California Leaders React to EPA Decision on Ethanol Waiver

FRESNO, Calif., June 2 -- Pacific Ethanol, Inc. , announced today that the U.S. Environmental Protection Agency (EPA) today denied the State of California's petition to waive the Clean Air Act requirement that federal reformulated gasoline (RFG) contain at least two percent oxygen by weight. The following individuals reacted to the news with the subsequent statements:

"Governor Schwarzenegger's bold leadership has taken California beyond the U.S. EPA waiver denial. Yesterday the Governor called for dramatic reductions of CO2. California will need every last drop of ethanol it can find and produce to help meet these challenging clean air goals. With ethanol, California achieved its cleanest air quality on record last year. Increasing the amount of ethanol in the gasoline to 10% is an immediate way to accomplish the Governor's goals while reducing gas prices at the same time. Renewable fuels are good for the environment and they can be one of the largest job creators in this state's history. This was a good decision based on sound science by EPA. It is now time to move on and create a truly renewable future for California."

   Bill Jones
   Chairman, Pacific Ethanol -- Former California Secretary of State.
   Phone:  310-854-8239

"U.S. EPA's action today clarifies, once again, the very positive role that renewable energy resources like ethanol can play in the California fuel supply. If California is going to reach the air quality goals on CO2 announced by the Governor yesterday, increased ethanol use, as well as other renewable fuels, is a must. While the federal government denied the state's request, it did provide much needed clarity to the question of what can be blended in California gasoline."

   John Dunlap
   Former California Air Resource Board Chairman
   Phone:  916-341-0808 or Cell 916-290-3842

"EPA's decision refocuses California on the positive goal of how we reduce our petroleum dependence. Now the question is, how can California increase its current use of ethanol above 5.7%?"

   Allen Dusault
   Sustainable Conservation -- San Francisco
   Phone:  510-367 9382

"It is ironic that the two states most vigorously pursuing an oxygen waiver to avoid using ethanol in gasoline, California and New York, had the lowest smog levels ever with ethanol in their fuel in 2004. Hopefully U.S. EPA's decision will lay the issue to rest so we can get on with the more daunting challenge of reducing this country's dependence on fossil fuels. There is no silver bullet; alternative fuels such as ethanol and biodiesel are an absolutely critical part of that effort."

   Brooke Coleman
   Renewable Energy Action Project (REAP)
   Phone:  857-719-9766

                              ETHANOL FACTS

  FACT: CALIFORNIA CAN BE THE NATION'S LEADER IN ETHANOL PRODUCTION.

The California Energy Commission in a 1999 report to the Governor estimated that California has enough biomass feedstocks to produce over 3 billion gallons of ethanol a year. There are currently 6 to 8 ethanol projects in advance stages of development in Southern, Central, and Northern California. These projects will immediately produce nearly 400 million gallons per year and provide over 7000 jobs and $1.1 billion of economic activity each year. For more information: Pat Perez, California Energy Commission -- 916-654-4527.

FACT: ETHANOL PROVIDES DOWNWARD PRESSURE ON GASOLINE PRICES.

Ethanol has been consistently cheaper than both Gasoline and MTBE since ethanol's introduction into the California marketplace. Ethanol, a renewable fuel that is completely independent from the refining industry, is a positive energy diversification strategy for transportation fuels.

FACT: ETHANOL IS THE MOST EFFECTIVE WAY TO REDUCE CLIMATE CHANGE GASES.

Ethanol reduces greenhouse gases by 30% compared to gasoline. According to a recent report from the PEW Center on Global Climate Change, "ethanol and other fuels that can be blended with petroleum offer the greatest promise for reducing transportation GHG emissions during the next 15 years." Full report can be found at: http://www.pewclimate.org/docUploads/ustransp_brief.pdf

FACT: ETHANOL IS BLENDED AT 10% VOLUME IN EVERY PART OF THE COUNTRY EXCEPT CALIFORNIA.

Ethanol is blended at 10% volume all across the country providing additional emission reductions and supply advantages. California refiners may blend at 10% but none currently do. California's air quality regulations make it very difficult for refiners to do in California what they do across the country. Minor changes and updates to the Predictive Model can insure air quality reductions while increasing supply and use of ethanol thus providing even more relief to the gasoline price spikes.