Method of pretreating citrus waste to break cell structure, pasteurize or sterilize citrus waste solids and remove inhibitory peel oil components (e.g., limonene) involving optionally reducing the particle size of the citrus waste prior to preheating, preheating the citrus waste through indirect heating in a preheater reactor to form preheated citrus waste and conveying the preheated citrus waste to a main reactor, heating the citrus waste through a combination of (simultaneous) indirect heating and direct heating to produce treated citrus waste solids that are pasteurized and a vapor containing water and peel oil components, separating the pasteurized citrus waste solids and the vapor containing water and peel oil components, and collecting the separated vapor containing water and peel oil components by condensation. The method optionally includes cooling the pasteurized citrus waste solids followed by saccharifying with enzymes and fermentation to produce ethanol or other products.