A biofuel startup in Illinois can make ethanol from just about anything organic for less than $1 per gallon, and it wouldn't interfere with food supplies, company officials said.

Coskata, which is backed by General Motors and other investors, uses bacteria to convert almost any organic material, from corn husks (but not the corn itself) to municipal trash, into ethanol.

"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.

Coskata won't have a pilot plant running until this time next year, and it will produce just 40,000 gallons a year. Still, several experts said Coskata shows enough promise to leave them cautiously optimistic.

"The question will come down to 'Can they deliver?'" said Nathanael Greene, a senior energy-policy analyst at the Natural Resources Defense Council. "The approach is interesting and promising in the problems it addresses."

Coskata uses existing gasification technology to convert almost any organic material into synthesis gas, which is a mix of carbon monoxide and hydrogen. Rather than fermenting that gas or using thermo-chemical catalysts to produce ethanol, Coskata pumps it into a reactor containing bacteria that consume the gas and excrete ethanol. Richard Tobey, Coskata's vice president of engineering, says the process yields 99.7 percent pure ethanol.

Gasification and bacterial conversion are common methods of producing ethanol, but biofuel experts said Coskata is the first to combine them. Doing so, they said, merges the feedstock flexibility of gasification with the relatively low cost of bacterial conversion.

Tobey said Coskata's method generates more ethanol per ton of feedstock than corn-based ethanol and requires far less water, heat and pressure. Those cost savings allow it to turn, say, two bales of hay into five gallons of ethanol for less than $1 a gallon, the company said. Corn-based ethanol costs $1.40 a gallon to produce, according to the Renewable Fuels Association.

The company plans to have its first commercial-scale plant producing up to 100 million gallons of ethanol a year by 2011. Friedman and Greene said the timeline is realistic.

May Wu, an environmental scientist at Argonne National Laboratory, says Coskata's ethanol produces 84 percent less greenhouse gas than fossil fuel even after accounting for the energy needed to produce and transport the feedstock. It also generates 7.7 times more energy than is required to produce it. Corn ethanol typically generates 1.3 times more energy than is used producing it.

Making ethanol is one thing, but there's almost no infrastructure in place for distributing it. But the company's method solves that problem because ethanol could be made locally from whatever feedstock is available, Tobey said.

"You're not bound by location," he said. "If you're in Orange County, you can use municipal waste. If you're in the Pacific Northwest, you can use wood waste. Florida has sugar. The Midwest has corn. Each region has been blessed with the ability to grow its own biomass."

Still, consumers will need some way of getting that fuel into their vehicle. Less than 1 percent of the nation's 170,000 gas stations sell E85, said Mike Omotoso, senior manager of the global power train group at J.D. Power & Associates.

"Even if you produce it county by county, you still need an infrastructure," he said. "People aren't going to go to some remote location for fuel."

But with production set to ramp up quickly to meet the 36 billion gallon mandate, ethanol advocates believe it won't be long before E85 is widely available.