BURNABY, B.C. - Canada moved one step closer to becoming a leader in the commercialization of cellulosic ethanol today.

The Government of Canada and Sustainable Development Technology Canada announced that a project led by Lignol Energy Corporation's (TSX-V: LEC) ("Lignol" or "the Company"), wholly-owned subsidiary, Lignol Innovations Ltd., has been awarded up to $1.82 million in additional funding contributions from SDTC.

This award is in addition to the $4.42 million awarded to date from SDTC representing an aggregate contribution from SDTC of up to $6.24 million. The scope of the current work plan that commenced June, 2006 with the support from SDTC will be completed by Q2 2009 and supports the overall project costs estimated to be $20.36 million. The project will result in the establishment of a world-class, integrated, industrial scale facility for the production of cellulosic ethanol and unique renewable biochemicals.

"Our Government is investing in new and innovative technologies to help move forward the next generation of renewable fuels," said Mark Warawa, Member of Parliament for Langley and Parliamentary Secretary to the Minister of the Environment. "These new technologies have the potential to generate even greater environmental benefits than traditional renewable fuels and will provide new economic opportunities."

"The additional funding from SDTC is an important contribution that will enable us to enhance the functionality of our industrial pilot plant here in British Columbia and allow us to pursue several truly innovative breakthroughs that were developed by our renowned engineers and scientists," said Ross MacLachlan, President and CEO of Lignol. "This funding has enabled us to extend this phase of operations well into the first half of 2009 with an expanded scope of our project together with enhancements for enzyme utilization and process improvements."

"The creation of bio-refineries, producing both cellulosic ethanol and related co-products from non-food biomass feedstocks, is of fundamental importance as Canada tries to move its economy forward," said SDTC President and CEO Vicky Sharpe. "The technology developed by Lignol has the potential to bring Canada one step closer to this goal and to secure its place as a global leader in the production of next-generation biofuels."

About SDTC - Sustainable Development Technology Canada (SDTC) is an arm's-length foundation which has received $1.05 billion from the Government of Canada as part of its commitment to create a healthy environment and a high quality of life for all Canadians. SDTC operates two funds aimed at the development and demonstration of innovative technological solutions. The $550 million SD Tech FundT supports projects that address climate change, air quality, clean water, and clean soil. The $500 million NextGen Biofuels FundT supports the establishment of first-of-kind large demonstration-scale facilities for the production of next-generation renewable fuels. SDTC operates as a not-for-profit corporation and has been working with the public and private sector including industry, academia, non-governmental organizations (NGOs), the financial community and all levels of government to achieve this mandate. For more information, please visit www.sdtc.ca.

About Lignol - Lignol (TSX-V: LEC) is a Canadian company undertaking the development of biorefining technologies for the production of fuel-grade ethanol and other biochemical co-products from non-food cellulosic biomass feedstocks. Lignol's modified solvent-based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including HP-LT Lignin. Lignol is executing on its development plan through strategic partnerships to further develop and integrate the core technologies on a commercial scale. Lignol also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology. For more information about Lignol, please visit our website at www.lignol.ca.