Five companies, including general contractor Taisei Corp and trading house Marubeni Corp, will join in a new business to extract car fuel from wood materials discarded in construction.

Asia Online reports that the firms will jointly establish a company in April with a capitalisation of 100 million yen (US$960,836), with a plan to begin mass production of ethanol for automobiles in fiscal 2007. The use of biomass fuel is considered an effective way to reduce greenhouse gases.

The company will aim to establish itself in the new environmental business with an eye toward the creation of an infrastructure for such biofuel by the government and the auto industry. The other participating firms are Sapporo Breweries Ltd, construction waste disposal firm Daiei Inter Nature System Inc and construction materials manufacturer Tokyo Board Industries Co.

The companies will spend more than 3 billion yen to build an ethanol-production plant in Osaka prefecture. Starting in fiscal 2007, the plant will process 30,000 tons of discarded wood materials each year in order to produce the 3,700 kiloliters of ethanol that will be supplied to 100 gas stations throughout the year. The ethanol will be shipped at a price of about 50 yen per liter, and the company targets sales of 500 million yen in the first year.

To produce ethanol that is more than 99 percent pure, wood materials will be decomposed using acid and will then be fermented. The technology will be based on extraction techniques that Marubeni introduced from the US, and Sapporo Breweries will provide its expertise in fermentation. Meanwhile, Taisei and Daiei will supply the discarded wood materials