MEAD, Neb. -- Backers of a unique ethanol plant being built here say its innovative design will boost ethanol's competitive edge while easing environmental problems related to ethanol production and large livestock operations.

Ground was broken Thursday for the E3 Biofuels Complex, the first in the nation to pair an ethanol plant with a cattle feed yard, letting each operation benefit from the other's waste.

The ethanol plant will be powered by methane gas from cattle manure, while the cattle will be fed byproducts from the corn used to make ethanol. The manure and corn residual would be sold as fertilizer.

If the plant is successful, backers see potential for similar operations across the country.

"This plant will be a model for others looking to produce ethanol in an efficient way and will help position our state to continue as a leading producer,'' Gov. Dave Heineman said at the groundbreaking ceremony.

Nebraska is the nation's thirdlargest producer of ethanol.

David Hallberg, president and chief executive officer of E3 Biofuels, said his goal is to build more than 100 such plants across the country in the next 15 years.

He said the Mead facility is a plus from the environmental point of view.

"Whatever you don't like about manure,'' he said of the plant, "this eliminates.''

E3 Biofuels is spending $71 million on the operation, part of which is being used to buy the Mead Cattle Co., an existing 30,000- head feedlot.

The rest will be used to build the ethanol plant and manure processor. The company will use state industrial bonds for some of the financing.

The facility is expected to begin operations next summer and will produce 20 million gallons of ethanol annually, a modest amount compared with plants being built elsewhere.

Hallberg estimated that ethanol will cost about 30 to 50 cents less per gallon to make at this plant, compared with conventional plants.

That's due in large part because the plant won't have to buy natural gas for fuel. Using methane, he said, should save about $8 million annually in natural gas costs.

By saving money and reducing the environmental impact, the plant gives ethanol a competitive edge that critics have said it lacks.

Hallberg said there are about a half-dozen livestock facilities in Nebraska that could be adapted to fuel an ethanol plant.

The key component is having a confined livestock facility with a slatted floor that allows the manure to drop onto a concrete surface below. For efficient conversion to methane, the manure should be as clean as possible.

"This decentralizes energy production in a clean, environmental way," Hallberg said.

"We can keep these plants community-sized and do more of them, spread them around. Over time, that's going to be seen as pretty important."