China EXIM’s interest in providing substantial financing to BlueFire is unprecedented and significant for the U.S. renewable energy sector and for U.S. renewable energy small businesses.
Particularly in the capital-intensive energy industry, small businesses like BlueFire struggle to access capital amidst tightening credit markets in the U.S. since the financial crisis beginning in 2009.
"This is a significant feat, not just for BlueFire as it also provides a model for the U.S. small business community because it is a strong indication of China’s commitment to support and fund U.S. renewable energy technologies to improve the environment and build a strong foundation for cooperation between China and the U.S. in the field of renewable energy," stated Arnold Klann, CEO of BlueFire Renewables, Inc.
"There are significant opportunities for replicating the BlueFire Fulton size or larger facilities in China and the U.S. to deal with problematic agricultural and urban waste currently being burned or buried." Klann said. "Debt financing has been the most difficult part of the financing to obtain for the cellulosic biofuels industry. BlueFire’s business model and relationships with China EXIM will set the standard for future debt financing arrangements and could be the spark that leads to the more beneficial use of cellulosic wastes in the bio-fuels industry in the U.S. and China. We are cracking the code when it comes to striking a win-win business deal for China, the U.S. and energy consumers."
Klann said that BlueFire has been working with China EXIM in response to the China Strategic and Economic Dialogue with the U.S. which encourages U.S./China cooperation in the renewable energy field.
Due to the difficulty in obtaining financing for capital intensive energy projects, many renewable energy projects do not get past the pilot phase and into the full commercial development stage. Dozens of renewable energy projects in the U.S. are languishing because of the debt financing problem and the BlueFire solution could be the path to commercialization for many of these projects.
Because Loan Guarantee programs offered by U.S. Federal agencies (the Department of Energy and the Department of Agriculture) were not structured for small businesses, the BlueFire/China EXIM framework with major Chinese companies will open the door for more businesses in the U.S. to finance and build projects, not only in the U.S., but in China.
The Letter of Intent continues the international collaboration between U.S. and China initiated by BlueFire.
"Combining the already announced engineering and project management contract with China Three Gorges, which is China’s largest utility, and now the addition of funding intended by the China EXIM Bank, both countries can work on the sustainable production of renewable fuels and chemicals while promoting jobs and the use of domestic and readily available biomass resources" said Klann.
The companies will continue to work together to complete the standard due diligence procedures of the China EXIM bank and meet all credit criteria and condition precedent to reach definitive agreements in order to complete the financing as soon as possible. Once completed, China Three Gorges Corporation and its U.S. subcontractors will begin construction of the Fulton Project.
The Fulton, MS project will allow BlueFire to utilize green and wood wastes available in the region as feedstock for the ethanol plant that is designed to produce approximately 19-million gallons of ethanol per year.
