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$1.00/gallon Ethanol...Interesting

http://www.usatoday.com/money/industries/energy/environment/2008-01-13-gm-ethanol-coskata_N.htm

General Motors finances ethanol maker Coskata

By James R. Healey, USA TODAY
DETROIT — General Motors (GM) says it is investing in a fledgling company that claims its secret process could be able to make ethanol from waste in large quantity as soon as 2010 for $1 a gallon or less, half the cost of making gasoline.
Bill Roe, CEO of 18-month-old ethanol maker Coskata, says the company's process uses bacteria developed at the University of Oklahoma and existing gasification technology to generate 99.7% pure ethanol, plus water. He says the method should leapfrog cellulosic production, which has been seen as the next step from today's ethanol production using corn.

GM won't disclose its investment, but Roe says it's enough to make Coskata "a speed-to-market play. I don't think most people saw this coming," he says. "Most talk about cellulosic ethanol is futuristic."

Coskata's process can use garbage, old tires and other waste, but Roe says wood waste probably will be used at first because it's available, cheap and easy to handle.

Coskata was founded July 2006 with backing from Khosla Ventures, Advanced Technology Ventures and Great Point Ventures. It is based in Warrenton, Ill.

Ethanol is being blended with gasoline to cut oil use. Much fuel sold in the USA now is 10% ethanol, which modern cars burn without problems. An 85% ethanol blend, or E85, is seen as a way to drastically cut oil use, but it requires slightly modified "flex-fuel" vehicles.

GM has promised to make 50% of its vehicles E85-capable by 2012 if there is a sufficient ethanol distribution and says it is trying to make sure enough E85 is available. Of the 170,000 U.S. gas stations, E85 now is sold at about 1,000, mainly in the Midwest.

Roe pledges to be operating a 40,000-gallon-per-year pilot plant this year and to line up partnerships with other companies to build $400 million facilities that each could produce 100 million gallons a year as soon as late 2010. The USA uses 140 billion gallons of gasoline a year.

While E85 could cut oil use, questions have been raised about health and financial drawbacks.

A study from Stanford University's civil and environmental engineering department, updated last year, says E85-fueled vehicles increase ozone levels, and a shift to 100% E85 fuel could boost U.S. respiratory deaths by about 185 per year. The author, professor Mark Jacobson, says "E85 may be a greater overall public health risk than gasoline."

GM spokesman Alan Adler says the automaker believes the report is wrong and says it has joined some environmental, pro-ethanol and health groups to call for a working group to seek consensus on ethanol health effects.

"There is no question in my mind that making ethanol more widely available is absolutely the most effective and environmentally sound solution," Chairman and CEO Rick Wagoner said said Sunday, announcing the tie-up between GM and Coskata at media preview days ahead of the North American International Auto Show here. "And it's one that can be acted on immediately."

GM says it also has asked Jacobson to revise the work. Jacobson says he's never had such a request: "What they're saying is absolutely false." He says his conclusions, partly based on data from GM and other automakers, are conservative.

E85 contains less energy per gallon than gasoline, so it takes more to go the same distance. Adjusting for that difference, E85's cost is between midgrade and premium gasoline, says travel group AAA. The U.S. average price for gasoline was $3.095 per gallon, AAA reported Friday, while E85's energy-adjusted price was $3.325.

Even giving monetary value to cutting oil use, E85 is a bad bargain at today's prices, says John Graham, dean of the Pardee Rand Graduate School and founder of the Harvard Center for Risk Analysis. His study of alternatives to gasoline published last year found that burning E85 could cost as much as $1,600 more over a vehicle's life, while diesel fuel could save up to $2,300.

Ethanol blended with gasoline also has a federal subsidy of 51 cents per gallon. Roe says Coskata's process could erase the cost disadvantage, even without the subsidy.