GM: Ethanol Will Cost Less Than $2 A Gallon

General Motors is investing heavily in old-school ethanol as a stopgap until it can figure out how to make a lithium-ion battery work effectively in its electric car, the Volt.

The good news is that GM has partnered with Coskata, an Illinois-based ethanol maker that claims to be able to produce ethanol that costs less than $2 a gallon at the pump, according to the Los Angeles Times. In addition, the company has pioneered the use of bacteria to break down cellulose from other plants, most likely waste wood, so that ethanol doesn't have to come only from corn. Corn-based ethanol has proved problematic because of the energy in-energy out equation (it takes almost as much energy to produce a gallon as you get by burning it) and because its use has increased agricultural pollution.

According to USA Today the fuel could retail for as little as $1 a gallon, and it costs less than half of what gasoline does to produce.

The ethanol push, however, may be partly because of the loophole Congress wrote into the new vehicle efficiency standards, allowing vehicles that run on ethanol to get worse fuel mileage than those that run on only gasoline. Most vehicles built to run on ethanol will run on either gas or ethanol blends (that's why they're called "flex fuel).

The Volt isn't due to hit the showrooms until 2010, anyway.

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