The latest ethanol plant to be built in Nebraska could help the state become the nation's second-largest producer of the renewable fuel.

But even if Illinois and Iowa remain ahead of Nebraska in the ethanol production race, the Grand Island economy will still benefit from the new plant Energy Grains Development Group plans to build.

Creighton University economics professor Ernie Goss said ethanol plants and the renewable fuels industry played a key role in Nebraska's economy in 2006, and that's likely to continue. The industry has proven especially important in rural areas where most of the plants have been built.

"It's very important in that it affects the non-metropolitan areas where there has been some weakness," Goss said.

The roughly 543 million gallons of ethanol Nebraska's plants were producing annually in 2006 trailed only Illinois' 780 million gallons and Iowa's 1.1 billion gallons, according to the trade group Renewable Fuels Association.

If the announced new plants and ethanol expansion projects are completed, the Renewable Fuels Association estimated that Nebraska's ethanol production capacity would jump to 1.05 billion gallons a year. That would be more than the 887 million-gallon capacity the trade group expects in Illinois, but it would still trail the 1.7 billion gallons the group expects Iowa producers to make.

Yet it's not immediately clear when or if Nebraska might claim the No. 2 ranking because some of the announced plants the Renewable Fuels Association includes in its figures may not become reality, and the trade group might have missed a few announcements.

Gov. Dave Heineman praised Energy Grains' plans at the company announcement on Friday.

"Projects like this have a significant impact on local economies on our state overall," Heineman said.

Wherever an ethanol plant has been located in Nebraska, Heineman said the local farm economy has been given a boost. About 40 to 50 permanent jobs were created at the plant, and 120 to 125 construction workers were employed for a year and a half to build the plant.

Goss, the economics professor, said for every job created at an ethanol plant, another job is created nearby.

Heineman said another positive aspect of the Grand Island project is that it will be locally owned.

"It's like hitting a grand-slam home run to have local investment and local commitment," Heineman said.

Energy Grains officials said they have turned down requests from outside investors because they want the plant's profits to benefit Nebraskans.

"This is doing it the hard way," said Dan Lindstrom of Kearney, who is a partner in Energy Grains. "We're interested in doing this the hard way because it's the right way and better long term for Nebraska."

The company plans to install two thermal oxidizers to reduce odors from the plant.

The Energy Grains plant will be built across the street from Grand Island's Platte Generating Station power plant, and it will produce up to 100 million gallons a year of ethanol. The location is about two miles south of Grand Island and two miles north of Interstate 80, and it has rail access.

"The ethanol plant will really blend in with the power plant," said Marlan Ferguson, president of the Grand Island Area Economic Development Corp.