Clean Diesel Technologies in Licensing Agreement with Largest Diesel Engine Exhaust Company in China

8 April 2008

Clean Diesel Technologies, Inc. has licensed its Wire Mesh Filter (WMF) technology to Headway Machinery Co., Ltd. (Zhucheng City, China), the largest commercial diesel engine exhaust company in China.

This agreement enables Headway to develop the WMF technology in order to provide particulate matter (PM) emission reduction solutions to China-based truck manufacturers. Clean Diesel, in return, will receive an upfront licensing fee and royalties on all WMF units sold in China. The objective for Headway is to bring China in line with the Euro 4 PM emission standards for light- and medium-duty trucks.

China is currently phasing in more stringent emissions standards, based on the European standards. Euro 4 standards have applied to light-duty diesel vehicles in Beijing since 2007; compliance for gasoline vehicles began in March 2008. Euro 4 light-duty standards will apply nationwide in July 2010.

The Beijing region implemented Euro 4 standards for heavy-duty engines in January 2008; those standards are in effect nationwide in January 2010.

Headway Machinery, established in 1985, is based in Zhucheng City of the Shangdong Province. The company is China’s largest tier-one automotive diesel exhaust supplier with market reach throughout China.