AE Biofuels has announced its wholly-owned advanced ethanol subsidiary AE Advanced Fuels Keyes, Inc. (AE Keyes), has been awarded a $1.88 million matching grant from the California Energy Commission (CEC) to accelerate the commercial implementation of its patent-pending, enzyme based, cellulosic ethanol production technology.

The integrated cellulose/starch pre-development facility will be located near the 55 million gallon per year commercial ethanol facility the company plans to restart and operate in Keyes, California in late April 2011.

The pre-development facility will further optimize the company's enzyme technology utilizing multiple agri-waste feedstocks in conjunction with traditional corn inputs in order to ready the integrated process for commercial implementation.

When fully incorporated into an operating ethanol facility, the company anticipates that the integrated cellulose/starch technology could replace up to 25% of traditional corn inputs with non-edible agricultural waste feedstocks, thus reducing fossil fuel consumption and overall green house gas (GHG) emissions.

The CEC grant will enable the company to build upon prior enzyme optimization work conducted at its Butte, Montana cellulose/starch demonstration facility, and help the State of California achieve the goals of the Low Carbon Fuel Standard (LCFS).

"We believe that our integrated cellulose/starch approach is the most cost efficient process to rapidly accelerate the commercialization and adoption of next-generation biofuels in the marketplace," said Eric McAfee, chairman and CEO of AE Biofuels, Inc.

"By combining the existing ethanol infrastructure with next-generation technology and non-edible agricultural feedstocks, AE Keyes will help drive the industry's goal of large-volume production of advanced transportation fuels," said Andy Foster, president of AE Advanced Fuels Keyes, Inc.

AE Keyes was awarded the grant through the Biofuel Production Plants PON-09-604 solicitation, under the Alternative and Renewable Fuel and Vehicle Technology Program created by the California Legislature in AB 118, and will be administered by the CEC. The company will meet with the CEC over the coming weeks and months to refine the project's scope, budget, regulatory compliance requirements, and timeline.