Biofuel start-up Coskata Inc. has signed a deal with ICM to build a cellulosic ethanol plant the company says will be producing fuel on a commercial scale within two years.

ICM is one of the world's leading ethanol plant design and engineering firms, and Coskata said it chose ICM because of its "unrivaled biofuels technical knowledge and ability." As we told you last month, Coskata has developed a method of producing cellulosic ethanol from just about any organic matter for less than $1 a gallon.

Coskata says the proprietary process addresses many of the drawbacks to ethanol because it does not rely upon food crops and instead uses agricultural waste, wood waste and even municipal trash to produce fuel. Environmentalists say its too soon to know if Coskata's process is the breakthrough the company claims, but it looks good enough on paper to leave them cautiously optimistic.

Coskata plans to have a pilot plant producing 40,000 gallons annually by this time next year. The company, which is backed by General Motors, has not said where ICM will build its first commercial plant but says it will be running by 2010. Coskata hopes to have the plant producing 100 million gallons of fuel annually.