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November 2004

Joint Venture Developed to Attract Municipal Solid Waste Gasification Contracts from Mexico

Vancouver— Clean Energy Combustion Systems Inc. (Clean Energy) announced the formation of a joint venture with EnEco Industries Ltd. of Vancouver to promote the sale or license of EnEco’s Controlled Oxidation Reaction Environment or “CORE” gasification system in Mexico to safely and cleanly dispose or recycle solid municipal wastes that would otherwise be directed to landfills, as well as other solid wastes such as medical waste, tires and selected wood wastes.

Under the joint venture, Clean Energy will take the lead in procuring projects and financing, while EnEco will handle all project engineering activities. All profits from the sale or licensing of the CORE gasification system in Mexico will be split 50/50 between the parties.

As part of the joint venture, Clean Energy will allow EnEco to use Clean Energy’s oscillating burner technology for the secondary combustion process in the CORE gasification system. Should the integration of Clean Energy’s oscillating burner technology with the CORE gasification system work as anticipated, the parties anticipate expanding the joint venture to other countries or granting EnEco a license to use the technology in its CORE system for solid municipal waste gasification applications.

The parties have entered into the joint venture in furtherance of continuing discussions with senior Mexican government officials about the potential use of the CORE gasification system to gasify solid municipal wastes in lieu of developing or increasing landfills. These officials have stated their desire to procure technology that can both economically process and dispose of municipal solid waste in an environmentally clean manner as well as co-generate power to assist in reducing the country’s critical shortages in electrical power.

As part of these discussions, the joint venture has proposed to commence construction by 2005 of four CORE gasification pilot plants in four of Mexico’s largest cities, and have those plants under operation by 2006. Each pilot plant would process 600 tons per day of a combination of municipal solid wastes, hospital waste, tires and selected wood wastes. Steam generated in the heat recovery process would drive 2 - 10 megawatt steam turbines and generators for a total electrical output of 18.8 megawatts. Electrical energy from the plant would be considered “base load power” or “firm” power, which could be relied on as a constant source of power to the local power grid. All ferrous and non-ferrous metals contained in the solid waste would be recovered in their original form and sold to recycling markets without contaminating the resultant ash with heavy metals. Glass, sand, and ash recovered from the gasification process can also be used for building materials. Additional plants would be constructed upon satisfactory operation of the pilot plants. Executives of Clean Energy and EnEco will be meeting with senior government officials in Mexico to discuss the proposal.

The CORE gasification system is different in design, operation and application than Clean Energy’s proprietary Mark V ecoPhaser gasification system, which can be used to gasify a wide variety of “homogenous” waste materials, such as pulp and wood wastes from primary industrial processes, processed agricultural residues, and animal wastes.

These applications are not generally considered to constitute municipal solid wastes and, as such, Clean Energy retains the right under the joint venture to market the ecoPhaser gasification system in Mexico for these applications outside the joint venture. Nevertheless, there may be a number of complimentary solid waste applications or subprocesses for which the ecoPhaser gasification system will be appropriate to enhance the overall process, such as the gasification of selected wood wastes to increase energy production, in which case these applications will be governed under the joint venture on the same basis as EnEco’s Core gasification system.

EnEco is a private company, incorporated in 1991 with the intent to solve municipal solid waste environmental problems with economical solutions. EnEco has since installed more than a dozen municipal solid waste gasifiers, some in continuous operation since 1992.

According to Mr. Ross Dickenson, President of EnEco “We are very excited to pursue the joint venture with Clean Energy, particularly since both EnEco and Clean Energy have recently been pursuing a number of government contacts in Mexico which we believe may result in significant contracts.


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