Part GM-owned Coskata announces ethanol plant deal

DETROIT (Reuters) - Start-up biofuel company Coskata Inc said on Wednesday it teamed up with engineering firm ICM Inc to build a commercial plant to mass produce cellulose-based ethanol using Coskata-developed technology.

General Motors Corp owns a stake in Coskata, although the top U.S. automaker has declined to disclose the size of its stake or how much it paid for it.

The plant will be designed and constructed by ICM, which specializes in ethanol plant design. It is due to open in late 2010 and will be Coskata's first ethanol plant.

Warrenville, Illinois-based Coskata projects it will be able to produce ethanol for less than $1.00 a gallon almost anywhere in the world from a range of materials including agricultural or municipal waste.

Cellulose is a structural material contained in nearly every plant, tree, and bush all over the world without agricultural effort or cost needed to make it grow.

Cellulosic ethanol production currently costs about double that of traditional U.S. ethanol, a plant-based distilled alcohol derived mostly from corn in the United States and from sugar in Brazil.

The new U.S. energy bill signed into law by President George W. Bush in December calls for a huge jump in biofuels production for America's automobiles - 36 billion gallons by 2022, with 16 billion gallons from cellulosic ethanol.

Coskata claims its process uses less than one gallon of water for every gallon of cellulosic ethanol produced and reduces carbon dioxide emissions by 84 percent compared with gasoline.

Tests carried out by Argonne National Laboratory have shown Coskata's cellulosic ethanol generates 7.7 times the energy used to produce it, compared with 1.3 times for corn-based ethanol.

(Reporting by Nick Carey, editing by Derek Caney)