POET, THE Sioux Falls, SD-based ethanol giant, announced that it will get a $6.85 million funding increase to an existing grant from the U.S. Department of Energy. POET reports that this is the first of two funding increases from the DOE to help establish a market for corncobs to produce cellulosic ethanol. The company estimates that the second increase, which may come as soon as this year, will provide an additional $13.15 million.

The grant increases will play a key role in establishing corncobs as a viable commodity and set the stage for corncob harvesting across the U.S., POET reports. The company plans to use the additional funds to develop the feedstock infrastructure for cellulosic ethanol production.

POET will work with equipment manufacturers to help speed the process of getting cob harvesters into fields around its Project Liberty facility in Emmetsburg, IA. Fourteen area farmers are harvesting cobs this fall with prototype equipment from a variety of manufacturers.

Meanwhile, POET will develop and test infrastructure for cob pickup, delivery and storage.

The POET facility will be a 25-million-gallon-per-year cellulosic ethanol plant that will be connected to its existing corn ethanol plant in Emmetsburg. POET expects to begin production of cellulosic ethanol in late 2011.