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DuPont Co. has joined a University of Tennessee initiative to build a biorefinery pilot project in Vonore that would convert corn cobs and switchgrass grown on Tennessee farms into ethanol fuel.

Wednesday's announcement by Gov. Phil Bredesen and DuPont officials marked a change in development partners for the University of Tennessee-managed project -- a program to pioneer commercial processes for converting the cellulose -- or woody stem fibers of nonfood plants and feedstock -- into ethanol.

Initial partner Mascoma Corp. of Boston has been replaced by Delaware-based DuPont. That could expedite the refinery, but also cost it a $26 million grant the U.S. Department of Energy had awarded Mascoma, officials said.

In a joint statement, UT and Mascoma said simply they were unable "to come to mutually acceptable terms."

UT officials said the grant was never a sure thing -- negotiations were pending -- and its loss would not impact the project, though the biorefinery discussed Wednesday will have a capacity of 250,000 gallons of ethanol per year rather than 5 million gallons initially envisioned.

Still, the state of Tennessee's commitment remains the same. The state has pledged $70 million over five years to cultivating and converting switchgrass -- a common perennial prairie grass -- to fuel. That includes payments to farmers to grow it and $40.7 million to build the refinery.

"This announcement marks an important step forward in our goal to leverage the best of Tennessee's agricultural and academic resources in a way that will maximize our potential as a farm-based fuels leader," Bredesen said in a statement from Nashville.

Tennessee plans to begin construction later this year on the biorefinery in the Niles Ferry Industrial Park in Vonore. Sixteen farms within a 50-mile radius already are growing switchgrass, a common prairie grass, under contract to supply the biorefinery.

"We hope by the fourth quarter of next year to be making the first ethanol," UT Executive Vice President David Milhorn told The Associated Press.

The pilot refinery has been scaled back from original plans and will produce about 250,000 gallons of ethanol annually instead of the 5 million gallons initially envisioned. But project officials say they believe that will be enough to demonstrate and test the processes and move such ethanol from the laboratory into commercial production.

As oil prices continue to soar over $100 a barrel, scientists around the world are racing to find commercially viable energy sources to reduce U.S. dependence on petroleum-based fuels.

The Tennessee project is one of handful in the United States that seeks to turn agricultural waste or "biomass" such as switchgrass, corncobs, wheat straw and other fibers into the fuel called cellulosic ethanol.

Milhorn signaled last month that Mascoma, which has other biofuels projects under way in New York and Michigan, would be reducing its role to a technology provider and a search ensued for another partner, leading to DuPont.

Milhorn said Wednesday that Tennessee and DuPont-Danisco are "just much better aligned -- technology wise, capability wise and philosophically from a business standpoint. They will bring resources and capabilities to bear here that will allow us to accelerate the development of our ethanol program."

DuPont and Danisco's Genencor, one of the world's foremost enzyme companies, partnered on the key technologies involved in a DuPont-Tate Lyle plant that opened in nearby Loudon last year. That plant makes "Bio-PDO (propanediol)," a corn-based polymer that can replace petroleum in fabrics, face creams, carpets and a variety of other products. At the opening, Energy Secretary Samuel Bodman said that project was "on the leading edge of a biotechnology revolution."

Now comes Tennessee's project.

Tennessee, hoping to turn biofuels into a statewide industry, is funding UT research into the best ways to grow, harvest and transport switchgrass. DuPont specializes in pretreating the biomass material to break it down, Danisco-Genencor has the enzyme science to transform the cellulose into sugar and DuPont knows how to convert the sugar into ethanol through fermentation.

"At the end of the day we are talking about turning (a) ... kind of low-end feedstock into a fuel you can burn," said DuPont-Danisco Technology leader John Pierce.

DuPont and Danisco-Genencor created their ethanol joint venture in May, with a $140 million three-year commitment "to develop and commercialize the leading low-cost technology solution" for the so-called next generation of biofuel produced from nonfood sources.

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