The state of Michigan unveils an ambitious goal of attracting 1,000 biofuel filling pumps by the end of 2008 ¬– a project supported through a new $250,000 grant program.

The state says the grants are designed to help service station owners defray the cost of installing or converting existing infrastructure for E85 ethanol and other renewable fuels, such as biodiesel.

Converting a gasoline pump or installing a new E85 or biodiesel pump can cost anywhere from $75,000 to $100,000, according to the National Ethanol Vehicle Coalition (NEVC), an ethanol advocacy group that counts Detroit’s Big Three auto makers among its members.

E85 is a mixture of 15% gasoline and 85% ethanol, usually derived from corn. Biodiesel is made from vegetable oils or waste grease.

According to the NEVC, there are 19 E85 stations in Michigan.

Funding for the project is provided through a grant from the U.S. Department of Energy.

A spokeswoman for Michigan Gov. Jennifer Granholm, who announced the effort, says the state hopes to renew the grant and secure another $250,000 in federal dollars to put toward the goal of 1,000 pumps.

“Obviously we have a long way to go, but we think (the existing grant) will fund 150 stations,” the spokeswoman says.

The state will provide the grants to nonprofit organizations, which will be charged with disbursing the funds to individual service stations. Grants will be capped at $12,000 per station.

Ethanol output in the state is expected to grow in the next few years. Michigan is home to five ethanol production plants and two more are under construction.

Two biodiesel plants also are beginning production in Michigan, with another plant in the planning stages, according to a statement from the governor’s office.

In July, Granholm signed legislation cutting fuel sales taxes 36% on E85 and 20% on biodiesel.