The U.S. Department of Energy plans to make a $105 million loan guarantee to support the expansion of an Iowa ethanol factory into the nation’s first commercial-scale plant to convert corn waste into motor fuel. The Emmetsburg, Iowa plant, which is being built by Poet LLC, will convert corncobs, leaves, and husks rather than edible corn into about 25 million gallons of ethanol annually. If such production of cellulosic ethanol proves economically viable, it wouldÂ reduce the use of corn for ethanol, a practice criticized for reducing food supplies. Eventually, the company estimates the project will displace more than 13.5 million gallons of gasoline annually. “Our ultimate target is to be competitive with corn ethanol and gasoline,” said Jeff Lautt, president of Poet. First the company will have to scale up its production from a pilot plant that processes a ton of plant material per day to one that can handle 700 tons daily. Also, the pilot plant currently produces ethanol at a cost of about $2.50 to $3 per gallon, at least 50 cents higher per gallon than the price of ethanol from corn.