The world's largest production facility to make cellulosic bioethanol - a type of biofuel made from wood and plants - will be built in China next year, the company in charge of the project has said.

Chemtex Engineering Co Ltd will build the plant in Fuyang, Anhui province. The company already owns a major bio-refinery in Italy, but the Fuyang plant will be bigger.

"Our parent company, the Italian chemistry company Mossi Ghisolfi Group, and Danish biochemical company Novozymes are expected to invest about $500 million to build the factory, which will process 1 million metric tons of biomass every year," Sean Ma, Chemtex's president and CEO, told China Daily.

The factory, which will have about four times the capacity of the facility in Crescentino, Italy, will produce two kinds of biofuel: fuel ethanol and mono-ethylene glycol.

Fuel ethanol is a gasoline additive. Adding bioethanol to gasoline is a common practice in many countries, including the United States and Brazil, to cut carbon emissions.

The Chinese bio-refinery will also produce mono-ethylene glycol, a main component of the plastic used for packaging.

Beta Renewables - the joint venture between the Mossi Ghisolfi Group and Novozymes - opened the first plant of its kind in northern Italy in October.

"We'll continue to commercially expand Beta Renewables' core technology throughout the world, and we're very confident at this stage given the demand we see around the globe," said Guido Ghisolfi, Beta Renewables' chairman and CEO.

The Italian factory is able to produce 75 million liters of cellulosic ethanol annually from agricultural waste, which makes it the largest of its kind globally. According to the company, it's the first plant in the world designed and built to produce bioethanol from agricultural residues and energy crops at a commercial scale.

The factory uses wheat straw, rice straw and giant canes to produce ethanol. Ma said that the company will start to build plants in China at the beginning of 2014 using the same technology. He added that Fuyang was chosen because it has an established straw collecting system.

Chinese company Guozhen Group Co will also be involved in the plant, which will represent the largest investment the company will make in China and will also be the biggest across the industry, Ma said.

"Normally in China, first-generation bioethanol is made from crops, such as corn and cassava," Zhao Xiangdong, the consul for science, technology, education and culture of the Chinese Consulate General in Milan, told China Daily.

According to him, the country is now seeking second-generation bioethanol technology to avert the competition for raw materials between factories producing fuel and the others making products for human consumption.

Once second-generation plants are proved to be feasible, this will become the right direction for green and renewable energy projects in China, Zhao said.