Italy's M&G to build bioethanol plant

By Svetlana Kovalyova

TORTONA, Italy (Reuters) - Italian chemical group Mossi & Ghisolfi, M&G, plans to build a 200,000-tonne bioethanol plant and convert it to using cellulose feedstock as pressure mounts on the sector to make more environment-friendly biofuels.

Traditional biofuels -- produced from grains, vegetable oils and sugar cane -- are facing strong criticism for driving food prices up and for limited contribution to cuts in heat-trapping gas emissions.

M&G Vice President Guido Ghisolfi said his group with partners would invest about 100 million euros ($148.1 million) to build the biggest bioethanol plant in Italy by 2009 and 120 million euros more in research to convert it to cellulose feedstock later on.

The plant in the north Italian region of Piedmont would produce 200,000 tons, or about 2.5 million hectoliters of bioethanol to help Italy meet its bioethanol target of about 1 million tons by 2010, Ghisolfi said.

"Our goal is to be competitive with Brazilian ethanol even without subsidies," Ghisolfi said on the sidelines of a biofuels conference, brushing off sector concerns that Italian bioethanol producers have been hit by limited fiscal brakes.

The new plant would initially use 600,000 tons of maize as feedstock and Tortona-based M&G has already lined up local farmers to deliver grain as it aims to cover 60 percent of feedstock needs with local supplies.

M&G has already presented an evaluation of environmental impact of the new plant -- a key document for getting a government permit for any big industrial project in Italy -- to the government and planned to start works in May 2008, he said.

The new plant's output would be sold mostly in Italy where a number of major petrol distributors have pledged to boost bioethanol blend sold at their pump stations from 2008.