EU state aid clearance

Alkane Energy PLC
09 October 2003



9 October 2003



                 Alkane Energy plc ('Alkane' or 'the company')

  EU state aid clearance for electricity generated from CMM to be exempt from
                           Climate Change Levy (CCL).


Alkane Energy plc, the UK's leading commercial producer of Coal Mine Methane
(CMM) from abandoned coal mines, is delighted to announce that EU state aid
clearance has been granted for electricity generated from CMM to be exempt from
CCL.


It was first announced in the Budget in April 2002 that full exemption from CCL
was to be incorporated into the Finance Act 2002 and that EU state aid clearance
would follow thereafter.  This was to correct the anomaly whereby CMM used
directly as an industrial fuel was exempt from CCL but electricity generated
from CMM was not.  The Association of Coal Mine Methane Operators ('ACCMO')
lobbied the government for this inconsistency to be rectified and is delighted
that clearance has now been granted.


The EU ruling will directly benefit Alkane's customers as they will now be able
to sell CCL exempt electricity to industrial and commercial users.  In
anticipation of this change Alkane's gas sales contracts provide for the company
to share any benefits from a change in tax regime with their customers. It is
expected that this exemption will result in an increase of approximately 15% in
revenues at the sites where Alkane sells its gas for electricity generation.


The company anticipates that this new benefit will come into effect in November
2003.


Commenting on the EU state aid clearance, Dr Cameron Davies, Chairman of Alkane
Energy said:


'Both Alkane and ACCMO welcome the announcement that EU state aid clearance has
been granted and see it as a resolute move demonstrating both EU and UK
Government support for the CMM industry, which benefits the environment by
reducing greenhouse gas emissions. We will continue to lobby the UK Government
for further financial incentives and benefits, particularly for inclusion in the
Renewables Obligation alongside landfill and sewage methane which are already
included.'


Enquiries:


Alkane Energy plc
Dr Cameron Davies, Executive Chairman                          Tel: [phone]
David Cross, Chief Executive

Buchanan Communication
Judith Parry                                                   Tel: [phone]
Sophie Morton




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