BPI Energy Signs Letter of Intent with Blue Source to Fund Greenhouse Gas Emission Reduction Project Development

  
    
  
  
    
      BPI Energy Holdings, Inc. (AMEX: BPG), an independent energy company 
      engaged in the exploration, production and commercial sale of coalbed 
      methane (CBM) in the Illinois Basin, today announced it has signed a 
      non-binding letter of intent for a relationship with Blue Source, LLC, 
      an aggregator and marketer of carbon credits. The letter of intent 
      contemplates that Blue Source would enter into an agreement by which it 
      would commit to exclusively funding any and all qualifying projects 
      generated from and/or constructed and operated by BPI, and that Blue 
      Source would become a 50/50 partner with BPI in those projects. The 
      relationship would commence with BPI’s Western 
      Fuels Project announced on June 18, 2008.
    
    
      As part of the proposed five-year agreement, Blue Source would become 
      the exclusive marketer of all carbon offsets and other quantifiable 
      environmental benefits produced by BPI.
    
    
      “According to the National Energy Technology 
      Laboratory statistics, releases associated with the mining of coal 
      account for about 10 percent of the country’s 
      total methane emissions,” commented James G. 
      Azlein, BPI president and CEO. “Methane is a 
      potent greenhouse gas having 21 times the global warming potential of 
      carbon dioxide. Recovery of coalbed and coalmine methane as practiced by 
      BPI not only captures a large source of emissions, but also harnesses 
      this energy resource.”
    
    
      Azlein added, “With the growing demand for 
      natural gas and heightened environmental concerns associated with 
      methane releases to the atmosphere, this complementary relationship 
      between BPI and Blue Source is a win-win.”
    
    
      Co-founder and CEO of Blue Source, Bill Townsend, said the partnership 
      signifies the possibilities in pre-regulatory efforts to reduce negative 
      environmental impacts associated with greenhouse gas emissions.
    
    
      “BPI is exemplifying environmental 
      stewardship by voluntarily reducing the amount of methane gases vented 
      into the atmosphere,” Townsend said. “The 
      company continues to demonstrate market leadership in this arrangement 
      with Blue Source. The foresight to take a methane stream of this nature 
      and to monetize the carbon emission reductions is clear foresight into 
      the solutions we all need to provide to mitigate global climate change.”
    
    
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      About BPI Energy
    
    
      BPI Energy (BPI) is an independent energy company engaged in the 
      exploration, production and commercial sale of coalbed methane (CBM) in 
      the Illinois Basin, which covers approximately 60,000 square miles in 
      Illinois, southwestern Indiana and northwestern Kentucky. The company 
      controls a large CBM acreage position in the Illinois Basin at 
      approximately 534,280 acres. News releases and other information on the 
      company are available on the Internet at: http://www.bpi-energy.com.
    
    
      About Blue Source LLC
    
    
      Blue Source is the climate change answer for forward-thinking 
      businesses, offering both physical and financial solutions to risks and 
      opportunities in the carbon market. The company is organized into a 
      portfolio group, responsible for marketing and managing the carbon 
      offset portfolio and sourcing new offset projects and a separate project 
      development group, responsible for identifying, designing, developing 
      and managing projects. The company is leading development of a “carbon 
      highway,” through investment in 
      infrastructure to capture and transport carbon dioxide for long-term 
      geologic storage. Blue Source Canada, formerly Baseline Emissions 
      Management, is a leader in Canada’s domestic 
      offset opportunities with a supplier portfolio of more than ten million 
      tonnes of emission offsets. Blue Source Canada’s 
      technical division leads in technical expertise for protocol development 
      and offset identification. Blue Source has offices in Salt Lake City, 
      Calgary, Houston, Denver, Raleigh, San Francisco and New York. More 
      information on the company is available at: http://www.ghgworks.com.
    
    
      Some of the statements contained in this report that are not 
      historical facts, including statements containing the words “believes,” 
      “anticipates,” “expects,” 
      “intends,” “plans,” 
      “should,” “may,” 
      “might,” “continue” 
      and “estimate” and 
      similar words, constitute forward-looking statements under the federal 
      securities laws. These forward-looking statements involve known and 
      unknown risks, uncertainties and other factors that may cause our actual 
      results, performance or achievements, or the conditions in our industry, 
      on our properties or in the Basin, to be materially different from any 
      future results, performance, achievements or conditions expressed or 
      implied by such forward-looking statements. Some of the factors that 
      could cause actual results or conditions to differ materially from our 
      expectations, include, but are not limited to: (a) our inability to 
      raise the funds necessary to satisfy our existing accounts payable and 
      accrued liabilities; (b) a refusal by GasRock Capital LLC (“GasRock”) 
      to make any additional advances under the GasRock Credit Agreement, 
      which are at GasRock’s discretion; (c) our 
      inability to repay or refinance the amounts advanced to us by GasRock 
      when such amounts become due on January 30, 2009; (d) a breach by us of 
      a covenant under the GasRock Credit Agreement or other event of default 
      that allows GasRock to accelerate our outstanding obligations; (e) our 
      inability to obtain sufficient financing, close an offering of debt or 
      equity securities, or complete a merger/combination, joint venture, 
      asset sale, selling of rights relating to our litigation against 
      Drummond or other transaction that would enable us to fund our future 
      operations; (f) our failure to accurately forecast CBM production; (g) a 
      decline in the prices that we receive for our CBM production; (h) our 
      failure to accurately forecast operating and capital expenditures and 
      capital needs due to rising costs or different drilling or production 
      conditions in the field; (i) our inability to attract or retain 
      qualified personnel with the requisite CBM or other experience; (j) 
      unexpected economic and market conditions, in the general economy or the 
      market for natural gas; (k) limitations imposed on us by the GasRock 
      Credit Agreement; and (l) potential exposure to losses caused by our 
      derivative contract. We caution readers not to place undue reliance on 
      these forward-looking statements.