December 2004

First Mexican Solid Waste and Tire Gasification Facility Approved

Vancouver— Clean Energy Combustion Systems Inc. announced that it has signed, with its joint venture partner, EnEco Industries Ltd., a memorandum of understanding with Sistema Metropolitano de Procesamiento de Desechos Soildos (“SIMEPRODESO”), granting the joint venture a concession to construct and operate a 30 megawatt solid municipal waste-to-energy facility for the City of Monterrey, Mexico, using EnEco’s Controlled Oxidation Reaction Environment “CORE” gasification technology. Clean Energy estimates that it will cost approximately $70 million to construct the facility and to commence operations. Construction is proposed for 2005 and operations are scheduled to commence in 2006. Clean Energy and EnEco intend to secure an experienced third-party solid municipal waste operator to fund the project and to operate the initial plant as well as anticipated follow-up plants for SIMEPRODESO, and are currently under discussions with an established operator relative to this aspect of the project.

The CORE technology is an environmentally friendly gasification system, which converts organic or carbon-based materials contained in solid municipal waste to five percent ash content. Since 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 solid waste will not be gasified; instead, they will be easily recovered in their original form after the gasification process and sold to recycling markets. All remaining material is further processed to ensure all inert material is contaminant free. The resulting ash from the gasification of the organic materials is relatively benign since it is not contaminated with heavy metals. After this final processing step, ash together with glass and sand recovered may be used for asphalt and concrete building materials as well as land fill 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 lower and, in some cases significantly lower, than that presently allowed under U.S. and Canadian pollution standards.

SIMEPRODESO is a private company owned by the State of Nuevo Leon, Mexico which provides all of the State’s municipal solid waste management services. SIMEPREDESO currently processes approximately 5,000 tons per day of unsorted solid municipal waste for the Monterrey municipal area. Under the Memorandum of Understanding, for the next 20 years SIMEPRODESO will deliver 765 tons per day of unsorted solid municipal waste containing at least 10% wood waste, and 135 tons per day of car and truck tires, to the plant to be gasified and to create heat energy that can be converted into electrical energy, and will be obligated to purchase the electrical power generated at a fixed rate of US $0.06 per kW. Based upon the 30 MW output of the plant, this will result in approximately US $16 million in revenues per year. Under the memorandum of understanding, the joint venture 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.

Under the joint venture, all profits from the operation, licensing or sale of the Monterrey plant will be split 50/50 between Clean Energy and EnEco. As part of the joint venture, Clean Energy will allow EnEco to use Clean Energy’s unique high-efficiency valveless oscillating burner technology as a component part of the secondary oxidation process in the CORE gasification system under which the gases produced by the primary gasification process are burned and the resultant heat energy is made available to create steam energy for electricity production.


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