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Range Fuels expands funding to speed cellulosic-ethanol production

Company lands $166 million, more than anticipated, to help complete a 20 million gallon-per-year plant next year that uses a gasification process.

When it comes to next-generation biofuels, it's a competition for both technology and capital.

Range Fuels expanded its previously announced series B funding from $100 million to $166 million, according to reports. Private Equity Hub on Monday cited a regulatory filing, saying Morgan Stanley Capital Group joined the round. VentureBeat reported the expansion last week.

The money will be used to build the first phase of its ethanol plant in Soperton, Ga., which will use forestry waste as a feedstock. The plan is to complete a 20 million gallon-per-year plant next year that uses a gasification process.

There's growing awareness of the problems associated with corn-based ethanol, which research shows does not significantly reduce greenhouse gas emissions compared to gasoline. The high demand for ethanol, driven by government mandates, is also being blamed as one reason for higher food prices.

Cellulosic ethanol from wood chips, grasses, or agriculture waste is considered a better alternative than corn, but production has not yet been done on a commercial scale.

With a planned plant for 2009, Range Fuels will be one of the first providers in operation.

Other companies on the hunt to make cellulosic ethanol on a large scale include Coskata, which signed a deal with General Motors and intends to have a pilot plant running next year. Coskata uses a combination of gasification and microbe processing to convert a range of carbon sources to ethanol.

GM last week said it has also invested in Mascoma, a company using a third approach: genetic manipulation of bacteria optimized for breaking down sugars and fermentation.