Department-funded projects, which will be matched with private money for a total of $1.3 billion, are meant to test a number of biofuels techniques at demonstration scale. Chemical and energy company UOP, for example, received a total of $31.7 million to make a renewable diesel and jet fuel from wood wastes by treating biofeedstocks with hydrogen during its process.

Different methods to produce ethanol will also be tested through the Energy Department program. In the 2007 Energy Act, the federal government set an aggressive goal for production of advanced biofuels made from plants other than corn, such as agricultural residue and wood.

Algenol Biofuels received almost $59 million in total to produce ethanol from seawater algae and carbon dioxide in Freeport, Texas. Cellulosic-ethanol company ZeaChem, meanwhile, received $25 million from the Energy Department to supplement a planned project to make ethanol from poplar trees in Oregon using a microbe that breaks down wood. And waste-to-fuel companies BlueFire Ethanol and Enerkem received grants for their gasification-based systems for converting municipal solid waste into ethanol.

In a statement, Energy Secretary Steven Chu said advanced biofuels are a key part of the country's goal to create a cleaner, more sustainable transportation system and generate jobs.

In a statement, the Biotechnology Industry Organization said the government funding will help innovative companies attract capital from private sources to commercialize their technology.