Things are looking up for the ethanol industry after two rough years, which is good news for Sacramento-based Pacific Ethanol. Pacific Ethanol saw five of its production subsidiaries file for Chapter 11 bankruptcy protection last spring and was in danger of being removed from the Nasdaq stock market listings in the fall because its share price consistently fell below $1. However, with some positive signs for the ethanol market, shares have climbed over $2 and the threat of being delisted from the Nasdaq has subsided.
Last year, Pacific Ethanol closed its two California plants in Stockton and Madera. In 2008, the two plants had combined to produce 40 million gallons of ethanol, according to the California Energy Commission. The plants have yet to re-open, but a plant in Idaho has resumed production and hired 35 more workers. Reopening the Stockton and Madera plants would provide a small but important boost to the struggling cities' job markets.
The renewed optimism in the ethanol market is due in large part to federal and California regulatory standards that encourage the use of low-carbon fuel such as ethanol. U.S. demand for ethanol will rise as the Energy Independence and Security Act of 2007 set forth incremental increases in renewable-fuel volumes with the goal of reaching 36 billion gallons by 2022. The United States produced 10.5 billion gallons in 2009. In California, demand is predicted to almost double in 2010 from 950 million gallons to 1.6 billion. California's low-carbon fuel standard calls for gasoline in California to be blended with 10 percent ethanol this year, compared to 6 percent last year. The regulation mandates that California's transportation fuels only contain 10 percent carbon by 2020.
