GM ( GM) wants to help fuel its vehicles with garbage.

The automaker announced Sunday it has formed a partnership with Coskata, an Illinois-based maker of cellulosic ethanol, a fuel that can be produced using many types of waste. GM said it would take an undisclosed equity stake in Coskata, and the partners plan to work to produce ethanol out of GM's factory waste and nonrecyclable car parts.

The announcement at the North American International Auto Show in Detroit appeared aimed at burnishing GM's green reputation. Rival Toyota ( TM), which could soon overtake GM as the world's No. 1 carmaker, has built an image as an environmental leader with its aggressive push into hybrid vehicles.

Cellulosic ethanol could turn out to be an important fuel source for GM's flex-fuel vehicles, which can run on E85, a blend of as much as 85% ethanol and gasoline. The company already has 2.5 million such vehicles on the road.

But large-scale cellulosic ethanol production will take time. Although GM will receive its first ethanol from Coskata's pilot plant in the fourth quarter of this year, Coskata doesn't expect commercial production to begin until 2011. The Wall Street Journal noted that no company has yet made cellulosic ethanol on a commercial basis, because of high production costs.

GM shares finished Friday down 18 cents at $23.50.

This article was written by a staff member of TheStreet.com.

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