Many investors have turned their backs on corn-based ethanol, focusing instead on sinking millions of dollars into developing second-generation ethanol, Investor’s Business Daily reported.

First-generation ethanol, typically derived from corn or sugar, has faced criticism for its use of food at a time when corn is in high demand and for the high amount of energy needed to produce it. Second-generation ethanol, derived from nonfood plant matter, such as cornstalks, grasses and wood chips, is not being produced on a commercial scale yet, but could enter the market in the next few years, sidestepping some of the concerns current ethanol plants raise.

Many large corporations and private equity investors are throwing millions of dollars into new ventures that support the development of cellulosic ethanol. E.I. du Pont de Nemours & Co., parent company of Johnston-based Pioneer Hi-Bred International Inc., has joined the Genencor division of Denmark-based Danisco A/S in a $140 million venture to commercialize cellulosic ethanol. General Motors Corp. and Marathon Oil Corp. have invested in Mascoma, a start-up built on enzyme research; GM also has sunk money into Illinois-based Coskata Inc., which is researching the use of micro-organisms to create fuel; and Chevron Corp. is partnering with Weyerhaeuser Co. and several universities to develop cellulosic fuel as part of its $2.5 billion commitment to alternative energy.

In July, Range Fuels Inc. broke ground in Georgia for what could become the first commercial-scale cellulosic ethanol plant in the United States. The company raised $100 million for the project. BlueFire Ethanol Inc. also was granted a permit in July to convert organic waste from an adjacent landfill into fuel and could begin production next August.

The federal government is encouraging production of second-generation ethanol, with a target goal of producing 16 billion gallons of cellulosic fuel by 2022. The new farm bill also offers a 50-cents-per-gallon producer tax credit for using cellulosic ethanol, which is added to an existing 45-cent credit for using ethanol in general. The Department of Energy has given $1 billion to cellulosic development over the past two years.