To Our Shareholders

Clean Energy president & CEO Andrew J. Littlefair

2007 marked the 10th year since we began operations to develop the use of natural gas for transportation.

We started with the notion that natural gas should and would become an important alternative fuel for transportation. We purchased our first stations from the Southern California Gas Company and set up operations in California. At times, it seemed an exceedingly slow process as we built up stations and fleet fueling contracts, refining our business model. Yet now, we see how much has happened and how far we have come in a decade.

In 2007, we delivered 75.3 million gallons of natural gas (CNG and LNG) compared to 2.0 million gallons in our first year. We ended 2007 with 170 stations fueling over 275 fleet customers operating approximately 14,000 vehicles daily across North America. Revenue in 2007 grew to $117.7 million. Total assets were $249 million at December 31, 2007.

Today, Clean Energy is the leader in the natural gas vehicle fuel industry and the largest provider of natural gas for transportation in North America. Our initial public offering in May 2007 provided resources for the significant growth program now underway.

Key Energy Solution Why is Clean Energy so aggressively pursuing this business? Because never before have the factors supporting the use of natural gas for transportation, particularly for heavy-duty fleet vehicles, been so numerous and so positive.

In the past, we essentially had a good environmental story. Natural gas was far cleaner than gasoline and diesel. But natural gas vehicles were still being developed or converted and were expensive compared to diesel vehicles. And the fuel price difference between natural gas and diesel was not meaningful enough to convince fleet operators to switch to natural gas.

Today, new natural gas vehicles have been designed and developed from the ground up and work well. Their costs are coming down as production scales up and technology improves. Federal tax credits help cover the cost difference between natural gas and diesel vehicles. And most importantly, the price of diesel is climbing as world petroleum production peaks while demand increases. The fuel price differential between natural gas and diesel has become significant and compelling for fleets to switch to natural gas.

Based on December 2007 prices in California, a CNG taxi can save more than $3,000 per year in fuel costs over a gasoline taxi. A CNG transit bus can save more than $15,000 per year in fuel costs over a diesel bus. A CNG refuse truck can save more than $16,000 per year in fuel costs over a diesel refuse truck. And CNG vehicles still produce lower emissions than their conventional gasoline or diesel counterparts.

The need to lower emissions results from mounting pressure from government at all levels to reduce toxic and greenhouse gas emissions by 20% to 30% or more through the use of low-carbon alternative fuels, favoring natural gas, which can help achieve the low-carbon goals.

Globally, the use of natural gas for transportation is increasing even more rapidly than in the United

States as countries throughout Europe, South America and Asia seek to reduce petroleum consumption and smog- and greenhouse gas-producing emissions. China and India are deploying natural gas transit buses in large numbers. Other major countries turning to natural gas for their own transportation needs include Iran, the United Arab Emirates, Pakistan, Peru, Argentina, Brazil and Germany.

First Foreign Operations In Peru, the government is actively supporting the transition to natural gasvehicles and is targeting the conversion of thousands of transit vehicles and taxis in Lima alone. In 2007, weformed a joint venture, Clean Energy del Peru, to develop and operate natural gas fueling stations in Peru. Peru’s natural gas reserves are approximately seven times the size of the country’s oil reserves, supporting the government’s move to natural gas for transportation.

Collecting Refuse Cleanly Refuse collection presents a major market opportunity for Clean Energy nationwide. We have played a key role in the development of the natural gas vehicle refuse market in Southern California and helped the first municipality outside California to satisfy a CNG mandate for refuse collection in Smithtown, New York, in 2006. Since that time, we have developed considerable momentum in converting refuse operators to natural gas vehicles across the nation. The economics are very favorable. The market is very large.

Port Truck Breakthrough After lengthy consideration, in late 2006 the Port of Los Angeles and the adjacent Port of Long Beach passed the Clean Air Action Plan aimed at reducing port-related diesel pollution significantly. The combined ports account for 40% of all container traffic into the US. The resulting pollution in Southern California has a significant negative impact on the region’s health, economy and quality of life. The current Plan envisions replacing up to 16,800 dirty diesel trucks with clean trucks within five years.

Clean Energy committed to support the Plan by building the LNG fueling infrastructure needed and by ordering the first 100 LNG trucks to be used as a demonstration of their benefit. In December 2007, we opened the first LNG truck fueling station specifically for the ports. In November 2007, both ports approved a progressive ban on dirty trucks, requiring all trucks to be at 2007 EPA emissions limits by January 2012. In December 2007, both ports also approved increased tariffs to help fund truck replacement. In February 2008, the Port of Long Beach approved its portion of the plan by requiring that no less than 50% of the trucks (or 8,300 trucks) “be powered by alternative fuels proved to be cleaner than diesel, such as liquefied natural gas.” In March 2008, the Port of Los Angeles passed a similar requirement calling for 50% or more of the trucks to be replaced with clean trucks such as natural gas. When fully deployed, we believe those trucks could consume from 80 to 95 million gallons of LNG annually. Clean Energy intends to fuel as many of the new trucks as possible and already is in the process of developing additional stations for this purpose.

Ports nationwide and overseas represent an excellent market for the use of natural gas fuel for vehicles.

Providing Needed LNG Furthering our support of the Southern California ports’ fuel needs, as well as the needs of other heavy-duty trucking and fleet customers in the Southwest, we are building the Clean Energy California LNG Plant in the Mojave Desert, approximately 140 miles from the ports. It is scheduled to be able to produce 160,000 gallons per day of LNG in the fall of 2008, and is designed to be expanded to 240,000 gallons per day. Additionally, we have contracted with another LNG plant in development along the California/Arizona border to provide up to 50,000 gallons of LNG per day beginning in late 2008. These sources complement our Pickens LNG Plant near Houston, Texas, which serves that region.

The new Clean Energy plant is the first large-scale, commercial LNG plant in California.

Biogas for the Future We are just beginning to see the commercial development of biomethane from landfills, waste water and sewage treatment plants, and dairy and ranching operations. Next year, we will report in more detail on how introducing this biomethane into the system will enable us to provide biogas for transportation, using a renewable fuel and not just an alternative fuel. The positive implications for both energy security and the environment are striking. The greenhouse gas emissions produced by burning renewable methane as a vehicle fuel are far less than if methane is vented directly into the atmosphere from landfills and the like.

Moving Forward in 2008 Clean Energy is focused on key markets of substance — light-, medium- and heavy-duty, high-fuel-use vehicle fleets in transit, refuse, ports, airports, municipalities and regional trucking — as well as in international markets where our involvement makes sense. We are committed to pursuing our strategic plan vigorously.

We recognize the exceptional contributions of our management team and staff, and thank our Board of Directors for their insight, oversight and assistance. In particular, we recognize our founder, Boone Pickens, whose vision and investment is helping make Clean Energy a reality not just for its shareholders, but for the country.

Andrew J. Littlefair
President and Chief Executive Officer