The US Department of Energy announced at the end of January 2008 that it supported Pacific Ethanol's investment of US$24.32 million in building the first cellulosic ethanol validation device in the northwestern United States.

The plant uses wheat straw, sawdust and stalks of cereal crops as raw materials to produce ethanol, which is planned to be built at the company's existing production facility for grain-based ethanol plants in Boardman, Oregon. The medium-sized unit will be designed to produce 2.7 million gallons per year of ethanol and will validate the potential for the technology developed by BioGasol ApS to produce ethanol from a variety of biomass mixtures, scheduled for completion in the fourth quarter of 2009.

Pacific Ethanol is leading the development of new technologies that convert various biomass resources into ethanol. The commercial production of ethanol from cellulose will enable the United States to use renewable resources to replace large quantities of imported oil, which can also reduce millions of tons of CO2 emissions each year.

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