Xethanol Set to Expand in Southeast; Company Forms CoastalXethanol LLC. Subsidiary.

NEW YORK -- Xethanol Corporation (OTCBB:XTHN), a biotechnology driven ethanol production company, announced today that, as part of its growth plans to roll out small footprint ethanol plants regionally, it has organized CoastalXethanol LLC. to develop ethanol plants in the Georgia, South Carolina and Jacksonville, Florida region.

CoastalXethanol, to be based in Savannah, GA, will focus on a region rich in wood biomass residues from its huge forest products industry. Xethanol expects to open plants utilizing its proprietary technologies. These technologies, acquired from leading universities and U.S. Government agencies such as the U.S. Forestry Products Laboratory in Madison, WI, are designed to enable Xethanol to produce ethanol and valuable co-products using biomass waste feedstocks.

According to the Atlanta Business Chronicle last week, demand for ethanol in Georgia could skyrocket if a federal court rules that metro Atlanta drivers must use reformulated gasoline to comply with Clean Air Smog standards -- a move experts say could generate overnight demand for 250 million gallons or more of ethanol.

The Atlanta Business Chronicle further reported that on January 11, Georgia Governor, Sonny Perdue, proposed a state budget that includes $2 million to seed research on developing alternative "biofuels" that convert wood chips, peanut hulls and other organic material into energy. Perdue called for a possible expansion of the Georgia BioRefinery Initiative at The University of Georgia. "As a strong agricultural state, Georgia should be, and will be, a leader in this field. We'll be able to meet more of our own energy needs, reduce our dependence on foreign oil, and turn a profit," Perdue said.

Endorsing Gov. Perdue's enlightened policies, Xethanol Chairman and CEO Christopher d'Arnaud-Taylor commented "We chose this region as our primary growth initiative for two main reasons... first because of rapidly expanding regional demand for ethanol and second for its abundance of biomass feedstocks that are readily available. Our long-term goal for the region is to develop production capacity of 250 million gallons of ethanol per year. We have recently taken decisive steps to enable Xethanol to pursue this valuable regional opportunity. We are also pursuing strategic alliances within the context of Coastal to bring additional value to our stockholders."

Mr. d'Arnaud-Taylor further stated "The Coastal initiative provides a framework for expansion into other regions as well. We are currently evaluating similar opportunities nationwide."

About Xethanol Corporation

Xethanol Corporation's goal is to be the leader in the emerging biomass-to-ethanol industry. Xethanol's mission is to optimize the use of biomass in the renewable energy field and convert biomass that is currently being abandoned or land filled into ethanol and other valuable co-products, especially xylitol. Xethanol's strategy is to deploy proprietary biotechnologies that will extract and ferment the sugars trapped in these biomass waste concentrations. Xethanol's strategic value proposition is to produce ethanol and valuable co-products cost effectively with ethanol plants located closer to biomass sources. In Iowa, Xethanol owns two ethanol production facilities, where it is deploying these technologies. For more information about Xethanol, please visit its website at http://www.xethanol.com.

Forward-Looking Statements

Certain matters discussed in this press release are "forward-looking statements." These forward-looking statements can generally be identified as such because the context of the statement will include words, such as "expects," "should," "believes," "anticipates" or words of similar import. Similarly, statements that describe Xethanol's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, including the financial performance of Xethanol, as appropriate, which could cause actual results to differ materially from those currently anticipated. Although Xethanol believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, it cannot give any assurance that their expectations will be attained. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating any forward-looking statements. Certain factors could cause results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are discussed below. These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. These forward-looking statements are only made as of the date of this press release and Xethanol does not undertake any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.