Coskata, a firm from Illinois, promises to produce ethanol for less than $1 per gallon from a process that uses bacteria for ethanol generation from organic material.

An excerpt from Wired:

“It’s not five years away, it’s not 10 years away. It’s affordable, and it’s now,” said Wes Bolsen, the company’s vice president of business development.

The discovery underscores the rapid innovation under way in the race to make cellulosic ethanol cheaply. With the Energy Independence and Security Act of 2007 requiring an almost five-fold increase in ethanol production to 36 billion gallons annually by 2022, scientists are working quickly to reach that breakthrough.

“It signals just how hot the competition is right now,” said David Friedman, research director of the clean vehicles program at the Union of Concerned Scientists. “There are a lot of people diving into this right now, trying to figure out how to crack the nut. This increases my confidence that someone will do it.”

Besides cutting production costs to fire sale prices, the process avoids some key drawbacks of making ethanol from corn, company officials said. It wouldn’t impact the food supply, and its net energy balance is high because the technique works almost anywhere using almost anything with great efficiency. The end result will be E85 sold at the pump for about a dollar cheaper per gallon than gasoline, according to the company.

The firm is backed by investors, such as General Motors, and it is looking forward to setting up regional production centers that can operate on local feedstock. The process to generate cellulosic ethanol can include materials ranging from corn husks to household thrash. These developments should be a major push for the use of E85 fuel.