Baard Energy / Coal / Research & Reports

Three questions for Baard Energy CEO John Baardson

John Baardson

Baard Energy CEO John Baardson speaks to the World Coal-To-Liquids Conference in Washington, DC, March 2009, the same month he withdrew his application for U.S. Department of Energy loan guarantees.

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 chaos
In 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 available
Our 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.
Three months later, on March 27, 2009, Baard Energy withdrew its loan guarantee application, and has not resubmitted it to this day. This raises three questions for Mr. Baardson:
1. We agree with your December 2008 analysis. Without a loan guarantee, you had no prospects for financing the coal refinery.  No grants, no loans, no equity. Given that, why did you doom the refinery project by pulling your loan guarantee application?
2. Since you did pull the plug on your only chance at financing, why have you continued to maintain — publicly at least — that the project is going ahead?
3. Why are you asking Wellsville businesses to lobby for a federal loan guarantee application that doesn’t exist?  According to the February 27, 2010 Morning Journal
[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