Lignol Energy Corp. announced Wednesday that its U.S. subsidiary, Lignol Innovations Inc., is moving forward with its previously announced plan to construct a commercial demonstration cellulosic ethanol plant in Colorado.

Lignol has recently received approval from the U.S. Department of Energy ("DOE") to locate the facility in Grand Junction, on the western slope of Colorado. The approved location is a change from the originally proposed site adjacent to Suncor Energy (U.S.A.) Inc.'s ("Suncor") refinery in Commerce City, Colorado.

Lignol is expecting that Suncor will operate the facility, to be built next to Suncor's products distribution terminal in Grand Junction. The Grand Junction location offers logistical advantages including access to feedstock and ethanol distribution efficiencies. Site specification decisions are subject to regulatory approval.

In January 2008, the DOE approved Lignol's funding application for a proposed cellulosic ethanol plant, including up to US$30 million in funding to construct the facility. Lignol continues to negotiate the final details of the DOE funding agreement and related party agreements.

The proposed facility will be designed to process hard and soft woods and agricultural residues such as straw and corn stover. Lignol expects the facility, once operational, will process about 100 tonnes of feedstock per day and produce approximately 10 million liters of ethanol per year.

Lignol is a Canadian company undertaking the development of biorefining technologies for the production of fuel-grade ethanol and other biochemical co-products from non-food cellulosic biomass feedstocks. Lignol's modified solvent based pre-treatment technology, originally developed by a former affiliate of General Electric, and then further developed and commercialized for wood-pulp applications by a subsidiary of Repap Enterprises Inc., facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including HP-L(TM). Lignol is executing on its development plan through strategic partnerships to further develop and integrate the core technologies on a commercial scale. Lignol also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology.