DETROIT, Michigan (AFP) — General Motors Corp. is planning on making biofuel with garbage at a cost of less than a dollar a gallon, the company's chief has said.

The US automaker has entered into a partnership with Illinois-based Coskata Inc. which has developed a way to make ethanol from practically any renewable source, including old tires and plant waste.

The process is a significant improvement over corn-base ethanol because it uses far less water and energy and does not divert food into fuel.

"We are very excited about what this breakthrough will mean to the viability of biofuels and, more importantly, to our ability to reduce dependence on petroleum," said Rick Wagoner, GM's chief executive officer, on Sunday.

GM, which was late in introducing gas-electric hybrids, is the industry leader in flex-fuel vehicles that can run on gasoline blended with up to 85 percent ethanol.

It is currently producing more than a million flex-fuel vehicles a year globally and is committed to making half its production flex-fuel by 2012.

It is also introducing 16 new hybrid vehicles over the next four years, including a plug-in hybrid which can run on electricity alone, and will soon have the world's largest fuel-cell test fleet when it delivers more than 100 Chevy Equinox fuel cell vehicles to customers in the United States, Europe and Japan.

But while these may be the vehicles of the future, flex-fuel is the best "interim" solution as it will take 12 years to replace most of the vehicles currently on the road, Wagoner told reporters at the Detroit auto show.

"There is no question in my mind that making ethanol more widely available is absolutely the most effective and environmentally sound solution," Wagoner said. "And it's one that can be acted on immediately."

Coskata's first pilot plant will be up and running in the fourth quarter of 2008 and the fuel will be used on GM test vehicles.

"We will have our first commercial-scale plant making 50 to 100 million gallons of ethanol running in 2011," said Coskata chief Bill Roe.

The prestigious Argonne National Laboratory analyzed Coskata's process and found it generates up to 7.7 times the amount of energy used and reduces CO2 emissions by up to 84 percent compared with a well-to-wheel analysis of gasoline.

The process also uses less than a gallon of water to make a gallon of ethanol compared to three gallons or more for other processes.

President George W. Bush's energy policy includes plans to increase the consumption of biofuels from 7.5 billion gallons in 2012 to 36 billion gallons in 2022.

Detroit - Bags of garbage and bald tires that go to landfills today could wind up in your gas tank in a few years, along with wood chips, crop residue and plastic pop bottles.

That's what Coskata Inc., a biofuels start-up in west suburban Warrenville and auto industry giant General Motors Corp. said Sunday at the Detroit Auto Show in announcing a partnership to produce ethanol from just about any carbon-containing material by 2011.

This would produce pump prices that are 50 cents to $1 less per gallon than gasoline--even before federal ethanol subsidies--and would reduce greenhouse gases. An Argonne National Laboratory study has concluded that cellulosic ethanol produces 85 percent to 90 percent less greenhouse gas than gasoline, compared to 20 percent to 30 percent less from corn-based ethanol.

Coskata's secret weapons are patented bacteria and bioreactors that it says can produce larger amounts of cellulosic ethanol at lower cost than other methods from materials including farm waste, household trash and prairie grass. Oklahoma State and Oklahoma Universities developed the micro-organisms and granted exclusive license to Coskata, which developed the bioreactors and process to recover the ethanol.

The company says it can turn four old tires into seven gallons of ethanol and two bales of hay or straw into five gallons at a production cost under $1 per gallon. That compares with $1.40 to $1.50 for corn-based ethanol, according to the Renewable Fuels Association and Department of Energy, respectively.

The project has a long way to go before achieving a significant scale. Privately held Coskata, which was launched in 2006 and has 37 employees, will open a plant late this year in a location to be named that will be able to produce 40,000 gallons annually.

GM, which has taken an undisclosed minority stake in Coskata, will test the ethanol at its Milford, Mich., proving grounds and provide engineering and research assistance plus some raw materials.

Coskata President and Chief Executive Bill Roe said the firm will seek other partners and expects to have a plant capable of making 100 million gallons annually by the end of 2010. The fuel would be mixed with gasoline to create E85, a blend of 85 percent ethanol and 15 percent gas. "The technology is ready today and is a platform for other biofuels," Roe said in an interview. "We believe it will have impact at the pump."

Energy Act a catalyst

Unlike conventional fermentation processes that convert corn to sugar to make ethanol, Coskata's turns biomass into carbon monoxide and hydrogen. It then adds patented strains of voracious bacteria to consume those gases and transform them into ethanol. Coskata says its process uses less energy and water than others.

E85 is available at only about 1,400 of the nation's 170,000 gas stations but should become more widely available under the Energy Act recently signed by President Bush. The U.S. produced 6.5 billion gallons of ethanol last year, most of it from corn and most of it used in a 10 percent mix with gasoline to reduce emissions.

The Energy Act requires fuel retailers to sell 36 billion gallons of ethanol by 2022, with 21 billion gallons from cellulosic materials, the kind created in Coskata's processes.

GM has bought into this technology because E85 use qualifies it for extra credit toward meeting federal fuel-economy requirements with flexible-fuel vehicles that can burn up to 85 percent ethanol, even if the owners never use the fuel. Besides, equipping a car to burn E85 at the factory costs less than $100. In contrast, gas-electric technology, in which GM lags, adds thousands.

"If you're GM, you can build a lot of these vehicles quickly if E85 is widely available," said David Cole, chairman of the Center for Automotive Research, in Ann Arbor, Mich. "The Asian [manufacturers] aren't into it nearly as much, and potentially that is a competitive advantage for GM."

Potential encouraging

Though lauding the concept, David Friedman, director of the clean vehicles program for the Union of Concerned Scientists, was skeptical. "Show me the money. We won't know until it's up and running."

Still, Friedman said cellulosic ethanol has the potential to become 30 percent to 40 percent of transportation fuel. "It's exciting news that there is more potential technology coming out, and it's a good sign that GM also is investing in a company like this. But with a lot of things introduced at auto shows it's hard to tell the difference between potential and products."

Coskata initially will enlist partners experienced in running ethanol plants.

"We will essentially be the technical arm of partners that will operate the facilities," Roe said, comparing Coskata's processes to software that runs a computer.

His plan is to release new, more-productive bacteria strains every two to three years, as well as add products, such as butanol and propanol.

"We have a head start, we have an edge now, but you have to continue to innovate," he said, adding that the firm could go public after its technology is producing ethanol.

Long term, Roe said Coskata's technology and other processes could mean that municipal waste will be delivered to ethanol plants instead of landfills. "Waste can now be seen as useful for something else. Landfills can be dramatically minimized if not eliminated."

rpopely@tribune.com