-- Total contract value amounts to US$1.43 million

-- System turns palm shell waste into economically sound bio- fuel

China Energy Recovery, Inc. (OTC Bulletin Board: CGYV) (ISIN: US16943V2060), a leader in the waste heat energy recovery sector of the industrial energy efficiency industry, today announced that the company has completed a biomass boiler system for EKO-PP Paper Mill, the first paper mill to utilize palm shell to produce pulp and paper in Malaysia. The total contract value of the system amounts to RMB 9.8 million (approximately US$1.43 million) and the revenue to be recognized in Q2 2009 according to US GAAP would amount to roughly RMB7.67 million (approximately US$1.12 million).

The system will utilize the massive palm shell waste out of the pulp-making process as fuel for combustion to generate steam to further power the turbines for electricity generation. The designed power generation capacity is 3MW. This not only helps address the need to treat palm shell waste and solve the associated environmental issues, but also turns it into a type of economically sound bio-fuel.

"This is our first biomass boiler system to export out of China," commented Mr. Qinghuan Wu, Chairman and CEO of China Energy Recovery. "Though we are continuing to concentrate on waste heat energy recovery, our strong technological and engineering capabilities have enabled us to expand into other relevant alternative energy and energy efficiency market segments both inside China and overseas. Biomass fuel is one of such market segments. It has great opportunities in developing countries such as those in southeastern Asia. The completion of this order has demonstrated our capabilities to serve the special regional needs and is expected to aid our further expansion in such fast growing overseas markets."

The contract value presented above includes a 17% value added tax ("VAT") and an 8% retainage for product warranty purpose. According to US GAAP, VAT and the retainage are excluded from the current period for revenue recognition purpose and the retainage will be recognized as deferred revenue. The numbers presented represent values based on current exchange rates. Changes in the currency exchange rates would result in a commensurate change in contract value.

What is Waste Heat Energy Recovery?

Industrial facilities release significant amounts of excess heat into the atmosphere in the form of hot exhaust gases or high- pressure steam. Energy recovery is the process of recovering vast amounts of that wasted energy and converting it into usable heat energy or electricity, dramatically lowering total energy costs.