Coskata raises $19.5 million in second round of financing

In Illinois, Coskata has raised $19.5 million in a second round of funding that will be used towards construction costs of its first 100 Mgy cellulosic ethanol plant. The company projects that its waste-to-ethanol process can produce fuel at $1 per gallon. General Motors and Khosla Ventures were among the investors in the first round of funding. Coskata, which uses thermochemical and biological processes, says that it can produce 100 gallons of fuel per ton of waste.

Coskata announced a strategic partnership with ICM last month to construct a commercial scale plant for cellulosic ethanol. Coskata executives said that this first plant would open in 2010, but did not disclose the plant’s capacity. They said that full-scale cellulosic plants would cost up to $400 million and would produce 100 Mgy.

Coskata aims to produce 100 Mgy of cellulosic ethanol based on five bacteria strains developed at research labs in Oklahoma. The company will produce 40,000 gallons of fuel on a pilot basis, using woodchips from a co-located chemical plant as feedstock. The company aims to produce fuel for $1 per gallon.

In January, General Motors announced that it will invest in Coskata, which is backed by Vinod Khosla. GM is reported to have made the move in part to convince its customers that the company aims to be the leader among car makers in developing environmentally friendly vehicles.