WASHINGTON — Despite a challenging environment for raising venture capital, University of Tennessee officials say their planned cellulosic ethanol refinery is still on track for a 2010 opening.

“It’s not a shocker that there’s been somewhat of an economic downturn that’s made financing more difficult than people would have expected,” said Kelly Tiller, director of external operations for the Tennessee Biofuels Initiative. “This project is still on target. We’re on path to achieve our objective in the stated time frames and in the stated budget.”

UT Executive Vice President David Millhorn had told the university’s board of trustees Friday that capital markets have softened, affecting financial partner Mascoma’s ability to raise private funds for ethanol projects.

UT and Boston-based biofuels firm Mascoma are partnering on a $40.7 million demonstration plant to make cellulosic ethanol, using switchgrass as its feedstock rather than corn, the most-common base for ethanol.

Mascoma officials declined to comment specifically on Dr. Millhorn’s comments to the UT board, saying the company’s agreement with the university has not been finalized.

“Mascoma remains involved in the definition and execution of this project, and is contributing both technology and financing, including a $26 million grant from the U.S. Department of Energy for the DOE Small-Scale Biorefinery Projects grant program,” the company said in a statement.

Rep. Zach Wamp, R-Tenn., who has touted UT’s switchgrass ethanol project, said he remains confident in the university’s ability to deliver on its facility.

“Everybody has to adapt to the marketplace, whether it’s UT or Mascoma,” Rep. Wamp said. “I’m proud that our university’s been way out front on this, and if they can adapt, we’re still going to be ahead of the country.”

When the facility near Knoxville is complete, UT officials said, it will produce between 2 million to 4 million gallons of ethanol annually. That’s down from the original estimate of 5 million gallons annually, but Dr. Tiller said the reduced figure is not completely attributable to any difficulties in raising venture capital.

“The balance we’re trying to strike is to demonstrate (the viability) of cellulosic ethanol on a large enough scale so the next step is commercial production,” Dr. Tiller said. “But at the same time, we recognize that technology in five years will not look like today’s, so we want a smaller scale so that as we develop new technology, we can still use this facility to be the intermediate step to commercialization.”

Cellulosic ethanol took on greater attention as controversy over corn-derived ethanol’s possible impact on food prices prompted several lawmakers on Capitol Hill to favor other, nonfood-based feedstocks for the alternative fuel.

Cellulosic ethanol is made from cellulose, the material found in plant cell walls, and switchgrass is hailed as a potential leading feedstock because of its high levels of cellulose and relatively low cost to cultivate.

Sixteen farmers in Tennessee have been recruited by the university to grow 723 acres of switchgrass for the new refinery, with the goal of expanding to as much as 8,000 acres by 2010, when the facility opens.

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