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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.

Nearly all ethanol today is made from corn or sugar cane. Ethanol advocates say that cellulosic ethanol, made from wood chips, grasses, agricultural residue, and other wastes, is more environmentally sound and doesn't compete with food sources. The Department of Energy is funding about 20 cellulosic ethanol trials, and the recently passed energy bill mandates that by 2022, 20 billion out of 36 billion gallons a year of biofuels come from non-corn feedstocks.

Rather than use specially designed enzymes for fermentation, Coskata uses naturally occurring micro-organisms it licensed from the University of Oklahoma to make ethanol.

GM's investment is part of a second round of funding, which was originally backed by venture firms Khosla Ventures, Advanced Technology Ventures, and GreatPoint Ventures.

Its process starts by putting carbon-based materials into a gasification chamber where heat and pressure turn feedstock into syngas, a combination of carbon monoxide, hydrogen, and carbon dioxide.

That gas combination is then scrubbed to remove particulates and then moved into a bio-fermentation vessel where micro-organisms metabolize the syngas and turn it into ethanol.

Its process is flexible enough to work with a range of renewable sources, including grasses, wood chips, and even old tires. The company says its bioreactor uses plastic tubes, rather than dropping the entire mixture into a single tank, to maximize exposure to the microbes, a design which keeps overall costs down.

"Our calculations indicate that for virtually any carbon-containing feedstock handled in large bulk, we will be able to convert it without subsidies at under a dollar a gallon," said Coskata President and CEO Bill Roe, who added that current processes are about twice as expensive. "We believe that's what's going to drive consumer interest."

Coskata has a water-recovery step that allows it to use less than 1 gallon of water for each gallon of ethanol produced. That compares to 3 to 5 gallons of water per gallon of corn-based ethanol.

Roe said that Argonne National Laboratories measured the "energy balance" of its process and found that it can produce 7.7 times as much energy in the end product as it takes to make it. Its fuel produces 84 percent less carbon dioxide than gasoline, when measured from production to use.

Those numbers compare favorably to switchgrass, an experimental ethanol source. A recent multi-year study from the Proceedings of the National Academy of Sciences found that switchgrass contains five times the energy required to grow it and produces 94 percent less greenhouse gases.

Coskata, named after a nature preserve near Nantucket, Mass., is one of several racing to bring cellulosic ethanol to market cost-effectively.

"It really points to the potential for this family of technology to be large-scale and really environmentally beneficial," said the NRDC's Greene. "There's a much higher probability of success through this shot gun approach."