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WASHINGTON, May 1 (Reuters) – General Motors Corp (GM.N: Quote, Profile, Research) is taking another stake in a company focused on developing ethanol from sources other than corn, the automaker said on Thursday.

Mascoma Corp is testing its process for converting biological wastes — plant matter, grasses, wood chips and other non-grain sources — to fuel. It expects to start producing ethanol later this year at a demonstration plant in New York state.

There is growing concern among international aid groups and others that diverting a sizable percentage of America’s corn harvest for ethanol production has helped to drive up crop and food prices.

In January, GM announced it was taking a stake in Coskata Inc of Warrenville, Illinois, a biofuels company looking at sources of energy including garbage, old tires and plant waste.

“These investments in leading edge firms supports belief that ethanol has the greatest near-term potential as a clean-burning, renewable fuel that can help reduce oil dependence,” GM President Fritz Henderson said in announcing the Mascoma deal.

Henderson would not disclose the size of the equity stake in Boston-based Mascoma, which is privately held. Mascoma said its technology is designed to produce ethanol more efficiently and at lower cost.

President George W. Bush has promoted producing ethanol from cellulose sources like crop wastes and grasses as an alternative to grain, but some critics say it will take years to bring it to market.

U.S. gasoline prices are at all-time highs, prompting automakers, already under pressure from the government to make more efficient vehicles, to consider more ways to conserve fuel.