There’s been speculation that rural communities could be the foundation of the country’s renewable energy future. Not all of this is talk, it turns out. Monday, the ethanol producer Poet announced that it has opened a pilot plant to produce low-carbon fuel made from crop residue, not corn. This is the nation’s first cellulosic ethanol plant and it’s in South Dakota. Poet hopes to open a commercial-sized version by 2011 in Emmetsburg, Iowa.

Kate Galbraith writes in the New York Times that other cellulosic plants “are also racing to start construction and, in a few cases, start operating.” Cellulosic ethanol producers use corn cobs, switchgrass, sugar cane scraps (above) or other woody materials as feed stock instead of corn. Last week the Secretary of Agriculture told reporters that a cellulosic company backed by Vinod Khosla, a Silicon Valley venture capitalist, would likely get a loan guarantee from the government. Range Fuels is building a plant in Georgia.

The corn-based ethanol plants are still in trouble, as corn prices have risen and the price for gas has dropped. Innovation taking place in rural communities, however, has pushed the industry in another direction.