The Midwest supplies most of the ethanol produced in the U.S., but Central California may soon be a substantial secondary supplier of the fuel based on corn and other agricultural products. California has phased out the MTBE additive from gasoline because of its polluting presence in ground water, and is using Midwestern ethanol as a replacement.

See the SITES California Central Valley Economic Development Corp. www.californiacv.com Great Valley Center www.greatvalley.org UCLA Anderson Forecast www.uclaforecast.com

      "There are opportunities presented by the overlapping of several events," says Neil Koehler, CEO of Pacific Ethanol, one of several companies seeking to take advantage of the valley's agricultural resources to crank up the industry. Pacific Ethanol purchased the former Coast Grain facility in Madera and plans to break ground for a plant by the end of the year. The company also plans a plant in Visalia by the end of 2004.
      "California can't produce enough gas, and demand is increasing by three percent a year, so it's a serious supply problem," Koehler says. "Ethanol usage in California has gone from nothing to a billion gallons [3.8 billion l.] a year since MTBE was banned. It's a massive market, but it's virtually all coming from the Midwest."
      Koehler says there's potential for four to six ethanol plants in the Central Valley to produce the fuel from corn. Developing technology will soon make it economically feasible to make ethanol from other cellulose, using rice straw and orchard prunings.