The company, Ethanol Technologies, holds an exclusive worldwide licence to a process which converts fibrous biomass to ethanol and generates surplus electricity from combustion of the lignin co-product.

Ethtec director and chief scientist Dr Russell Reeves says phase one of the four-phase project at Harwood in the northern rivers region of New South Wales was attracting significant international interest.

Dr Reeves says that, if the commercialisation program is successful, production time could be slashed from “days to minutes” and fuel ethanol production costs dramatically reduced.

“Our aim is to commercialise production of highly cost competitive fuel ethanol from lignocellulosic materials without using steam distillation and without generating large volumes of noxious effluent,” he said.

“Results from the critical first two phases of the project are expected to be available within 18 months and commercialisation can follow quickly thereafter.”

Feasibility studies suggest that fuel ethanol produced by the Ethtec process would have a crude oil equivalent cost in the range of $US36-50 per barrel when the ethanol is used in blends with petroleum fuels.

This cost of ethanol, without government subsidies, was competitive with the current cost of crude oil, which is in the range of US$90-100 per barrel.

“Economically viable conversion of woody or fibrous materials to ‘cellulosic’ ethanol is internationally recognised as being the basis of an environmentally sustainable industry that is able to deliver this liquid fuel in the volume required to meet projected demand,” Dr Reeves said.

He pointed to recent announcements by Virgin’s Sir Richard Branson and Microsoft’s Bill Gates involving plans to develop cellulosic and biomass ethanol.

EthTec is a subsidiary of Willmott Forests, whose chief executive Marcus Derham said it was a value-adding opportunity for the plantation forest industry sector.

“While we are pursuing this project conservatively with our sugar cane industry partners, the opportunity to add serious value to what has almost universally been treated as waste, is very, very compelling,” he said.

Dr Reeves said the production of ethanol from major food crops such as corn was distorting international markets and tying up vast areas of farm land in the United States and Europe, while delivering no significant reduction in greenhouse gas emissions.

“Studies have shown that all of Australia’s liquid fuel demand could be met by ethanol produced from fibrous biomass … without interfering with food production or causing land or other environmental degradation,” he says.

“The Ethtec process brings distinct environmental and production advantages over other ethanol production processes.”

The new Ethtec pilot plant is being constructed alongside the historic Harwood Sugar Mill on the Clarence River in northern NSW.