updated 11/7/2007 10:40:54 AM ET 2007-11-07T15:40:54

Among the tall pines of rural Georgia, dignitaries with ceremonial shovels broke ground Tuesday on the first U.S. commercial plant designed to turn trees and wood scraps into biofuel for automobiles.

Colorado-based Range Fuels plans to finish construction of the plant's first phase by the end of next year, and start producing 20 million gallons of ethanol per year in 2009. Every drop will come from trees, a big deal considering nearly all ethanol produced in the U.S. is now made from corn — a valuable food source.

"When people think of biofuel and ethanol, they think of corn and Iowa. But we will be changing that," said Gov. Sonny Perdue, declaring he could "feel history in the making."

The Department of Energy chose the Range Fuels plant in Georgia as one of six projects to receive $385 million in federal funding aimed at jump-starting ethanol production from nontraditional, cellulose-based sources like wood chips, switchgrass and citrus peels. The Georgia plant expects to receive $76 million.

Energy Secretary Samuel Bodman told a crowd of local residents gathered beneath a sprawling white tent that the plant, located 150 miles southeast of Atlanta, will launch "a new phase in our effort to make America more energy secure."

Sun Microsystems co-founder Vinod Khosla, the venture capitalist who is backing the Range Fuels plant, went a step further by saying America needs to "declare a war on oil." Cellulose-based ethanol, he said, "is the weapon we need."

"This is nothing less ... than to replace 100 percent of our oil," Khosla said. "It's not about playing around with five or ten percent."

Waste to gas, then liquid
Range Fuels will have plenty of raw material for its new plant nearby. Soperton is a hub of Georgia's timber industry that bills itself as the "Million Pine City" in a state with 24 million acres of forest.

The Soperton plant will use a chemical process that heats timber waste and mill residue and transforms it into a heavy synthesis gas. The gas, known as "syngas," is then refined into a liquid and turned into ethanol and methanol.

Eventually, Range Fuels plans to produce 100 million gallons of ethanol annually at the Soperton plant.

Mitch Mandich, CEO of Range Fuels, said the ethanol produced here will be more environmentally friendly that corn ethanol because it will rely largely on scrap wood leftover from timber harvests that would otherwise be left to burn or rot.

He also said it's more efficient to produce. The Broomfield, Colo., company's process for turning trees into biofuel uses 75 percent less water than it takes to produce corn ethanol, he said, and requires less energy overall.

Generous analysts say making four gallons of ethanol takes the energy equivalent of three gallons of it. Mandich says the Soperton plant will be able to produce 10 gallons of ethanol from wood using the energy equivalent of a single gallon.

"There's always a bit of butterflies when you start a new process, you're on the world stage," Mandich said. "But it gives you a conviction to even work harder, work smarter and succeed at it, because you know you're going to have a positive impact on the world."

'Bioenergy Corridor' promised
The Range Fuels' plant won't be the last biofuel startup in Georgia. State marketers will begin using a new slogan — "The Bioenergy Corridor" — to draw alternative energy companies to Georgia, said Nathan McClure, chief forester with the Georgia Forestry Commission.

With timber prices sagging, the state hopes tree farmers can earn additional revenue by selling their otherwise unusable wood waste as fuel to alternative energy plants, McClure said.

"We're trying to establish an additional product out there to add to what landowners can receive," said McClure. "Sixty percent of Georgia's forests are owned by families and individuals, and they have to rely on something else for income."

Alternative fuel boosters have already lured a biodiesel plant to northwest Georgia with tax incentives. More plants in Camilla, Plains and Ellenwood are under construction.

An ethanol plant in Cordele using waste liquids — from soft drinks to milk — is expected to be running next month. The plant will also churn out water as a byproduct after extracting sugars and starch.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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