GM says it is investing in a company that makes ethanol economically out of nonfood plant matter.

The investment in Boston-based Mascoma comes at a time when the whole ethanol industry, as well as the U.S. government, is under fire for pushing ethanol too fast when it can only be made from corn on a mass scale. That policy has helped drive up the cost of corn, as well as food, and helped, many argue, drive food shortages in developing countries.

GM President Fritz Henderson said the investment in the company is because of its “best-in-class microorganisms and enzymes could lead a transformation to a new era of biofuels.”

Earlier this year, GM inked a deal with Coskata Inc., of suburban Chicago. Coskata is building an ethanol plant in Pennsylvania.

Companies like Mascoma and Coskata are pursuing ways too break down cellulose, as well as certain kinds of trash, to convert it to bio-fuel.

In the case of Mascoma, the company says its thermochemical process will work with many kinds of plant matter, including wood chips, switch grass and farm waste.

Mascoma plans to complete a pilot plant near Rome, N.Y., which will produce 200,000 gallons a year of ethanol. The plant will use paper mill sludge as its raw material. But it will be able to convert other materials to motor fuel.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE