Koalas love it. California park rangers rue the day it came to the U.S. And someday, your car may run on it.

Ethanol makers are increasingly becoming interested in using eucalyptus as a feedstock, says James Imbler, CEO of Zeachem, particularly in ethanol-happy Brazil. Zeachem, which will start producing fuel in 2010, wants to sell fuel both in the U.S. and Brazil.

"There is a lot of interest from Brazil in eucalyptus," he said during a tour of the company's labs. "It is a phenomenal tree in biomass. It is the fat boy."

Passing familiarity with eucalyptus pretty much can provide an answer. The trees grow rapidly in dry soils and because of their height, they offer pretty of good density per acre. Zeachem will initially make its fuel out of farmed poplar trees, another fast-growing species, but it can use a wide variety of feedstocks.

Brazil, he added, is an ideal place for ethanol for a number of reasons. The country has promoted ethanol as a fuel since the 1970s and there is a healthy supply of E85 cars and stations. More important, the country has long growing season and lots of land.

In the U.S., farmers growing crops for ethanol are getting 15 bone dry tons of feedstock per acre and are approaching 20 tons. In Brazil, some farmers are getting 20 to 30 bone dry tons per acre.

Zeachem says that its process – which combines biological and thermochemical processes –will allow it to squeeze 135 gallons of fuel from a bone dry ton of vegetable matter.  Most other cellulosic makers wallow around the 100-gallon mark.

Zeachem's process can get five times the amount of fuel from a ton as corn ethanol, Imbler added. If fuel car efficiency were doubled tomorrow, and Zeachem's process were swapped in for corn ethanol, it could provide 30 percent of the transportation fuel in the U.S. without recruiting additional farmland for biofuels. (Again, this is his claim. Like all biofuel makers, Zeachem still needs to prove its processes outside the lab.)

The company's starter organism can be found naturally in the guts of termites and is not genetically modified. The bug is not a yeast that ferments sugars from the wood. Yeast aren't very efficient and give off carbon dioxide. The organisms cost $225 for a few grams.

The company raised $34 million in a second round of funding in January and right now it working the kinks out of its process. It plans to build a commercial scale plant this year and sell fuel and other products next year. 

Tags: biofuel, eucalyptus, feedstock, koalas, zeachem