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 Stockto

n 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 Ma 

dera plant after completing testing this month. 

Cellulosic RINs command the highest price of all RINs as the amount of physical product avail 

able in the market consistently falls below EPA renewable volume obligations. 

Pacific Ethanol began the utilization of a new industrial-scale membrane system at the Mader

a 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.