A company claiming to have the capability to produce “third generation” ethanol has raised $34 million to prove it.

Colorado-based ZeaChem is developing a cellulose-based green fuels and chemicals biorefinery platform that converts renewable non-food biomass into market-competitive products such as ethanol. The new funds will be used to build ZeaChem’s first cellulosic biorefinery set to begin construction this year.

ZeaChem president and CEO James Imbler says the initial funding will allow them “to produce the highest yield, lowest capital cost, lowest carbon footprint bio-based fuels and chemicals benefiting our investors, strategic partners, and our future customers.” Among the investors in ZeaChem is Valero Energy Corporation, the largest petroleum refiner in the United States.

The company technology uses micro-organisms from the digestive tracts of termites as part of the conversion process for making ethanol from wood and other biomass sources.