BioEnergy International, a Norwell, Mass.-based biorefinery developer that secured $61.6 million in funding this week, plans to build a biomass and biomaterial company on a foundation of corn.

The company has two ethanol plants in development in Lake Providence, La., and Clearfield County, Penn., but is also working on putting up a pilot cellulose plant in Pennsylvania.

"If you look at the President and Congress' stated goals in excess of 30 billion gallons of renewable fuels, in some cases up to 60, I think most agree that corn kind of tops out at around 15 billion gallons," Samuel McConnell, VP of development at BioEnergy told the Cleantech Group.

"You really need alternative feedstocks in order to reach those significant goals, and that's where cellulose comes in," he said.

South Dakota's VeraSun Energy (NYSE: VSE [1]), one of the largest U.S. producers of ethanol, recently put some money into cellulose, making a minority investment in Massachusetts-based cellulosic ethanol developer SunEthanol (see VeraSun takes stake in SunEthanol [2]).

BioEnergy's cellulose plant could lead to more deals like the one the company already has with The Netherlands' Purac Biochem.

In June 2006, BioEnergy licensed one of its proprietary biocatalysts for the production of D(-) lactic acid to Purac, the world's largest producer of lactic acid and lactates.

Lactic acid is used in numerous industries, including bioplastics.

"In our minds it's not a matter of if it can be done cheaply enough, we've already demonstrated that it can, it's just a matter of convincing the financial entities that there's a replicateable business behind it," said McConnell.

This latest investment was led by Plainfield Asset Management, and included Camulos Capital, Itera Ethanol, and Context Capital Management.

Itera is a return investor. It put $10 million into BioEnergy in May 2006.

BioEnergy plans to use this week's $61.6 million round of financing for the plants in Pennsylvania and Louisiana, expansion of its research and development, and for existing corporate debt.

The company also has a commitment from Pennsylvania for over $22 million of state investments to support the ethanol project there, as well as an additional $5 million for the cellulosic plant.

Both plants are expected to produce 108 million gallons per year.

BioEnergy said it has a deal with Land O'Lakes to market the 380,000 tons of distiller's dried grains with solubles, or DDGS, produced annually at the Louisiana plant.

Also spoken for is the ethanol output at the Pennsylvania plant.

"We have an offtank agreement in place with Getty Petroleum Marketing for the entire output of the facility for 5 years, said McConnell.

The company expects to start construction on both plants this year, with the pilot cellulose plant expected to be constructed and operational by late 2008.

"It'll start out around 5 tons a day, and we also expect conversion at the same site, ultimately, of a commercial scale plant," said McConnell.

And the pilot plant won't just be used for pumping out cellulosic ethanol. The company has teamed up with researchers to look for more uses.

"What we're doing with the University of Florida is really on the back-end of the biorefinery," said McConnell.

"Being able to ferment these sugar solutions, that perhaps you've derived from cellulose, into not only ethanol, but beyond into a variety of specialty chemicals," he said.

The chemicals the company plans on producing would be the kind used in everyday items.

"The automotive companies are under a lot of pressure to find a renewable platform for all the materials that go into the cars, and these chemicals that we're talking about are really the building blocks for those types of polymers," he said.

Components like that are likely to start showing up very soon, with Purac set to go into commercial production next year with BioEnergy's D(-) lactic acid.

"That would largely be a component of various plastics. Plastic knives and forks, for instance, are largely lactic acid based," he said.

The company seems to have all its ducks in a row, but McConnell acknowledges that there is a lot of money chasing ethanol alternatives right now.

"I don't think you'll see just one company succeed in it, I think you'll see multiple solutions to this. And obviously we think we're going to be a big part of that," said McConnell.