Energy Deals Derailed by Obscure Accounting Rule

Nearly a decade after the most elaborate exercise in accounting fraud in America’s history ended in bankruptcy and prison sentences, the U.S. energy industry has yet to escape Enron’s ghost.
Now, courtesy of esoteric changes in accounting standards being implemented by the Financial Accounting Standards Board (FASB), we can add energy efficiency and clean energy to the list of casualties killed in the name of transparency.
FASB and the International Accounting Standards Board (IASB) develop financial accounting standards for beancounters. In the wake of the Enron debacle, FASB launched an effort to develop new rules for the treatment of lease transactions. In December, FASB released a joint exposure draft for these new rules, which will soon be ready for prime time.
The new guidelines would alter reporting obligations for clean energy and energy-efficiency transactions. In short, businesses would have to bring all of these lease transactions onto their balance sheets. That sucks. Still worse, in the case of energy efficiency and clean energy, the rules will not necessarily benefit the public. Ironically, it may do the opposite by distorting high-priority environmental and energy security policy objectives endorsed by legislators locally and nationally.
Currently, businesses only include capital leases as assets on their balance sheets. By contrast, in an operating lease, the lessee can use an asset without having to assume the responsibility of ownership. The new rules would require all companies to list leases transactions as assets and liabilities on their balance sheets.
This requirement will significantly deter energy-efficiency investments for developers, companies and non-profits by souring the benefits of sale leasebacks and power purchase agreements (PPAs). PPAs are currently treated as service contracts. FASB’s new rule would require PPAs to be treated as leases rather than service contracts, which would appear on a company’s balance sheet.
Although the financial mechanics of these transactions will remain unchanged, companies who pursue energy efficiency or clean energy will have heavier balance sheets and risk being perceived as having higher leverage than they otherwise would. This could make debt more expensive for companies who perform lease transactions. And that is only one penalty for those who pursue clean energy or energy efficiencies who will also likely have higher tax exposure, more extensive disclosure requirements and steeper annual accounting costs.
Simply put, in the tragic tradition of regulatory overreaction epitomized by Sarbanes-Oxley, the “proposed” FASB rule will burn the barn to roast the pig.
Ironically, unlike Enron, companies and institutions investing in clean energy and energy efficiency are not trying to bake the books. Rather, they are pursuing a perfectly legitimate institutional objective – buying electricity or reducing energy costs – and outsourcing the hassle of owning the actual system. After all, most companies and institutions are not in the energy business but dependent on it.

Wind Turbine Installations May Rise 20% in 2011, GWEC Lobby Group Says

Wind turbine installations may rise 20 percent this year worldwide and double by 2015, the Global Wind Energy Council said in a statement today.

Capacity to produce electricity from the wind may rise by 40 gigawatts in 2011 from 294.4 gigawatts at the end of last year, the lobby group said in a statement from Brussels. By 2015, it forecasts 450 gigawatts.
“2010 was a tough year for our industry, but 2011 is looking up,” said Steve Sawyer, secretary general for GWEC. “We’ve paid the price for the 2008 and 2009 financial crisis. Now we’re back on track.”  

Source: Bloomberg

DIVERSIFIED ETHANOL ANNOUNCE PLANT TECHNOLOGY FINANCING PROGRAM THROUGH MAZUMA CAPITAL FOR CUSTOMERS

PASO ROBLES, Calif., & BURNSVILLE, Minn., Dec. 8, 2010 – Greenbelt Resources Corporation (Pink Sheets: GRCO) today announced that its wholly-owned subsidiary Diversified Ethanol Corporation ("Diversified") has established a business partnership with Mazuma Capital to offer leased equipment financing to qualified Diversified customers. Diversified designs,  constructs, monitors and operates highly efficient and cost effective small scale waste-to-ethanol conversion plants that utilize a wide range of organic wastes feedstocks including cellulosic material, by products of breads and grain processing, organic slurry, and other food and beverage waste from beer, wine, and sugar-based products.

            Mazuma Capital is a leading national direct lender and will provide third party financing for qualified Diversified customers. Dedicated to maintaining a portfolio that includes renewable energies, Mazuma provides a sophisticated selection of finance programs that offer the flexibility necessary to meet the range of Diversified customers’ needs. 

            "Providing strong financing options for our customer seeking to own an ethanol plant is a critical avenue to continue the growth of the green fuels industry,” said Darren Eng, CEO of Greenbelt Resources Corporation. “When a partner like Mazuma takes notice and brings their expertise and success to the table, it strengthens customer confidence that ethanol from waste is a viable investment.”

            “Our support for Diversified plant financing is another cornerstone for Mazuma in the renewable energy sector.  By carrying risk and providing solutions to overcome financial barriers on emerging green technologies, more and more middle-market companies can now implement green initiatives.  Promoting the adoption of emerging green technologies is a continued goal of Mazuma Capital and through our partner programs and extensive knowledge of new technology financing Mazuma will continue to enhance energy project offerings,” said Jared Belnap, Mazuma Capital’s President and CEO.

            Diversified currently operates a waste-to-ethanol plant in Paso Robles California that conducts pilot studies on various feedstocks to expand a database of information  to support continued growth of waste-to-ethanol plant production. Shareholders and prospective investors can register for email updates on company financial and operations announcements at www.greenbeltresources.com/investors.About Greenbelt Resources Corporation
            Greenbelt Resources Corporation™ is committed to developing and implementing technology that makes alternative fuel reliable, practical, and efficient. The company is dedicated to delivering business solutions with integrity and perpetually high quality control through intelligent support services. Greenbelt Resources subsidiary Diversified Ethanol Corporation™ provides end-to-end waste-to-ethanol solutions designed to establish a highly efficient installed network of customer-owned modular ethanol plants providing localized processing of locally generated waste into locally consumed ethanol. The company's ethanol plants are built around the award winning Butterfield Closed Cycle System™. Founded in 2001, Greenbelt Resources Corporation is a public company trading under the symbol GRCO.PK. For more information including how to contact the company, visit Greenbelt Resources on the web at http://www.blogger.com/Local%20Settings/Temporary%20Internet%20Files/OLKE4/www.greenbeltresources.com.

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