British Petroleum (BP) has announced plans to bring cellulosic ethanol to market in the U.S., through a partnership with bio-fuel developer Verenium, a company that makes biofuels from rice straw, sugarcane stalks, switchgrass and wood chips. The partnership could help speed the availability of lower cost, more environmentally friendly biofuels, according to an announcement by both companies this week.

Cellulosic plants are considered to be a superior base product for biofuels because they are fast-growing, don’t supplant prime farmland, and require less water and fertilizer to grow, compared with crops like corn. This “next generation” ethanol made from these bio-wastes and grasses is expected to be both  cheaper and cleaner.

“This deal puts us at the front of the cellulosic biofuels game,” said Sue Ellerbusch, president of BP Biofuels North America. “In partnering with Verenium, we now have the most advanced technology for transforming these energy grasses to biofuels, increasing our ability to invest earlier in the US to meet the requirements for cellulosic ethanol laid out in the recent energy bill.”

The two companies have formed a Special Purpose Entity (SPE) that is equally owned by BP and Verenium that will support Verenium’s scientific research and refinement of cellulosic biofuels while capitalizing on BP’s distribution.

“We are very excited and proud to be partnering with BP, a world leader in both the traditional and alternative energy industries that shares our commitment and vision to rapidly evolve next-generation ethanol into a commercial-scale solution for our energy needs,” said Carlos A. Riva, President and Chief Executive Officer at Verenium.