Ethanol producers have talked for decades about using plant residue, wood scraps and even garbage to produce the fuel additive, but now companies finally are building full-scale refineries.
About 70 cellulosic ethanol projects are under way, reflecting billions of dollars of private investment.
The breakthrough comes at a key time, after the wide-spread drought heightened criticism about the vast amount of corn used to brew up ethanol rather than be used for animal feed or other foods.
Drought left the corn crop smaller than expected, and livestock groups blamed ethanol producers for soaring corn prices that hurt their profits.
The push for more ethanol production comes amid federal requirements that the petroleum industry mix 36 billion gallons of the additive into the nation's fuel supply by 2022.