Better late than never.

Coskata formally unveiled its 50,000 gallon a year demonstration plant for turning wood chips, garbage and all manner of organic material into liquid fuel, a step toward producing full-scale plants with its technology in the coming years. Earlier, the company had been aiming at erecting full-scale plants in 2010, but the economic downturn pushed its plans – and the plans of the whole biofuel industry – into the future.

The company takes a somewhat unusual approach to biofuels. It combines both thermochemical processes and biological processes to make fuel. Usually, companies either take one approach or another. Zeachem and Coskata both take a hybrid approach in an effort to boost yields. Coskata, though, can also turn a variety of garbage – old tires, wood chips, etc. – into fuel. Zeachem and most other biofuel companies try to generally focus on a single or a few feedstocks. By exploiting a wide variety of feedstocks, Coskata hopes to keep costs down.

Coskata first takes the garbage and turns it into a synthetic vapor courtesy of a Westinghouse plasma generator. Once the syngas is produced, it is fed to microbes that convert it to liquid fuels. The microbes live in large colonies that collect on membranes. Part of the company's intellectual property revolves around coming up with a way to let the microbes live as colonies and form slimes. Coskata has largely been concentrating its efforts on a few microbe species.

In the end, the fuel emits 96 percent fewer greenhouse gases than conventional gas and the company only uses half of the water in the manufacturing process. Although Coskata currently builds its own plants, in the long run it has talked about licensing the process, leaving the massive scaling-up job to the people who are already in the fuel business. Make fuel or license – it's a big debate in the biofuels industry. If anything, the cost of building ethanol plants has recently declined because many early companies are trying to sell mothballed plants. Valero, the big gas distributor, recently bought seven plants.

Ultimately, Coskata hopes to sell fuel for $1 a gallon.

General Motors will likely promote Coskata's fuel. It has invested in the company and says that half of its cars will be flex fuel cars that can drive on gas or ethanol by 2012. GM is also working with fuel companies to raise the ethanol content in transportation fuel from the 10 percent levels of today.