When it comes to biofuels, algae is usually mentioned as a means to make biodiesel, but a new project will be using it to make ethanol.

The Dow Chemical Company and Algenol Biofuels have announced plans for a algae-based biorefinery to convert CO2 into ethanol. The pilot facility will be located at Dow’s Freeport, Texas site.

Dow CEO Andrew Liveris says they are excited about the ground-breaking alternative energy project, which he calls “a good example of Dow’s holistic approach to CO2 capture and storage by adding value through chemistry.”

Algenol’s technology uses CO2, salt water, sunlight and non-arable land to produce ethanol. Algenol submitted a formal request last week for a Department of Energy grant to help fund the project.

Dow plans to develop the materials and specialty films for the plant’s photobioreactor system. The CO2 will be supplied to the algae in the photobioreactors and will serve as the carbon source for the ethanol produced. The result is a CO2 capture process which converts industrially derived CO2 into more sustainable fuels and chemicals.