By JANE HOUIN
Ohio Correspondent

BUFFALO, Iowa — Plans for a Buffalo, Iowa, ethanol plant have been placed on hold while developers look at other ways to produce biofuels and seek additional financial partners.

Larry Daily and his partners at River/Gulf Energy decided the project was too risky when corn prices climbed to $4.50 per bushel and ethanol dropped to less than $2 per gallon during the winter months.

“It made the company realize we didn’t want to be the sole owner and operator of this,” Daily said.

Now, the company is looking for partners to help build the $100 million ethanol plant and add a second alternative fuel project to the site that is not related to corn.

Although corn prices have dropped and gasoline prices have risen, Daily said the company does not want to get involved in another corn-related venture at this point.

Instead, they are researching cellulosic technologies, which break down organic biomass into fuel. They are also looking into ways to turn coal into ethanol and other fuels, Daily said.

While grain-based ethanol uses raw material of sugars and starches, cellulosic ethanol utilizes cellulose as a starting raw material. Currently there are at least two methods of cellulosic ethanol production: hydrolysis followed by fermentation of the generated free sugars and synthetic gas fermentation of catalysis.
Neither process generates toxic emissions in the production of ethanol, though technology is very new and exists in pilot configurations where testing is ongoing.

According to the U.S. Department of Energy studies conducted by Argonne Laboratories of the University of Chicago, one of the benefits of cellulosic ethanol is that it reduces greenhouse gas emissions by 85 percent over reformulated gasoline. In contrast, starch ethanol, such as that made from corn, most of the time uses natural gas to provide energy for the process, reducing greenhouse gas emission by 18-29 percent over gasoline.

In June 2006, a U.S. Senate hearing was told that the current cost of producing cellulosic ethanol in the U.S. is $2.25 per gallon due to the current poor conversion efficiency – a price that is not competitive with other fuels once distribution costs are added.

However, the Department of Energy remains optimistic and had requested a doubling of research funding with a research target to reduce the cost of production to $1.07 per gallon by 2012.

The Buffalo, Iowa, ethanol project was announced in May 2006 and was expected to create 35-45 positions for workers at the plant. In addition, it was estimated that construction of the $100 million-plus facility would provide approximately 100 local construction jobs.
The only construction completed so far has been the clearing of the site.

The original anticipated opening date was early 2008 at the 100-acre site of a former fertilizer plant that closed several years ago.
Company officials estimated at the onset of planning that the plant would process more than 18 million bushels of corn per year in the first phase of the plant.

Located along the banks of the Mississippi River, the plant was touted as a unique venture because of its plant to ship ethanol by barge as opposed to rail.

Buffalo city clerk Bill Bowers said city officials are disappointed by the delay but remain optimistic.

“We would prefer to have this built as soon as possible, he said.