Mascoma's factory will make wood-cellulose ethanol, a renewable alternative to corn-based ethanol. The plant is to be built on state land near Kinross, south of Sault Ste. Marie in the eastern Upper Peninsula. The facility is expected to cost $250 million and eventually produce up to 40 million gallons of biofuel annually. The Massachusetts-based start-up had announced plans to build plants in both Michigan and Tennessee. It said in April that it had received the $26 million federal grant to construct a facility in Monroe County, Tenn. Tennessee and Mascoma officials decided to drop the project after they disagreed over its size. Mascoma had announced in July 2007 that it would build a plant in Michigan, in part due to the Wolverine State's abundance of forested land. The plant will use harvested mixed hardwood chips and other nonfood biomass materials to produce cellulosic ethanol. General Motors Corp. and Marathon Oil Corp., both investors in Mascoma, are providing money and technical support for the Michigan project. Granholm and Michigan Economic Development Corp. CEO James Epolito said the project will employ about 150 construction workers followed by 40 to 50 full-time plant workers. The agency estimates it will create 700 Upper Peninsula jobs, when spin-off employment in related businesses is included. Mascoma CEO Bruce Jamerson said the company would like to start building in about a year and would take another 1 1/2 years to complete the first phase. You can reach David Shepardson at (202) 662 -- 8735.