Commercially viable cellulosic ethanol has held revolutionary promise as a fuel source for years, and now life and materials sciences giant Royal DSM and ethanol producer POET LLC are joining up to demonstrate and license “the next step in the development of biofuels.”

The new joint venture, called POET-DSM Advanced Biofuels, is scheduled to start production in the second half of 2013 at a facility called Project Liberty. The facility is currently under construction adjacent to POET’s existing corn ethanol facility in Emmetsburg, Iowa and will produce 20 million gallons of fuel in its first year before hitting an anticipated pace of 25 million gallons of cellulosic ethanol each year.

Project Liberty could be the start of a new construction and retrofit boom for ethanol producers. DSM, quoting the US Environmental Protection Agency (EPA), says that a many as 400 bio-refineries will have to be constructed by 2022 to meet the current volume requirements for cellulosic bio-ethanol.

Cellulosic ethanol differs from corn-based ethanol in that it relies on agricultural crop residue and ducks the food-versus-fuel debate that has raged over ethanol production and resulted in opening of the US market to imported biofuel. POET has been working on developing cellulosic ethanol for more than a decade and began operating a research pilot plant in 2008.

“The partnership has set an ambitious goal,” POET CEO Jeff Broin said in announcing the deal, which is owned 50% by each firm and headquartered in Sioux Falls, South Dakota. The company will make “cellulosic bio-ethanol competitive with corn ethanol, which is the most competitive liquid transportation fuel on the market today.”

DSM has developed yeast and enzyme solutions that increase biomass conversion rates and make the technology commercially viable, the companies said. DSM is fully committed to a post-fossil-fuel future, company CEO and Chairman Feike Sijbesma told Breaking Energy in an interview earlier this year.

“As the world is facing unprecedented challenges with a growing population making an ever-bigger claim on the planet’s resources, we need to accelerate the transition to a bio-based economy and this joint venture is a significant step in that direction,” Sijbesma said as the POET deal was announced.

The companies said that if the technology is extended to POET’s existing 27 corn ethanol production facilities, it could move up to one billion gallons of cellulosic bio-ethanol each year.

Photo Caption: A sugar-cane to ethanol production facility.