General Motors said Thursday it has dropped an undisclosed amount of funding into the coffers of next-generation ethanol developer Mascoma.

It is the second time GM (NYSE: GM) has invested in a company working on cellulosic ethanol, a fuel made from nonfood biomass like switchgrass, wood chips and corn cobs.

Companies developing the alternative fuel haven't yet been able to produce it on a mass scale, or at an affordable price.

To help Boston-based Mascoma bring cellulosic ethanol to market, GM said the two have entered into a "strategic relationship." The auto giant's involvement will also include evaluating other fuels for engine use.

GM said it made the investment because it was impressed by Mascoma's cellulosic technology.

Mascoma has developed what it claims is a simpler process for converting cellulose into ethanol.

Making ethanol requires fermenting sugars from a feedstock into alcohol, a process that is a lot easier when the feedstock already packs high levels of the key ingredient, as do sugarcane or corn.

But getting the sugar out of materials like wood chips that aren't known for such a property is a lot harder.

According to Mascoma, traditional methods used to unlock sugars from cellulosic materials include harsh mechanical or chemical pretreatment. This process opens up the feedstock so that enzymes can be added to finally set the sugars free.

Mascoma claims it has developed a simpler and more cost-effective process that uses heat and ethanol-fermenting microbes, which in turn cuts out the need for chemicals and the step of adding enzymes.

Mascoma is currently building a demonstration plant in Rome, N.Y., which it said will be producing ethanol by the end of the year.

The company already is backed by the likes of Khosla Ventures, Kleiner Perkins Caufield & Byers, Pinnacle Ventures and VantagePoint.

In March, Mascoma bagged $50 million in a third round of funding, according to Private Equity Hub (see Funding Roundup: VCs Play the Field). The biofuel developer also said it has secured more than $60 million in government grants.

But it’s not GM’s only cellulosic play. The company also has backed Warrenville, Ill.-based Coskata. In January, the automaker announced a partnership agreement with Coskata and took an undisclosed stake in the company (see With GM Deal in Hand, Coskata Promises $1 Ethanol).

Coskata, which claims it can deliver ethanol for less than $1 per gallon, uses thermochemical technology to make its ethanol from nonfood sources.

The company's process starts with the gasification of any of a wide variety of carbon-containing materials, such as agricultural waste, wood chips, old tires and municipal solid waste. Then, proprietary bacteria and a bioreactor convert the gas into ethanol.

Last month, Coskata said it already had begun building its plant, which it expects to begin delivering ethanol next year (see Coskata Picks Pennsylvania for Pilot Plant and Coskata Begins Building Demonstration Plant). The company was founded with $10 million from Khosla Ventures, Advanced Technology Ventures and GreatPoint Ventures in 2006. And last month, Coskata said its partnerships were among the advantages that differentiated the company (see Cellulosic Firms Match Coskata’s Ethanol Claims).

Even though both Mascoma and Coskata are producing ethanol from cellulosic materials, GM said it doesn’t view the two as competition. It will take more than just Mascoma and Coskata to push forward the cellulosic ethanol market, said Mary Beth Stanek, GM's director of environment and energy policy and commercialization.

Plus, the companies’ approaches are different, she said during a press conference call. Coskata makes ethanol from challenging feedstocks such as municipal waste, whereas Mascoma is looking at a much larger market, Stanek explained.

Candace Wheeler, a technical fellow in GM’s development and planning department, said technologies like those being developed by Mascoma and Coskata could be integrated into a biorefinery in the future. And this, she said, could ultimately prove the most efficient way to make biofuels.

Rick Kment, a biofuels analyst at DTN, agreed that the investment by GM isn't about picking winners.

"I think the move by GM is more strategic in nature than financially driven," he said, adding that the benefit to the automaker will be more about returns in the form of "good will" than actual money.

He said GM wants to demonstrate it is committed to advancing alternative fuels and vehicles across the board, and the newest investment shows the company's commitment to flex-fuel vehicles, which use a blend of up to 85 percent ethanol and 15 gasoline for its fuel.

He said the positive outcome will be felt more in the biofuels industry, which has seen a decline in investments as it struggles with tight margins and blame for damaging the environment and competing with the food supply (see Sugarcane Biodiesel Heads to Brazil and Pacific Ethanol Gets Much-Needed Cash).