Coskata, the startup with plans to produce $1 a gallon cellulosic ethanol, has announced the location of its 40,000 gallon a year pilot plant: Madison, Penn., just northeast of Pittsburgh. The $25 million project will be built with newly revealed technology partner Westinghouse Plasma. Coskata says the plant will start delivering ethanol by early 2009 for GM, one of its backers, to use in flex-fuel vehicle tests at the automaker’s site in Milford, Mich.

Coskata’s newest partner, Westinghouse Plasma, a subsidiary of gasification specialist Alter NRG, will provide gasification technology for the pilot plant. Gasification is key to Coskata’s ability to use a variety of feedstocks. Under high heat and pressure the gasifier breaks the chemical bonds of the feedstock, reducing it to syngas – carbon monoxide, hydrogen and carbon dioxide molecules. The pilot plant will use woody biomass as well as agricultural and industrial wastes as feedstocks, Coskata says.

In parallel development is Coskta’s first full-scale facility, a 50-100 million gallon a year plant that Coskata plans to break ground for this year with production starting in 2011. The Warrenville, Ill.-based startup has moved quickly in its first 20 months. The cellulosic ethanol race will likely provide a large prize for the first to make it to market, while forcing consolidation on those startups whose technology doesn’t pay off. Coskata has been talking a big game and now it looks like their production is falling into place to back it up.

If all proceeds well, the naysayers and know-nothings who have translated their whines on behalf of Big Oil to a pretense of economic concern over food shortages – will have to come up with a new excuse to oppose the process of growing renewable fuels.