By Dave Carpenter
Associated Press
Monday, January 14, 2008

WARRENVILLE, Ill., Jan. 13 -- General Motors said Sunday that it has taken an ownership stake and formed a partnership with Coskata, a renewable energy start-up company that plans to produce ethanol from agricultural leftovers and municipal and industrial waste.

The announcement was made at the North American International Auto Show in Detroit after the two companies briefed reporters earlier at Coskata's headquarters in this western Chicago suburb. The extent of GM's investment and minority stake was not disclosed.

The partnership represents a rare foray by a major automaker into the production side of non-fossil fuels as GM and its rivals, under pressure from tougher U.S. fuel-efficiency standards, pursue a mix of fuel-efficient vehicles and technologies.

GM's chairman and chief executive, Rick Wagoner, said it will take more than 12 years to replace most of the vehicles now on the road with more energy-efficient electrically driven vehicles.

In the meantime, ethanol is needed to decrease oil dependence "because there are already millions of flex-fuel vehicles on the road right now, for example, more than 6 million in the U.S. alone," he said. "Vehicles that could be running on ethanol if it were more readily available."

If all the flex-fuel vehicles produced by GM, Ford and Chrysler, plus those the companies have committed to producing by 2010, were to run on ethanol, they would displace 29 billion gallons of gasoline annually, or 18 percent of the projected petroleum usage at that time, Wagoner said.

"Nothing else we can do gets even close to that kind of impact that soon," he said, adding that ethanol requires little change in consumer behavior.

The cellulosic ethanol being developed from Coskata's biology-based technology will not be available at retail gas stations until at least late 2010.

But the Illinois company maintains that its process is commercially viable now and is a platform for producing other biofuels in the future. It aims to have a 40,000-gallon demonstration facility operational by the end of this year to deliver ethanol to GM for testing

in its vehicles before building

a 100-million-gallon commercial plant at an undetermined U.S. location.

Bill Roe, president and chief executive of 18-month-old Coskata, said that at full production the company will be able to make ethanol for less than $1 a gallon. He said pump prices should dramatically reflect widespread production of the cheaper new ethanol by 2015 or 2016, when it expects to be building 20 to 25 fuel plants a year.

"GM is enabling Coskata to produce the next generation of biofuels -- without using a food source -- making it economically viable and commercially available," he said. "Alternative transportation fuels are coming faster than people think . . . and will be available at a lower cost than people have imagined."