The P.E.I. government is standing behind its investment in a new ethanol plant, even though plans by the company to expand to commercial production have been scrapped.

Innovation Minister Allan Roach at the Atlantec announcement Friday. CBC

The Alantec plant in Cornwall will demonstrate new technology for creating ethanol for biofuel from sugar beets, and sell that technology to other companies, rather than growing into a commercial facility itself.

The plant will launch with 10 employees, and that could expand to 35 in the first five years if the business thrives. The P.E.I. government invested $1.8 million, mostly in loans, in the plant.

"I think the spinoff for the government, if we can get 35 people employed, and we continue to employ them for the next number of years to come. I haven't sat down and figured out the exact dollars myself, but I think that [it's] good," said Innovation Minister Allen Roach.

"We're employing islanders. It's a manufacturing business, and of course we'd love to see manufacturing businesses move to P.E.I. and manufacture, produce and then export."

Roach said the potential spinoffs are even greater because Atlantec is partnering with Diversified Metal Engineering of Charlottetown. That company would build stainless steel vats that will be used in Atlantec-designed plants.