Chemical formula for Ethanol is CH3CH2OH. It is produced by chemical synthesis through direct hydration of ethylene (ethylene derived from petroleum), or by biological fermentation using microorganisms. Production of ethanol has been limited to using sources of soluble sugar or starch using corn.

Biomass is organic matter that can be processed into energy for heat, liquid fuels or power generation. Sources of biomass include wood, plants, agricultural residues, animal waste, and the organic components of municipal and industrial wastes.

The production of ethanol from corn is a mature technology that is not likely to see significant reduction in production costs. Substantial reductions must be possible, however, if lignocellulosic-based feedstocks are used instead of corn. The ability to produce ethanol from low-cost biomass will be key to making ethanol competitive with gasoline.

In addition, if an ethanol production system was co-located with biomass power plant certain synergies could occur. In particular, lignin from the ethanol plant could be utilized by the power plant, while steam and electricity from the power plant could be utilized by the ethanol facility.

Also, it is likely that the ethanol plant could utilize other existing utilities at the biomass power plant, such as sewage handling, cooling water and other buildings. It is also likely that the ethanol Although lignocellulosic feedstock are less expensive than corn, today they are more costly to convert to ethanol because of extensive processing required.