GM invests in 'trash to ethanol' start-up

General Motors buys undisclosed share in the cellulosic ethanol company Coskata to bring E85 fuel to market faster.

General Motors is investing in biofuels start-up Coskata in a bid to speed the flow of ethanol for GM's flex-fuel vehicles.

At the North American International Auto Show in Detroit on Sunday, GM is scheduled to announce a partnership with Coskata, a year-and-a-half-old company with technology for turning wood chips, grasses, or municipal waste into ethanol.

It's one of several biofuels partnerships GM plans to forge to promote E85, a blend of ethanol and gasoline that powers flex-fuel cars.

GM said it invested in Coskata, initially backed by high-profile venture capitalist Vinod Khosla, because its technology promises to deliver ethanol from non-food sources faster than others.

Coskata claims it can deliver ethanol at under $1 per gallon--cheaper than current prices. It intends to construct a 40,000-gallon-per-year facility near a GM test track by the end of the year and to have a full-scale 100 million-gallon-per-year plant by 2011.

"We are not going into the fuel business," said Mary Beth Stanek, GM's director of environment, energy policy, and commercialization. "But let's be clear: we want consumers to have access to biofuels that are affordable and (that) lower greenhouse gases. That is in our interest." GM did not disclose the amount of the investment.

The auto giant has committed to doubling its flex-fuel vehicle output to 80,000 cars by 2010, and to making half of its new cars flex-fuel-capable by 2012.

But the limited availability of E85 poses a problem. There are only about 1,400 ethanol filling stations in the U.S., mainly in the Midwest, which is far too few for GM's flex-fuel ambitions.

During a press briefing at the Consumer Electronics Show last week, GM CEO Rick Wagoner called for a tenfold increase in the number of ethanol pumps.

"It has been remarkably difficult" to get E85 pumps installed, he said, adding that GM is "doing more work than I thought we would need to."

"Greener" forms of transportation are expected to be one of the main themes of the auto show, a response to higher gas prices and growing environmental concerns.

Ford plans to show off a concept car with the EcoBoost, an energy-efficient turbo-charged engine that the company will start putting into sedans in 2009. Global Electric Motorcars, a Chrysler company, will showcase its latest low-speed electric vehicles.

Meanwhile, Fisker Automotive has chosen the conference to officially launch its high-end plug-in hybrid sports sedan, which will be able to go 50 miles on its battery and 620 miles on fuel. It hopes to bring its $80,000 sedan out in 2009.

GM is investing in several technologies. At the show, it is expected to show the hybrid Saturn Vue and its hybrid Cadillac concept, Provoq, which can run on hydrogen.

But flex-fuel cars are one area where GM, along with Ford and Chrysler, has staked out an early lead, even though the technical barriers are relatively low.

"GM has a competitive advantage in this sector. They've been pushing harder, faster, and longer internally," said Nathanael Greene, a biofuels policy analyst at environmental advocacy group National Resources Defense Council.

Greene said the investment in Coskata appears to be a stepped-up commitment to biofuels, whereas the company's previous efforts, publicized in its "Live Green, Go Yellow" advertising campaign, had an air of greenwashing.

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