Pacific Ethanol plans to add cellulosic ethanol production at its Magic Valley, Idaho, plant and expects US Environmental Protection Agency approval by the end of 2017, the company's CEO said Thursday.
The move comes on the heels of cellulosic production being added at the company's Stockton and Madera, California, plants. Both plants have annual cellulosic ethanol capacities of 1 million gallons.
"We remain on track to begin commercial operations for cellulosic ethanol production at our Madera plant in the second half of the year," Pacific Ethanol CEO Neil Koehler said during a Thursday morning earnings call.
The Stockton plant began producing cellulosic ethanol in December 2015 and received EPA approval to generate cellulosic (D3) RINs in September 2016.
Koehler said the company plans to seek EPA approval to generate cellulosic RINs at the Madera plant after completing testing this month.
Cellulosic RINs command the highest price of all RINs as the amount of physical product available in the market consistently falls below EPA renewable volume obligations.
Pacific Ethanol began the utilization of a new industrial-scale membrane system at the Madera plant in the second quarter of 2017.
"The Whitefox industrial-scale membrane system at our Madera plant is operating very well and we expect a positive impact in energy savings, operating performance and in our carbon intensity score," Koehler said. "We estimate overall energy savings and carbon premium combined to be around $350,000 at current markets."
Under California's Low Carbon Fuel Standard, companies that produce fuel with low carbon intensity scores generate credits that can be sold for a premium, encouraging investment in low-carbon technologies.
The company plans to expand the membrane system to other plants, seeking to file for approval with the California Resources Board after three months of consistent operation.
Pacific Ethanol also plans to install a 5-MW solar power system at its Madera plant in early 2018, with the equipment procurement process completed and construction underway. The system is expected to significantly lower its carbon intensity score and cut production costs by $1 million/year.
