Ethanol producer Range Fuels has secured over $100m in second round funding for the creation of the first commercial scale cellulosic ethanol plant in the US.

The company, which plans to start producing ethanol using wood waste from timber farming next year, secured the cash in a funding round led by Passport Capital of San Francisco.

The money will enable Range Fuels to continue development its plant currently being built in Soperton, Georgia, which will produce 20m gallons of ethanol each year.

The company uses thermo-chemical techniques to turn biomass into ethanol. Biomass is first converted into a gas, called a synthesis gas, which is then exposed to a catalyst that in turn produces a variety of alcohols, including ethanol. The company argues this approach is more efficient than the alternative process, in which sugars are extracted from the biomass using enzymes and then fermented.

Jim McMillan, biorefining process R&D group manager at the National Renewable Energy Laboratory, praised the Range Fuels development arguing that the emergence of plants capable of using non-food feedstock for ethanol production greatly increased the potential scale of the biofuels markets.

"If you look at corn in the US, the energy bill caps us out at 15bn gallons per year which is approximately a tenth of our gasoline market," he said. "If we go to cellulosic materials, we can quintuple that amount."

The wood-based feedstock for which Range Fuels' system is suited is particularly useful because abundant timber forests were planted 20 years ago to supply a paper and pulp industry that then decamped to Asia, McMillan added. Much of that timber is now available for harvest.

"Range Fuels is moving very quickly in terms of getting their permits, constructing and moving forward," he continued. "They're a front runner."

The shift towards timber as a source of biofuel would also help address growing concerns that increased demand for corn, soy and palm oil from biofuel producers has led to tropical deforestation and raised the prospect of serious global food shortages.

The latest funding round follows a grant of $76m awarded to Range Fuels by the Department of Energy in November for the construction of the plant.

The news comes a month after oil giant Chevron launched a major joint venture with forestry giant Weyerhaeuser Company to research the potential for cellulose-based biofuels. The company said the new venture, called Catchlight Energy LLC, would aim to "create a sustainable, economic, non-food biofuels business at commercial scale".