Using corn cobs as feedstock, the Poet Research Center in South Dakota, United States, will produce 20,000 gallons a year.

The $8m pilot plant is a precursor to Poet’s $200m “Project Liberty,” a commercial-scale cellulosic ethanol plant that will begin production in 2011.

“After producing 1,000 gallons, we’ve already been able to validate all of what we learned in the lab and believe the process will be ready for commercialization when we start construction on Project Liberty next year,” Poet chief executive Jeff Broin says.

The pilot plant is the result of significant investment in into cellulosic research. In 2008 alone, Poet spent $20m on research -- doubling its research staff and tripling the size of its lab in Sioux Falls, South Dakota.

Poet is pursuing an integrated starch- and cellulose-to-ethanol biorefinery model that could see cellulosic production capacity added to its 26 plants currently producing 1.5bn gallons of ethanol from corn each year.

Producing ethanol from corn cobs at a commercial scale would be a major breakthrough for the biofuels industry, as it would not affect food supplies. Corn cobs contain as little as 2% of the nutrients of the above-ground corn plant, according to the United States Department of Agriculture.