Range Fuels has already begun building the country's first cellulosic ethanol plant in Georgia. The plant has a goal of producing 100 million gallons of ethanol per year using leftovers from Georgia's giant timber industry. Unfortunately, right now Range Fuels only has enough money to build 20 million gallons per year of capacity. The money to do that came mostly from government grants.

But now Range has announced that they've raised another $100 million from Khosla Ventures and an unnamed energy company. The injection of funds will allow range to meet it's 100 million gallon per year goal, hopefully by 2009.

Range's technology gasifies the plant cellulose using a technique created to turn coal into liquid fuel. After the gasification, turning the wood chips into ethanol is fairly trivial. Unfortunately, the process is much more expensive than the processes that turn corn into biofuel.

But the expense of the process, it turns out, is less important once corn prices start skyrocketing due to increase demands both for food and ethanol. Wood chips on the other hand are pretty much free. This is how Range hopes to make up the difference in cost, hopefully scaling up to the point where its ethanol is actually cheaper than both corn ethanol and gasoline.

$100 million definitely won't hurt the attempts to achieve this goal.

Via CNET Clean Tech