COLUMBUS — On December 22, 2008, John Baardson, CEO Baard Energy, analyzed the prospects for financing a coal refinery in Wellsville in a loan guarantee application to the U.S. Department of Energy:
Debt markets in chaosIn today’s environment, there is no debt available to projects like Ohio River Clean Fuels [the coal refinery]. Debt markets are essentially closed to all large-scale project finance companies, even without considering the technology integration risk. Until debt markets markedly improve, the prospects for raising commercial debt for Ohio River Clean Fuels are dim. It is unclear when conditions will improve.Equity requires assurances that debt will be availableOur discussions with potential equity investors indicate that “forward funding risk” is paramount to them right now. Equity investors are reticent to invest in the early stage of projects because of the risk that commercial debt markets will not be open or won’t be reasonably priced when the time comes to obtain construction financing. A U.S. Department of Energy loan guarantee mitigates this risk and will enable Ohio River Clean Fuels to secure equity sooner and on more reasonable terms.
[On February 25, Wellsville Area Chamber of Commerce President Randy Allmon] said [Baard President Steve] Dopuch asked the chambers to have their members send letters to President Obama, urging him to support the coal-to-liquid fuel plant. Copies of the letters were distributed to members… [the letter] notes that Baard Energy is ‘fully permitted for construction in Wellsville, Ohio,’ but needs a Department of Energy loan guarantee.
– Paul Ryder, Organizing Director, Ohio Citizen Action