One of the world’s largest ethanol producers, POET and Royal DSM, have announced a joint venture to commercially demonstrate and license cellulosic bio-ethanol.

POET–DSM Advanced Biofuels, LLC, is scheduled to start production in the second half of 2013 at one of the first commercial-scale cellulosic ethanol plants in the United States adjacent to POET”s corn ethanol plant in Emmetsburg, Iowa. The two partners will produce cellulosic ethanol from corn crop residue through a biological process using enzymatic hydrolysis followed by fermentation. The initial capacity is expected to be 20 million gallons in the first year, growing to approximately 25 million gallons per year.

POET-DSM Advanced Biofuels, LLC, intends to replicate and license the technology to additional plants to be built at the other 26 corn ethanol facilities in POET’s network and license it to other producers in the United States and the rest of the world.

DSM and POET will each hold a 50% share in the joint venture, which will be headquartered in Sioux Falls, South Dakota. The initial capital expenditure by the joint venture in Project Liberty will amount to about $250 million. The closing of the joint venture is subject to regulatory approvals and other customary closing conditions

The U.S. Environmental Protection Agency (EPA) estimates that in the United States as many as 350-400 new bio-refineries will have to be constructed by 2022 to meet the volume requirement of 16 billion gallons/year of cellulosic bio-ethanol under the Renewable Fuel Standard.