GM's deal with Mascoma

Less than a year ago, GM announced that it was investing in Coskata, a startup with a unique process for turning waste materials into fuel.

Now it has announced that it's invested, and taken equity, in Mascoma, another cellulosic ethanol producer. Coskata can turn things like corn husks, mulch, and even old tires into ethanol. Mascoma's process is a bit more limited, but also turns non-food plants into ethanol. GM loves ethanol because, if it can be produced cheaply, locally, and sustainably, then cars might continue their supreme reign for another fifty years.

GM has already invested a lot of money in creating biofuel vehicles, and it plans to have most of its new vehicles be E-85 capable by 2012. Of course, having E-85 capable vehicles is useless without ethanol. So GM, it seems, is giving a little shove to the industry. And the company is also planning on making some money off of it.

Coskata's process is somewhat unique among ethanol makers. Instead of using microbes and enzymes to digest the cellulose, Coskata uses a self-sustaining plasma reaction to gassify the stuff into CO and hydrogen gas before feeding it into a bioreactor. This eliminates the need for specialty microbes that are able to digest tough plant fiber. It also allows Coskata to use a wider range of feedstocks, including lignin (what trees are made of) and even plastics.

Mascoma uses a more traditional approach. It physically chops the plant material down, and then its specially selected microbes are able to eat it and convert it into sugar (first) and then ethanol. Mascoma's process, however, requires the addition of external enzymes, which are very expensive. But it doesn't require the input of as much energy as Coskata's process.

In short, both Coskata and Mascoma are leaders in cellulosic ethanol production, but they use very different techniques. At this early stage in the development of these fuels, GM is wise to attempt to spur development of more than one cellulosic ethanol production method. And while both techniques are going to be producing ethanol for sale in the U.S. soon, there's no way to tell which is going to be cheapest or most disruptive.

GM, with its deep pockets, can afford to invest in these companies. First, because there is a lot of money to be made in cellulosic ethanol. But, second, because without cellulosic ethanol, it might not matter what GM does with any of its money. Without the cheap, sustainable fuel that these companies hope to promote, the system that GM thrives on, and GM itself, might not exist at all.

Read the GM Mascoma Press Release here (PDF). And check out Mascoma's description of their technology at their website.