US-based cellulosic sugar producer Sweetwater Energy has inked a $100m agreement with Ace Ethanol for the production of cellulosic ethanol in Wisconsin.

The long-term commercial agreement has a 16-year term and will help Ace stabilize its feedstock costs while requiring minimal capital expenditure.

Sweetwater will employ its decentralized process to convert the locally available cellulosic, non-food biomass, such as crop residues, energy crops, and woody biomass into highly fermentable sugar which Ace will ferment into ethanol.

Ace Ethanol president Neal Kemmet remarked that the two companies had been working and testing together and were confident of commercial viability of the partnership.

Sweetwater president and COO Jack Baron highlighted that the company’s sugar-production model enables the company to work in tandem with a refiner’s existing infrastructure fostering strong collaboration on both sides.

"Furthermore, our refined sugars can be used for biochemical or bioplastics production, giving Ace diversification options in the future," added Baron.

This process will use carbon from renewable biomass that is grown or procured domestically, and reduces greenhouse gas emissions.