The University of Tennessee has confirmed it will build a $40 million biofuel plant to create ethanol from switchgrass and other plants. The university will build and operate the demonstration scale facility in partnership with the Mascoma Corporation in the Niles Ferry Industrial Park in Monroe County, southwest of Knoxville.

It is the second major alternative fuels project announced this year for the Knoxville-Oak Ridge Innovation Valley.

In June, the Department of Energy awarded Oak Ridge National Laboratory $125 million to build a Bioenergy Science Center to address fundamental science and technological challenges to cellulosic ethanol production.

Researchers at the new biorefinery hope to use innovations that emerge from the lab's Bioenergy Center. The University of Tennessee manages Oak Ridge National Laboratory in partnership with Battelle and shares numerous joint institutes and professorships.

Tennessee is making other serious efforts to take the lead in the alternative fuels race. The state's Biofuels Initiative has an additional $24 million for farm incentives to grow switchgrass and for research.

The university's biorefinery will be about one-tenth the size of a commercial production facility. It will allow researchers to create a system that can be expanded to larger plants across the state in coming years. Construction will begin by the end of 2007. The plant will be operational in 2009.

Energy crops like switchgrass -- which can be grown on marginal crop land -- can produce affordable, domestic renewable fuel without raising food or feed costs. When operating at full capacity, the facility will require 170 tons per day of switchgrass and other agricultural and forest biomass.

Researchers say that eventually Tennessee could produce over one billion gallons of cellulosic ethanol a year, which could offset up to one-third of the state's petroleum usage.

University of Tennessee Executive Vice President David Millhorn said the broad cooperative approach between the state, the university and lab to producing ethanol "should lead to new business and economic development opportunities for our farmers throughout the state."