November 15, 2004

BC joint venture firms sign MOU to build energy-from-waste facilities in Mexico

Vancouver-based joint venture partners Clean Energy Combustion Systems and EnEco Industries have signed a Memorandum of Understanding (MOU) with Sistema Metropolitano de Procesamiento de Desechos Soildos (SMPDS), allowing the companies to build and operate a 30-megawatt (MW) municipal solid waste-to-energy facility for the City of Monterrey, Mexico. The $70-million facility will incorporate EnEco's Controlled Oxidation Reaction Environment (CORE) gasification technology. At the same time, the joint venture partnership will allow EnEco to use Clean Energy's high-efficiency valveless oscillating burner technology as a component part of the secondary oxidation process in the CORE gasification system. This secondary process burns the gases from the primary gasification stage, using the resultant heat energy to create steam for electricity production.

Construction of the Monterrey facility is proposed for 2005 and operations are scheduled to commence in 2006. This is the first of four CORE gasification pilot plants planned as part of the joint venture for construction next year and operation by 2006. Clean Energy and EnEco intend to recruit an experienced third-party municipal solid waste (MSW) operator to fund the project and to operate both the initial plant and the anticipated follow-up plants for SMPDS; they are currently discussing this aspect of the project with a prospective operator.

The CORE technology converts organic or carbon-based materials in MSW to 5% ash content. Because the gasification process uses relatively low heat levels, the glass, metals, aluminum, wires and other ferrous and non-ferrous metals and aggregates contained in the waste are not gasified, but can be easily recovered in their original form for sale to recycling markets.

All material remaining after the gasification process is further processed to ensure that all inert material is contaminant free. The residual ash is also relatively benign, as it is not contaminated with heavy metals. Once the process is finished, the ash, together with recovered glass and sand, is suitable for use as asphalt and concrete building material or for landfill cover. The energy-rich gases produced by the gasification process will be used to create electrical energy through a steam turbine circuit. Final plant discharges are well within limits set by U.S. and Canadian regulatory agencies.

SMPDS is a private company owned by the Mexican state of Nuevo Leon. The company provides all of the state's MSW management services and currently processes approximately 5,000 tons per day of unsorted MSW for the Monterrey municipal area.

The terms of the MOU call for SMPDS to deliver 765 tons per day, for the next 20 years, of unsorted MSW containing at least 10% wood waste, and 135 tons per day of car and truck tires, to the plant. There it will be gasified to create heat energy which can be converted into electrical energy. SMPDS will also commit to purchasing the electrical power generated at a fixed rate of six cents (U.S.) per kilowatt. Based on the 30 MW output of the plant, the deal is projected to yield approximately $16 million (U.S.) per year in revenues.

Also under the MOU, the joint venture partners will construct additional capacity on site, and additional 600 ton-per-day gasification facilities at outlying transit locations in Monterrey once the initial plant is operating. All profits from the operation, licensing or sale of the Monterrey plant will be split equally between Clean Energy and EnEco.

Clean Energy and EnEco initially began meeting with senior Mexican government officials to discuss the management of forestry waste and the creation of electricity using their gasification technologies. The scope of the discussions subsequently expanded to address more critical national issues facing Mexico relating to shortages of electricity capacity and the environmentally sound handling of MSW, wood waste and tires. Clean Energy president Dirk Stinson said Mexico's National Forest Commission has agreed to continue providing assistance in making CORE gasification waste-to-energy viable in Monterrey and the rest of Mexico, as well as developing wood plantations for producing renewable energy using these gasification technologies.

More information is available from Clean Energy Combustion Systems, 604/681-9337, FAX 604/681-9354,

E-mail shareinfo@clean-energy.com, Web site www.clean-energy.com.

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