ATLANTA – In the pine forests of rural Georgia, Devon Dartnell sees a path into the global fuel economy. As the biomass program manager for the Georgia Forestry Commission, Dartnell is impatiently waiting for construction to begin next month of a plant that will convert forestry wastes into ethanol, a car fuel, and rival similar efforts in Michigan.

The facility is an important test to see whether lumber and agricultural by-products, rather than corn or sugar cane, are an economically viable “feedstock” for ethanol production, CNET News.Com reported. Behind the plant is Range Fuels, a start-up headed by a former Apple executive and financed by famed Silicon Valley venture capitalist Vinod Khosla.

Dartnell hopes this project, eligible for up to $76 million in U.S. Department of Energy grants, will lead to many more plants-and a new industry-in the state, including Michigan.

And just like Georgia, other states are encouraging development of cellulosic ethanol.

The state of Michigan is working with Mascoma, a cellulosic ethanol company spun off from Dartmouth College, and said in July that they intend to build a plant in Michigan using wood wastes as feedstock.

Mascoma, also backed by high-profile venture capital firms, has designed organisms that speed up the process of breaking down biomass and converting sugars to ethanol.

Michigan’s governor, Jennifer Granholm, is enthusiastic about the plan and says it will help the state economically. The total investment from the state and Mascoma could top $150 million, said Michael Shore, a spokesman from the Michigan Economic Development Corporation, a state agency.

“The state of Michigan will be putting some significant dollars on the line. We certainly believe there’s a race to be first and we want to be in it,” Shore said.

The Georgia facility gives the state energy security and keeps the money in-state, Dartnell said. “Today, if we buy a tank of gasoline, a lot of money ends up with the oil reserve owners and refiners, and it’s spread all around the world.”

Georgia’s enthusiasm for the Range Fuels plant–one of a handful now being planned in the U.S.–underscores the high hopes attached to cellulosic ethanol, an advanced biofuel that backers anticipate will play a large role in meeting federal targets for domestic fuel production that can one day offset reliance on foreign oil.

But like many energy-related technologies now being actively pursued, there are potential pitfalls for advanced biofuels, including long-standing technology hurdles and environmental questions. And getting clear-cut answers on the benefits and trade-offs of biofuels is tricky.

“Just because the technology can be done right doesn’t mean we will use it right or develop it in a smart way; that’s the real challenge,” said Nathanael Greene, senior policy analyst at the National Resources Defense Council (NRDC). “Biofuels, in particular, can be anywhere from very good for the environment to very bad.”

Grain versus cellulose

Cellulosic ethanol promises several advantages over corn-based ethanol which, fueled by government policies and investor capital, is now undergoing a massive build-out.

Making ethanol from forestry or agricultural waste does not involve the same intensive farming as corn, which requires more water and labor, cellulosic ethanol proponents say. Also, in the ongoing food-versus-fuel debate, cellulosic ethanol advocates say that forests don’t compete for land with food crops.

The Soperton, Ga., plant will be using wood cast away by loggers. Trees are hauled to a central point where their tops and branches are cut off, providing the material for Range Fuels’ multi-step thermochemical process.

Tree branches will go into a large tank where enough heat and pressure are applied to the mix to turn it into a gas. That synthetic gas is treated and then passed through a chemical catalyst which converts the gas to alcohol. Finally, the alcohol gas is converted to fuels and then turned into liquid.

Companies are pursuing different routes to cellulosic ethanol. Iogen, one of several companies using enzymatic processes, has built a demonstration plant in Ottawa that uses specially designed enzymes to convert agricultural wastes, such as corn stalks and straw, to ethanol.

Other wood wastes, even wood from natural disasters and fires, could be used, Dartnell said. Researchers are also busy devising processes to convert grasses, such as switchgrass and Micanthus, into fuels.

“Everybody is looking for feedstocks which they have to then plant and grow,” Dartnell said. But because current logging practices usually leave branches behind, the waste is already there. It’s just not being put to good use.

Indeed, companies have promised working cellulosic ethanol processes for years, but at this point, most work remains in the research or trial stage.

Part of what has held back making advanced biofuels from wood or straw is the significantly higher capital costs it takes to build a plant. But even with the bigger up-front investment required, rising corn prices have made the cost of biofuel from cellulosic sources only slightly higher than corn-based ethanol, according to a recently published report in the journal Biofuels, Bioproducts and Biorefining.

Range claims its first plant will be completed next year and will be capable of making 20 million gallons of ethanol a year. It intends to later expand to 100 million gallons per year.

Dartnell estimates that the state has enough wood residue from tree farming and milling to create 2 billion gallons per year.

According to local press reports, the total investment of the Soperton, Ga., plant will be $225 million. A Range Fuels representative said that the company and Treutlen County have not finalized all of the incentives, which are said to include free use of land and tax abatements.

Federal mandates are setting a rapid pace in biofuel production and investment. Ethanol, made from corn, is now used as a gasoline addition, and blends with a high concentration of ethanol can power “flex-fuel” cars that run both ethanol and gas.

The Energy Policy Act of 2005 set a target of 7.5 billion gallons of renewable fuels by 2012–a benchmark that is expected to be surpassed as early as next year. The current capacity from U.S. production is more than 6.5 billion gallons, with another 6.4 billion gallons currently under construction, according to the Renewable Fuels Association.

Biofuels today make up a fraction of gasoline consumption, which in the U.S. is about 400 million gallons a day, according to the U.S. Energy Information Administration.

By mid-century, domestically grown biofuels could meet one third of current fuel demand, according to a 2005 report from the Departments of Energy and Agriculture. The report assumes a major portion will be derived from forests as well as agricultural waste products.

Deforestation?

As the investments continue to flow toward ethanol and government biofuel production targets rise, environmentalists are taking a closer look.

Making ethanol from the cellulose in agricultural and forestry waste rather than corn produces less greenhouse gases, according to environmental groups. An NRDC study found that, on average, corn-based ethanol reduces greenhouse gas pollution by 18 percent for every gallon of gasoline displaced.

Making ethanol from other sources of biomass can reduce the greenhouse gas emissions by 50 percent to 75 percent depending on the feedstock, the group found. The analysis sought to analyze the emissions through the lifecycle of fuel production. Compared with perennial crops like grasses or managed forests, creating corn ethanol is more polluting because farmers use petroleum-based fertilizer and tractors that consume gas, according to studies.

The NRDC advocates incen