The backers of an ethyl alcohol plant on the Buffalo River are putting a new twist on an old product.
They plan to distill corn for use as a motor fuel, not as a social lubricant.
But does it make sense to convert food into fuel -- especially when corn prices are rising?
It was a question that the plant's backers addressed on Wednesday at a meeting for potential investors in Buffalo.
"We can truly become a leader in alternative energy in Buffalo," said Rick Smith III, chairman of RiverWright Energy.
The developer of the proposed plant said that the idea would generate $288 million a year in sales, producing a homegrown fuel -- and a healthy profit -- while recycling the city's unused grain elevators.
Investors posed questions about the proposal's economics on Wednesday, adding to community questions about its odor and safety.
"There have been a lot of saviors for energy that have kind of come and gone," said Pete Grum, president of Rand Capital Corp. in Buffalo.
He and Smith were both at the downtown Buffalo Club on Wednesday for a meeting of the Western New York Venture Forum, where RiverWright pitched its plan.
The company seeks about $20 million in funding from venture capitalists to support the $89 million project, with a minimum buy-in of $100,000. The bulk of the project's cost is being financed by French bank Societe General.
Ethanol is getting a lot of attention as an alternate fuel. President Bush has proposed cutting gas consumption by 20 percent over 10 years, mainly by switching to domestic ethanol. The goal has set off a spate of ethanol plant development -- and global debate about food versus fuel.
RiverWright argues that ethanol is the business that the waterfront has been waiting for. The city's vacant grain elevators and lake shipping facilities are the perfect infrastructure for a corn-to-energy plant, which will bring in supplies from the Midwest.
"You would need to spend billions of dollars to replicate the waterways, buildings and grain storage" available in Buffalo, said Smith, who founded RiverWright with partner Kevin Townsell.
The plant envisioned on Childs Street would consume 40 million bushels of corn annually and yield 110 million gallons of ethanol. The annual projected sales of $288 million, which includes byproducts for animal feed, would put the venture well into the black, Smith said. Current prices for ethanol are about $2.10 a gallon, he said.
KL Design Process Group, designer and builder of ethanol plants in the Midwest, is RiverWright's partner for constructing the plant.
Buffalo's planning board is scheduled to meet next week to determine if the company's impact study is sufficient, or whether more analysis will be needed.
While most ethanol production is in the nation's corn belt, Buffalo benefits from its proximity to big fuel markets of the Northeast, Smith said. Because it is corrosive, ethanol can't be piped to fuel sellers, making distance to markets critical.
The company's profits assume the current, near-record prices of more than $3 a bushel for corn will stick, he said. However, if corn prices continue to rise they will impact the plant's economics. Corn has surged this year largely because of demand from ethanol producers.
Ethanol is a highly sought-after fuel additive, which boosts the oxygen concentration and reduces output of carbon monoxide. Ethanol is replacing the petroleum-based additive MTBE, which is banned in New York and several other states because of its environmental threat to groundwater.
Much motor fuel -- about half that sold in New York state -- contains a blend of 10 percent ethanol to help it burn more efficiently with lower emissions, according to the New York State Energy Research and Development Authority.
But ethanol as a replacement for gasoline is a harder sell, experts said. As currently produced from corn, it costs more than gas -- at least before federal tax incentives are added -- and packs less energy.
Backers are putting their hopes into new technologies that will squeeze "cellulosic" ethanol from inexpensive grass and crop waste instead of corn.
Still, interest in "E85" ethanol motor fuel is surging. Currently it lacks fire safety permits for distribution in New York, but "there are a number of stations lined up to sell it," NYSERDA spokesman Sal Graven said. About 200,000 cars statewide are equipped to burn the 85 percent ethanol blend, he said.
Noco Energy Corp. in Tonawanda is interested in looking at ethanol fuel, said Scott Ernst, director of fuel operations, who attended Smith's presentation.
"Some people like to be green," he said.
New York has four ethanol plants under construction, Graven said. Commercial plants are being developed in Fulton, Oswego County, and the Seneca Army Depot in the Finger Lakes. Two other pilot plants for the development of cellulosic technology are being built in Greece, near Rochester, and Lyonsdale in Lewis County, north of Rome.
RiverWright has ties with a cellulosic energy developer and would work to convert its plant if new technology became available, Smith said.