Last week, SPP notified the market that it would receive a grant to jointly fund a pilot study into investigating the feasibility of developing Australia's full-scale woody biomass to ethanol facility.

The $96,800 grant has been made under the Commonwealth's 'New Industries Development Program' and will be supplemented by an additional investment of $232,000 by SPP.

SPP told the stock exchange that the funds will be used to allow the company to generate a wide range of design data which, in conjunction with organisations with global experience in ethanol production, to assess in detail the commercial and technical viability of a full-scale plant.

SPP said in a statement that the use of ethanol as a liquid transport fuel would help reduce greenhouse gases. "An ethanol production facility would also provide a significant environmental benefit, not at least being the production of a fuel with relatively low greenhouse emissions," SPP said.

However, the proposed ethanol plant is to be located next to SPP's expanding Gladstone facility, which according to one commentator is a "greenhouse belcher".

As for the Gladstone facility itself, according to a leaked document released by the Labor Party, the Australian Greenhouse Office opposed the Federal Government's decision to extend the $36 million annual subsidy.