A Japanese company plans to extract ethanol from waste timber to help meet the government’s biofuels target.

Tsukishima Kikai Co is building a plant in Sakai with the intention of producing 40 million kilolitres of ethanol annually by 2007.

The company says the 15 million tons of waste timber generated each year by forest thinning is a big potential energy source.

It has developed a way of extracting about 200 litres of ethanol from one ton of lumber using US-made genetic engineering technology.

The Japanese government this year increased biomass targets to the equivalent of 3.08 million kilolitres of crude oil from 670,000 kilolitres in 2004.