GM Partners With Coskata to Produce Cellulosic Ethanol

Special Coverage

North American Int’l Auto Show

General Motors Corp. Chairman and CEO Rick Wagoner wastes little time on opening day of press preview week at the North American International Auto Show to announce a new partnership with Chicago-based Coskata Inc. in “breakthrough” next-generation ethanol technology.

The auto maker is taking an undisclosed equity stake in the biology-based renewable-energy company to work on rapid commercialization of a unique technology, the partners say, that affordably and efficiently makes cellulosic ethanol from almost any renewable source.

This includes wood, garbage, manure, old tires and factory waste, rather than food-based crops such as corn and sugarcane.

The partnership also includes joint research and development into emissions technology and investigation into making ethanol from GM’s factory waste and non-recyclable vehicle parts.

“We are very excited about what this breakthrough will mean to the viability of biofuels, more importantly, to our ability to reduce dependence on petroleum,” Wagoner says, noting GM will begin testing the new fuel this fall at its Milford Proving Grounds.

GM’s latest ethanol venture comes at a volatile time for the industry, in which auto makers are racing to adjust to shifting consumer demand for environmentally friendly, fuel-saving vehicles.

Pressured by dependency on increasingly high oil prices, worries of global climate change and cognizant of new fuel-economy standards that will see a 40% improvement by 2020, car buyers want vehicles that offer solutions now.

In response, major auto makers are working on a host of short- and long-term technologies that include clean diesel, cylinder deactivation, gasoline fuel injection, dual-clutch transmissions, plug-in electric and hydrogen fuel-cell vehicles. Numerous examples of such vehicles will be unveiled at the Detroit show this week.

While GM says it is fully engaged in a range of such technologies, most notably its upcoming Chevy Volt plug-in hybrid, the auto maker also currently produces more than 1 million E85 (15% gasoline/85% ethanol blend) flex-fuel vehicles annually and currently has 3.5 million on the road globally.

“This is a pretty big move on our part; we want to help biomass fuels grow,” says Mary Beth Stanek, director-GM Environment & Energy Policy and Commercialization, at a GM media backgrounder held last week at Coskata facilities in Warrendale, IL. “We have landfills at our plants and lots of materials that can be recycled into ethanol.”

Stanek says the auto maker presently offers 11 flex-fuel-capable models in the U.S. and 20 globally and expects to see an industry total of 2 billion FFVs on the road by 2012.

“You’ll see starting in 2008 a series of announcements on GM flex-fuel vehicles – lots more brands, engines – an expanded portfolio,” she says.

“We have a lot of flex-fuel vehicle prowess and are getting a critical mass of owners. We drive high flex-fuel traffic, and we’re excited to get involved in the biomass side.”

At a media event last July at the $62 million U.S. BioEnergy Woodbury corn-ethanol production plant in Lake Odessa, MI, GM powertrain chief Tom Stephens said domestic auto makers could displace more than 22 billion gallons (83 billion L) of gasoline annually over the next 10 years through the use of E85.

All vehicle manufacturers could increase the savings to 37 billion gallons (140 billion L). E10, consisting of 10% ethanol, could save an additional 10 billion gallons (38 billion L), he said.

Beyond fueling automobiles, experts say ethanol is a renewable source of energy that provides the U.S a means of self-reliance. Global energy demand is growing 1.6% per year, which is why a collaboration of government, the auto industry, energy suppliers and academia is necessary.

The attraction of cellulosic ethanol is that it’s a non-food source that can be produced more cheaply than ethanol made from corn because the source materials cost less.

Plus, it holds the potential for significant reductions in greenhouse gases – from 67% to 89%, according to a recent study by the U.S.-based Argonne National Laboratory – compared with a 10% blend of corn-based ethanol that reduces greenhouse emissions 1%, rising to 20% for E85.

William Roe, Coskata president and CEO, says Argonne recently analyzed his company’s process and found an 84% reduction in emissions from energy inputs to produce the cellulosic ethanol compared with gasoline.

“That’s a very high level,” he tells reporters during a tour of Coskata’s facilities in Warrendale. “We use proprietary microorganisms and a patented bioreactor.

“We’re able to make more than 100 gallons (379 L) of ethanol per dry ton of material, and we use less than a gallon of water per gallon of ethanol. That’s a greater reduction of water than other cellulosic research.”

