GM Expands Ethanol Efforts

May 7, 2008
General Motors is expanding its already aggressive efforts to make ethanol the green fuel of choice in the U.S. market. The automaker is taking an undisclosed equity stake in Mascoma Corp., a Boston-based firm that plans to build a major new ethanol plant in Michigan.

Mascoma intends to use a new method to produce the ethanol fuel, something that could shield it from the increasing criticism of food-based fuels, which are catching much of the blame for the current surge in global food prices. Mascoma uses a technique called cellulosic, which instead of relying on crops, such as corn, can produce alcohol from a variety of agricultural and even industrial scraps, such as wood chips and recycled cardboard.

In January, GM made a high-profile investment in another cellulosic alcohol producer, Illinois-based Coskata.

“This is absolutely critical to our future,” declared GM President Fritz Henderson of the new investments. “It is in our economic self-interest for these companies to succeed.”

There are about 7 million so-called FlexFuel vehicles – capable of running on either gasoline or a gas/ethanol blend, called E85 – on U.S. roads, with millions more being added each year. But few actually use the fuel, industry data show, in part because ethanol is not readily available in most of the country. But companies like Mascoma and Coskata hope to change that over the coming years. And they contend that their cellulosic production methods would obviate concerns about the food/fuel conundrum. It should also lower production costs for E85 to less than $2 a gallon, they claim, which would help make E85 cost-competitive with gasoline, even accounting for the lower mileage delivered by the alcohol-based fuel.

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