range-fuels.jpgRange Fuels, a company that is searching to become the first to bring a much cleaner kind of alternative fuel, cellulosic ethanol, to market commercially, has raised nearly $100 million in new financing.

Cellulosic ethanol is significant because it’s a much more environmentally friendly way to to produce ethanol. Instead of using corn or sugar, it uses portions of plants and grasses to make ethanol, and has been found by the US DOE to reduce greenhouse gas emissions by 85 percent, when compared to reformulated gasoline. Regular starch ethanol (from corn, for example), which uses natural gas in its creation, has not been found to lower emissions.

Cellulosic ethanol has also become attractive because traditional methods of making ethanol have become more controversial of late. Critics say the demand for corn ethanol is outmatching the supply of corn, and taking away from the world’s food source — creating higher food prices.

There are several pilot projects attempting to prove that cellulosic ethanol production is economically viable.

The Broomfield, Colo.-based Range Fuels started building a production facility near Soperton, Ga., which is expected to produce up to 100 million gallons of ethanol when in full production mode.

The funding, first reported by VentureWire this morning, came from previous investor Khosla Ventures (which committed $25 million) and another undisclosed energy investor (which committed a similar amount). Range Fuels previously got $76 million grant from the U.S. Department of Energy.

Range Fuels’ process produces synthetic gas that can be converted to ethanol, but that’s just one of several methods. Another method, used by competitor Mascoma, of Cambridge, Mass., uses an enzyme process to create ethanol.

There are several other players racing to produce ethanol from cellulosic material, including start-up Coskata, of Warrenville, Ill., which has backing from General Motors Corp. and others, and Iogen, which has backing from Royal Dutch/Shell. BP is working with Hayward, Calif.’s startup Mendel Biosciences. Chevron also has its own project, called Catchlight Energy.

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