While cellulosic research has been ongoing worldwide, most analysts have predicted it would not be commercially viable for the next five to 10 years, giving Coskata a huge lead in the marketplace.

A recent global study by Accenture, a business and technology consulting firm, says while biofuels make up only slightly more than 1% of road-fuel consumption worldwide today, eventually they will account for 10%-15%, which is significant growth, requiring the industry to grow by five times to satisfy global demand based on current production levels.

However, it warns if development of food-based biofuels is not done “in a responsible and sustainable manner,” there will be issues.

While second-generation ethanol technology may be developed enough in five years to challenge corn (and other feedstocks except sugarcane), it would just be coming on stream, the report says, advising investors to think about entering the markets sooner than later: “With the run on capacity, waiting too long will further increase entry costs.”

Meanwhile, critics insist the cost of food-based ethanol far outweighs the benefits. Cars running on corn-based ethanol suffer from decreased fuel economy because E85 contains less energy than gasoline. This requires more frequent fill-ups at prices on par with gasoline or greater.

Others argue the impact of crop growth, distillation and transport of ethanol overshadow environmental benefits. In some countries, such as Indonesia and Brazil, the impact already is destroying native ecosystems.

Current biofuels also set up a competition for food between cars and people, critics say, noting they are being produced at the expense of more than half the country's corn, wheat and coarse grains, pushing food and other material prices to new heights.

Purdue University agricultural economist Chris Hurt predicts in a recent report the 2008 U.S. corn crop will not be big enough to allow the country’s ethanol industry to operate at full capacity, with plants running at 10% to 12% below full production.

He says the increase in renewable fuels for in the 2007 energy bill just signed by President Bush calling for 36 billion gallons (136 billion L) of ethanol by 2022 “is going to have huge impacts for agriculture and forestry. It’s not like throwing a pebble in a pond and having a few ripples. This is a boulder, and it’s going to create mega waves.”

Some 21 billion gallons (80 billion L) of the mandated biofuels must come from non-food based cellulosic ethanol, which Hurt predicts will be the dominant portion of industry growth after 2010, with production going from zero to target goal by 2022.

Roe says Coskata’s first commercial-scale plant will be producing 50 million-100 million gallons (13 million-26 million L) of cellulosic ethanol by 2011, following the two years needed to build the facility.

“Success in delivering on our business plan means we could account for a significant portion of the biomass ethanol mandated in the Renewable Fuels Standard within 10 years,” he says.

In comparison with corn ethanol, Coskata’s next-generation ethanol will cost $0.50 to $1.50 less a gallon at the pump than gasoline, and that will drive consumer demand, he says. “It costs $1.90 to $2.00 to produce a gallon of gasoline, compared with under a $1.00 per gallon to make Coskata’s cellulosic ethanol.”

Explaining his company’s cellulosic production process in layman’s terms, Roe says it includes three “simple” steps. The technology is not new to the chemical industry, he notes, but is uniquely suited to the Coskata method.

“It’s elegantly simple,” says Roe. “The microorganisms are not genetically modified but isolated from nature. There are five strains we refer to as our ‘thoroughbreds.’ We heat the organisms and let them sweat; the sweat is the ethanol.

Instead of huge tank farms, Coskata uses plastic tubing in which it encases the porous membrane, which helps keep capital costs down.

“We are in the process of commercializing (our) gasification, fermentation and ethanol recovery,” says Roe, noting the production process has geographic flexibility, with the Americas, Asia and Africa as leading biomass areas.

For GM, this could lead to joint production efforts in important emerging markets such as China, where its sales in 2007 rose 18.5% to a record 1.03 million vehicles. “The U.S. has lots of land to produce corn, but not China,” says Candice Wheeler, GM technical fellow, chemical and environmental sciences, who calls Coskata’s production process “head and shoulders” above other technologies GM considered.

Meanwhile, GM is discussing distribution of Coskata’s ethanol with oil- company partners. “We are talking with the major companies and are talking to more than one company,” Stanek says, declining to reveal names.

Getting the word out early about Coskata’s affordable cellulosic ethanol will encourage oil companies to market the product, as well as encourage GM rivals to step up efforts to produce more E85 vehicles, she says. This, in turn, will encourage more gas stations to start selling the fuel and convince more consumers to try E85.

Stanek says Coskata’s ethanol will get a big boost in public acceptance when stations post prices of regular and premium gas alongside, and consumers see E85 priced considerably lower.

– with Jim Mateja in Chicago

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