Mascoma, which wants to develop microbes that can convert woody biomass into ethanol, has signed a pretty important deal with Chevron Technology Ventures.

Under the deal, Chevron will supply feedstocks to Mascoma, and then Mascoma's microbes will convert the material into ethanol and lignin, the tough material that protects plants. Chevron will then evaluate the results.

To survive and thrive, biofuel startups will invariably have to partner with the major fuel companies. Chevron already has an R&D alliance with Solazyme, which makes algal biodiesel. Shell has deals with 70 or so different alternative fuel companies, according to sources. Mascoma recently underwent some management changes. CEO Bruce Jamerson became chairman and also chairman of Frontier Renewable Resources, which is trying to raise money to build a plant in Michigan based around Mascoma's microbes. Mascoma is currently looking for a CEO.

The lignin angle is interesting. Ligning keeps microbes from gobbling up plants. It is why we have coal: the lignin outlasted the microbes and the cellulosic material fossilized into coal over millions of years. It's a high-energy material. Some ethanol companies plan to burn lignin to run their own plants. Others transform it thermochemically and add the byproducts back into the ethanol mix.

Mascoma is trying to engineer microbes that can handle two stages of the ethanol process: breaking up wood chips and grasses into lignin, hemicellulose and cellulose and then turning the cellulose into ethanol. The company is not there yet but it is making process, Jamerson told us recently.