It’s been a long road, but the ZeaChem cellulosic ethanol demonstration plant in Oregon is finally turning out fuel.

The company announced the step this week, calling the Boardman plant “among the first operational cellulosic biorefineries in the world.” It’s a bit of good news in the seemingly illusory realm of ethanol made from non-food feedstocks, which have been slow to fulfill their promise of extricating the industry from the food vs. fuels debate.

image via ZeaChem
image via ZeaChem

“ZeaChem is developing the first truly-integrated biorefineries for the production of a broad portfolio of economical and sustainable biofuels and bio-based chemicals,” Jim Imbler, president and chief executive officer of ZeaChem, said in a statement. “The demonstration plant is fully integrated and operating as we ramp up to full capacity.”

ZeaChem says it makes ethanol from wood from a fast-growing hybrid poplar variety farmed nearby as well as locally sourced agricultural residues. The demonstration plant has an annual production capacity of 250,000 gallons.

ZeaChem had announced last October that the plant was completed “on budget,” however, it had taken longer to build than had been expected — in earlier statements, the company had said it anticipated a startup by the end of 2011. And in October it said it expected to begin production before the end of the year.

But great patience seems to be required when it comes to cellulosic ethanol. Under the Energy Independence and Security Act of 2007, the U.S. was supposed to produce 500 million gallons of cellulosic ethanol in 2012, but all that arrived was a mere 20,000-gallon dribble early last year .

The Obama administration has tried to give the sector a boost, approving loan guarantees for a couple of new plants in the Midwest – one in Kansas and another in Iowa. ZeaChem has received support as well. In 2009, the DOE gave it a $25 million grant to do the Boardman demo. Then, in October 2011, ZeaChem was one of the industrial partners in a $40 million Department of Agriculture (USDA) grant to the University of Washington for the development of cellulosic ethanol – and another partner was GreenWood Resources, which is growing the poplar trees in the Boardman area for use in the ZeaChem plant.

Ultimately, ZeaChem aims to have a 25 million gallon biorefinery up and running at the Oregon site. To support that, the Obama administration last year used the USDA’s Biorefinery Assistance Program that was part of the 2008 Farm Bill to conditionally extend a $232.5 million loan guarantee to the Colorado-based company. Not all of the ZeaChem’s backing is coming from the government, however; last October the company said it closed series C financing totaling $25 million in new equity.

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