UPDATE 1-DuPont, Danisco tap Tenn. for cellulosic ethanol

(Adds comments by Tennessee governor, acreage details)

By Carey Gillam

KANSAS CITY, Mo., July 23 (Reuters) - DuPont Co (DD.N) and Genencor, a unit of Denmark's Danisco (DCO.CO), said on Wednesday they will break ground this fall on a 250,000 gallon cellulosic ethanol pilot plant in Tennessee.

Ethanol should be available from the pilot plant by December 2009, with commercial-scale production by 2012, the companies said.

The 50-50 partnership, DuPont Danisco Cellulosic Ethanol LLC, is aligning with the University of Tennessee (UT) Research Foundation, through its Genera Energy LLC, and making use of state funds to construct the pilot-scale biorefinery and a research and development facility for cellulosic ethanol in Vonore, Tennessee.

The move comes amid growing criticism of corn-based ethanol at a time of record prices for corn, and food shortages seen around the globe. Several critics are pushing for the United States to roll back mandates encouraging production of corn ethanol, saying it is a culprit for rising food and livestock feed prices.

Indeed, Tennessee Gov. Phil Bredesen said Wednesday he thought "the nicest thing you can possibly say" about corn-based ethanol is that it is "transitional" technology.

"It really is much more about political eye wash ... trying to do something about the energy crisis. It has very little to recommend it over the long term," Bredesen said. "I think that cellulosic ethanol in contrast has a great deal to recommend it over the long term. That is where I am trying to emphasize us putting our weight and our money."

The companies said the pilot plant will initially process western Tennessee corn cobs into ethanol but plans to shift to switchgrass for conversion to ethanol, working with Tennessee farmers as dedicated switchgrass suppliers. The university has also invested state research dollars toward the development of switchgrass.