VANCOUVER, Canada --- Lignol Energy Corp. announced it has suspended plans for a joint venture with Suncor Energy to build a cellulosic ethanol commercial demonstration plant in Grand Junction, CO.

Lignol cited "the instability of energy prices, the uncertainty in the capital markets and the general market malaise" in explaining the decision.

Last October, Lignol and Suncor announced they were negotiating the terms of a joint venture, which was to include the construction of a $80 million cellulosic ethanol plant in Grand Junction, CO.

The plant in Colorado was tied to a grant of $30 million from the U.S. Department of Energy. But economic conditions led the parties to halt negotiations, anyway. 

"We are fortunate that this decision was reached at an early stage in the development of the project, and as such Lignol and Suncor have not incurred significant costs," said Ross MacLachlan, president and CEO of Lignol. "We are currently exploring various alternatives for the US$30 million grant from the DOE, including the re-examination of project time-lines, site locations and the participation of other industrial partners. We will report on the outcomes of these discussions as they unfold."