GREEN ISLAND — At Ecovative Designs, business is mushrooming. Literally.

The five-year-old company, which developed an environmentally friendly technique that uses mushroom fungus to make insulation and packaging material, is growing into larger manufacturing facilities off Cohoes Avenue.

And on Thursday, company founder Eban Bayer was given an award by the U.S. Environmental Protection Agency for a natural product that he hopes one day will replace much of the fossil-fuel plastics used by industry.

The biodegradable material is already used in packaging by such companies as Dell Computers, Crate and Barrel and footwear maker Puma, which is also working with the company to develop a biodegradable shoe soles and flip-flops.

Under a partnership with Fortune 500 company Sealed Air, privately-held Evocative soon will announce details of a plan to build a plant under license "somewhere in the Southwest," said Bayer. "That is all I can say for now."

The company had about 20 workers a year ago, and now has 42. It outgrew its original 9,000-square-foot manufacturing plant and two months ago expanded into another 25,000 square feet that will allow production to increase by a factor of ten, said Bayer.

"Our revenues are now in the millions, and are growing faster than our staffing. We are where plastics were 50 years ago," he said, producing a piece of mushroom-based material from this pocket that he said is being tested for use in wind turbine blades. The relative strength of the material depends on the type of mushroom used to grow it, he said.

And the company will continue to look for ways that mushrooms can replace plastics. "We only have about 1.7 billion years of mushroom evolution still to explore," said company mycologist Sue Van Hook.

"This is the coolest idea that I have ever seen," said EPA Commissioner Judith Enck, as she presented Bayer with an EPA Environmental Quality Award for the company's packaging product, called EcoCradle. "This is amazing, pioneering work."

She said that as a young environmental activist, more than two decades ago, she was part of a campaign to convince McDonald's to end the use of polystyrene plastic foam containers for its burgers. Polystyrene is a possible human carcinogen that remains in widespread use, said Enck, and most of it winds up with landfills, where it does not break down.

In contrast, the biodegradable packing material can be chopped up by consumers and spread over gardens as a compost. Made of a mix of agricultural wastes like corn stalks and mixed with a slurry of mushroom fungus, the material is placed into molds, where the fungus consumes the plant wastes. The material is air dried and later baked, using green hydropower from the Green Island Power Authority.

Ready for use in less than a week, the material will decompose in about 90 days in a compost pile, Bayer said.

Bayer said the company is encouraging new ways to the use material. It has provided several hundred "do-it-yourself" kits through its website that people have used to "growing their own products, like bike helmets or doll furniture," he said.

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