WASHINGTON (AP) — General Motors Corp. said today it had taken an ownership stake and formed a partnership with Mascoma Corp., a renewable energy company that is working to develop cellulosic ethanol from wood chips, waste paper sludge and switch grass.
The deal represented the automaker's second partnership with an ethanol startup this year. GM announced a similar relationship with Illinois-based Coskata Inc. at the North American International Auto Show in Detroit in January.
The extent of GM's investment and ownership stake in both companies have not been disclosed.
Mascoma, based in Boston, has developed a single-step cellulose-to-ethanol method that lowers the costs involved in other biochemical methods of producing cellulosic ethanol.
GM said its collaboration with the company would help develop non-grain forms of ethanol for flexible-fuel vehicles, which run on a mix of gasoline and ethanol.
GM President and Chief Operating Officer Fritz Henderson said the investments underscored the company's belief that "ethanol has the greatest near-term potential as a clean-burning, renewable fuel that can help reduce oil dependence."
Lawmakers have touted the development of biofuels, including ethanol from corn and cellulosic feedstock such as switch grass and wood chips, as a substitute for gasoline. President Bush signed energy legislation last year that requires a major increase in ethanol use as a fuel to 36 billion gallons a year by 2022.
The Detroit-based automaker has said it intends to double its annual production of flexible-fuel vehicles to 800,000 by 2010 and make half of its annual vehicles capable of running on E85 ethanol by 2012. The fuel is a blend of 85 percent ethanol and 15 percent gasoline.
GM and other automakers such as Ford Motor Co. and Chrysler LLC have pushed flexible-fuel vehicles as an alternative in the face of rising gasoline prices and tougher fuel efficiency standards. But with its second partnership, GM has aggressively sought a stake in the production side of non-fossil fuels.
Mascoma executives said they hope to mass-produce ethanol for about $1 to $1.50 a gallon and begin producing millions of gallons of the fuel around 2010. But Bruce Jamerson, Mascoma's chairman and chief executive, said the company's approach "can be economic at relatively small volumes."
Mascoma, which was founded by two Dartmouth College professors in 2005, has a research facility in Lebanon, N.H., and announced plans last year to build a cellulosic ethanol biorefinery in Michigan. The company, which employs 100 people, also is building a demonstration plant in Rome, N.Y.
Silicon Valley billionaire Vinod Khosla, the Sun Microsystems Inc. co-founder, is an investor in both Mascoma and Coskata, but GM officials said his role was coincidental in the separate agreements.
Khosla's venture capital firm has invested millions in biotech companies pursuing alternative fuel strategies.
