An announcement by General Motors CEO Rick Wagoner at the opening of the North American International Auto Show in Detroit yesterday made for big alternative energy news nationwide.

Wagoner announced GM’s partnership with Coskata, an Illinois company that has a process for for turning wood chips, grasses, or municipal waste into ethanol.

Coskata uses a proprietary process that leverages patented microorganisms and bioreactor designs to produce ethanol for less than $1 a gallon, about half of today’s cost of producing gasoline.

“We are very excited about what this breakthrough will mean to the viability of biofuels and, more importantly, to our ability to reduce dependence on petroleum,” GM Chairman and CEO Rick Wagoner said.

GM will receive the first ethanol from Coskata’s pilot plant in the fourth quarter of 2008. The fuel will be used in testing vehicles at GM’s Milford Proving Grounds.