GM invests in cellulosic ethanol

If ethanol is to be a viable fuel substitute for any significant gasoline demand, it needs to come from sources other than corn said General Motors at a Detroit auto show press conference.

"Grain-based ethanol has its critics, to be sure. Concerns have been raised ranging from water usage and food prices, to net energy balance... virtually everyone can agree that we must find a better way to make ethanol," said GM Chairman and Chief Executive Officer Rick Wagoner in Detroit.

In his 2006 State of the Union address, President Bush came to a similar conclusion when he announced an initiative to get ethanol from switchgrass, which is a tall grass that is indigenous to North America, can be harvested, and is self-seeding.

However, GM plans to leapfrog switchgrass and invest in making ethanol from waste materials such as pulp and even used tires.

The process, developed by startup company Coskata and backed by venture capital, uses a patented bacteria-based process to break down cellulose from a wide variety of sources. Coskata claims the process can produce ethanol for less than $1 a gallon and uses significantly less water than distilling ethanol from corn, an environmental concern. The company plans to have a demonstration plant working by the end of this year.

This can't happen soon enough. Corn ethanol could make up barely half of the latest federal mandate for ethanol production by 2030. And fuel economy incentives that encourage automakers to build more vehicles capable of running on 85 percent ethanol (E85) have just been extended through 2020. For those mandates to reduce U.S. oil dependence, clearly those vehicles need a supply of ethanol on which to run.

If we're going to break away from dependence on foreign oil, technologies such as fuel cells and batteries won't be here soon enough, Wagoner concluded. So we're going to need ethanol to bridge the gap. As GM strives to supply affordable ethanol for its growing E85-compatible fleet and beyond, it may also pump new-found profits into the corporate gas tanks.

—Eric Evarts

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