A few years ago, large scale, billion-gallon-a-year cellulosic ethanol production seemed around the corner. Instead we’ve seen companies fail, or scale back and delay their plans, as they find it hard to secure financing or bring down costs. The technology seems to have dropped off the radar, except for the occasional news of opposition to a mandate requiring the use of cellulosic ethanol.

Still, there are signs of progress. This week ZeaChem announced it started production at a 250,000 gallon demonstration plant that is making chemicals that can be used to make ethanol and other things. Two companies, Ineos and Kior, have finished construction at larger plants that can produce 8 and 11 million gallons of fuel. They’re in the process of starting those plants up. And Poet and Abengoa hope to finish construction on even larger plants—25 million gallon ones-by the end of the year.

It’s still not clear that these companies can make ethanol profitably. ZeaChem is hedging its bets. It can make ethanol if that’s the most profitable option. Or it can convert the acetic acid it makes to chemicals such as propylene. Other advanced fuels companies, such as Amyris, are also pursuing chemicals at first.

But there are plenty of challenges involved in trying to break into existing chemical markets, especially if the chemicals are low-cost commodities. For example, chemicals like propylene are typically made by big petrochemical companies at huge well-integrated plants that make many chemicals, and have low costs that will be hard to compete with.