WHERE: Hoover, Ala., a suburb of Birmingham, where almost all vehicles run on alternative fuel: 186 use biodiesel made from used cooking oil; 196 run on ethanol. The city's fleet department confirmed that “gasified” wood (see box) works just as well as corn and soybeans as ethanol feedstock.

PROJECT: The Hoover Public Works Department had been sending ground-up wood waste to a plant in Livingston, Ala., and getting free ethanol in return.

EXPECTED SAVINGS: $100,000 in tipping fees to landfill 2,000 tons of trees, limbs, and branches public works collects from homes each year.

THE LATEST: The U.S. Department of Energy (DOE) reports that corn, soybeans, and wood waste could be used to meet one-fifth — 21 quadrillion Btu/year — of the nation's energy demand by 2050. The stimulus package gave the department $36.7 billion to promote renewable-energy projects through grants and loans.

One local government, however, found that accessing the money isn't simple.

In April 2009, General Motors gave Hoover the OK to use cellulose-based ethanol on 15 flexible-fuel 2005 Chevrolet Tahoes because the fuel is now certified by ASTM International. Word spread nationwide because of the source of the fuel: residential wood waste, touted as ethanol's next great feedstock.

The plan was simple: Send residential wood waste to a pilot plant in Livingston, Ala., operated by Gulf Coast Energy Inc. The startup company, led by attorney Drayton Pruitt, is one of just a few such companies nationwide exploring gasification of nonfood plants.

But now the plant sits idle, unable to secure either private financing or government assistance.

Gulf Coast Energy needs $25 million to build a 1-mgd commercial ethanol plant. The city and company's joint request for $12.5 million of Alabama's $1.6 billion Energy Revolving Loan Fund stimulus allocation had been approved, and Hoover residents had OK'd a $12.5 million bond issue to raise the rest of the funding. “There's enough wood waste in Hoover to make 400,000 gallons of ethanol a year,” Mayor Tony Petelos told us last spring.

A year later, though, he says that “trying to build a fully operational plant that's never been built before was tough.” DOE turned down the city and company's joint request because they can't prove a commercial plant would be viable.

The reason: A 2000 DOE regulation defines commercial technology as “technology in general use in the U.S. marketplace.” The technology must have been successfully deployed in at least three commercial projects, and a proposed project must have been running for at least five years. The Livingston plant began operating in 2008.

Pruitt has pursued the issue since learning of the rejection in July 2009.

“Here we have an internal regulation superseding subsequent Congressional action,” he says. “I've never heard of a regulation overriding a law.”

On July 7 he applied for a $5 million grant through DOE's National Renewable Energy Laboratory to build a demonstration plant, the next step up from a pilot plant.

“We're watching all this oil destroy the Gulf Coast, and here we're landfilling perfectly good feed stock that could make perfectly good fuel,” Petelos says. “It's a tragedy to have a company that has the technology to make fuel from waste but is unable to get funding.”