Mississippi's great green hope

  @FortuneMagazine March 21, 2013: 7:32 AM ET
KOR08 kior
(Fortune)

The best way to understand what's happening out here is to follow your nose. Somewhere along the hash of giant pipes and canisters that make up this industrial plant, the sweet smell of milled pine gives way to a rotten-egg pungency. It's crude oil. Only it hasn't been yanked from underground reservoirs where it brewed over millions of years. For the first time ever, it's being manufactured, in mere seconds, from trees -- specifically, the pines surrounding this factory in Columbus, Miss.

The plant is the first commercial-scale facility for KiOR, a Pasadena, Texas-based startup bankrolled by Vinod Khosla, the billionaire clean-tech investor. After nearly a decade of coming up short, he's hoping he has finally struck on an earthmoving innovation, one that will break the grip that fossil fuels hold on the transportation market. And in the process he hopes to restore rural communities across the country devastated by the decline of paper mills. "My dream would be that there are 500 communities, 15 years from now, that are all back in business using the wood chips in the forests around them, and that forestry is a lively business -- not moving to Brazil," he says.

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