The moderate initial shipment marks a milestone in the development of so- called cellulose ethanol, made from farm refuse such as wheat straw and corn stalks, instead of the corn or other grains used for the ethanol now commonly blended with gasoline. Turning farm waste into fuel for automobiles has long been an alluring, but technically tricky, prospect.

Iogen officials have said they hope to begin work on a full-scale commercial plant next year, but significant hurdles remain.

Iogen is ahead of other firms seeking to commercialize ethanol from farm waste, said John Ashworth, an official of the Department of Energy's National Renewable Energy Laboratory in Golden, Colo., which has a pilot plant where companies test cellulose-ethanol concepts. Iogen's much-larger plant in Ottawa is the only demonstration plant for the technology, he said.

Iogen, a closely held maker of industrial enzymes, has been fine-tuning production processes at its plant in the past three years. The plant, which has an annual production capacity of 260,000 gallons, began about two weeks ago to turn wheat straw into ethanol that meets Canadian fuel specifications, according to people familiar with the situation.

Wall Street Journal Staff Reporter Christopher J. Chipello contributed to this report.

  Dow Jones Newswires
   04-21-04  0119ET