TUCSON, Ariz.--(BUSINESS WIRE)--The first major sugarcane ethanol refinery in the continental United States will be built in the Imperial Valley of California, one of the best locations for growing sugarcane in the world. The ethanol will meet California’s low carbon fuel standard, which mandates greenhouse gas reduction. The standard was heavily supported by a vote on California Proposition 23 in the November election with a higher margin than any other ballot proposition. The project will cost $575 million and produce 66 million gallons of ethanol, enough electricity to meet the needs of 35,000 homes, and enough biomethane to heat 10,000 homes per year. Sweet sorghum, which has similar characteristics to sugarcane, will also be used.
Many states are considering adoption of the same low carbon fuel standard as California: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
Clean Energy Capital LLC, the largest U.S. private equity firm specializing solely in investments in ethanol, has been engaged to fully develop the project.
Scott Brittenham, CEO of Clean Energy Capital, stated, “There will be strong demand for ethanol from the refinery because the ethanol produced will meet stringent low carbon fuel mandates imposed anywhere in the U.S.”
The project’s next-generation business model is unique because the prices are locked in with long-term contracts for the sale of the ethanol to a major international oil company and the purchase of the sugarcane from local farmers. This will provide greater stability in profit margins, which ethanol refineries desire.
Brittenham stated, “The ability to lock in a significant and sustainable profit margin makes an investment in this project compelling for investors.”
States like Alabama, Florida, Georgia, Hawaii, Louisiana, Mississippi, South Carolina and Texas, where sugarcane can be grown, are prime locations for building sugarcane ethanol refineries, which would create thousands of new jobs.
Frequent media attention has been devoted to the importation of foreign, high-tariff ethanol. The current 54 cent tariff for importing ethanol makes foreign produced ethanol more expensive for U.S. consumers. The ethanol produced in this refinery will be cheaper than foreign ethanol and will meet the low carbon standards for California and other states.