While first generation ethanol plants developed to use corn as a feedstock are struggling, a new crop of cellulosic ethanol plants are being built across the country. Commercialization of the technology may soon be at hand.

Even more importantly, the variety of raw materials being used indicates that biofuel production is becoming consistent with other renewable energy sources in harvesting the most efficient locally available resources.

Cellulosic ethanol plant projects recently in the news include collaboration between the University of Florida, Buckeye Technologies and Myriant Technologies which are jointly working on a demonstration plant in Perry, Florida. The facility will evaluate feedstocks including forest products, sugarcane, and sugar processing byproducts. To get the most benefit from the organic products, the plant will also use the biomaterials in developing natural alternatives to petrochemicals and a plastic alternative for water bottles.

In Sioux Falls, South Dakota, a cellulosic plant will be powered by liquid waste leftover from processing corn cobs into ethanol that has put into an anaerobic digester. The 25 million gallon per year ethanol plant is being developed by Poet and is slated to go on line in 2011.

Danish giant DONG Energy, through its Inbicon subsidiary, is building a demonstration cellulosic ethanol plant in Kalundborg as well as two 20 million gallon per year plants in the U.S. The plants will process 460,000 tons of corn stover or wheat straw as the company looks to commercialize its technology.

The biofuel market is shaping up with different feedstocks likely to lead regions based on the plants that come naturally: switchgrass (West and Southwest), corn and wheat (Midwest), forest products (Northeast and Northwest), and sugar cane (Southeast).

This is part of the greater shift towards decentralized renewable energy production. Wind, solar and hydro likewise are being called upon as the natural environment and weather provides. The many benefits of produced fuel and power near where it is needed include lower transportation costs, smaller carbon footprint, and a boost to the local economy.

The Oak Ridge National Laboratory is planting cottonwood trees at locations including British Columbia, Oregon and California along the west coast to see their genetic variations in context of multiple environments to understand the potential of the trees as an ethanol feedstock.

Because the distributed model is so different than today’s commodity market for oil, natural gas and coal, managers, scientists looking to advance technology and investors will have to adapt. The decentralization puts control at more of a local level, which will affect the decision making process for evaluating where to harvest and process the energy source.