INTERVIEW-BlueFire sees big cellulosic growth in five years

By Timothy Gardner

NEW YORK, May 21 (Reuters) - BlueFire Ethanol Inc, (BFRE.OB: Quote, Profile, Research) which hopes to make a new alternative motor fuel from feedstocks that won't boost food prices, plans to build capacity to make 500 million to 550 million gallons per year (gpy) of the fuel by 2013, its president and CEO said.

The company plans to build 10 plants with at least 55 million gpy of capacity in five years throughout the United States to make cellulosic ethanol, the new fuel, Arnold Klann, said by telephone on Wednesday. The feedstocks would include agricultural waste, wood scraps and non-food crops such as switchgrass.

Cellulosic has been touted as a fuel that won't raise food prices unlike traditional U.S. ethanol made from corn, which has been blamed for sending that grain and others to record prices as U.S. capacity to make the fuel has jumped 50 percent over the last year.

The fuel is not yet produced in commercial amounts, however, leading to criticism that the technology to make it is elusive.

Klann disagreed.

"It's an issue of financing, not technology," he said.

The U.S. Farm Bill, which contains guaranteed loans and a tax credit of $1.01 per gallon for cellulosic ethanol, would help the company raise new funds, he said. President Bush vetoed the bill on Wednesday, but the veto is expected to be overridden by Congress.

BlueFire has a market capitalization of about $100 million, and is building two plants in California with a combined capacity of about 20 million gpy of the fuel. It needs to raise funds to build the other plants.