American Fats & Oil Association2012 Annual Meeting October 10th – 11th, 2012

Grand Hyatt, NYC, NY

Bioheat® Fuel Market OverviewPaul Nazzaro, President, Advanced Fuel Solutions, Inc.,

Representing the National Biodiesel Board

Industry Challenges•Carbon Intensity/Government Intervention

•Particulate Matter Emissions/Sulfur, GHG

•Market Contraction, Conservation

•Market Uncertainty

•Natural Gas

Market Contraction

• 1980– 13.6 Million Homes heated with #2 heating Oil

– 8.4 million Northeast Homes

– Natural Gas Utilities, (small, fragmented, regulated)

• 2010– 7.7 Million Homes heated with #2 heating oil– 6.1 Million Homes in the Northeast– Natural Gas Utilities, (large, consolidated, unregulated)– Government declaration to abort the use of carbon intensive

fuels

• 2012 - 2013

#2 Heating Oil, Market Contraction 1984-2010

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

10000000

Source, http://www.eia.gov/dnav/pet/pet_cons_821dst_dcu_nus_a.htm

Oil heat Industry Vision

• On September 15, 2009, approximately 100 individuals representing the 23 NORA states and the District of Columbia gathered together to set a new vision for the future of Oil Heat.

The ResolutionThe National Oil heat Research Alliance

• The heating oil industry recommends and will encourage the Congress and appropriate state bodies to mandate the following changes for heating oil,

• By July 2010, all heating oil will be mixed with a bio component that meets the appropriate specifications to ensure that at least 2 percent of the fuel is renewable. That such levels shall increase over time as technical and economic feasibility permit.

• By July 2011, the petroleum base stock we now call heating oil will be transitioned to ultra low sulfur diesel fuel.

• In the interest of lowering the carbon intensity of heating oil applications, that training will be provided to heating oil companies on thermal solar applications.

The Market Opportunity• 6.5 billion gallons is concentrated in

the Northeast and Mid-Atlantic, NE, 30%, Mid-Atlantic, 43%. Fell off to 3.9 billion in 2010, (no winter, conservations, conversions).

• There are approximately 7000 Oil heat retailers delivering heating oil and Bioheat in 40,000 diesel powered trucks

Bioheat® The Market Opportunity

• Heating oil market represents a 325 million gallon biodiesel market as it emerges, at its peak 1.3 billion gallons. The peak is representative of a 20% blend which necessitates ASTM approval.

• NBB Technical Team currently overseeing multiple projects to achieve this goal (BTSC).

• Studies revealed that a 12%+ blend of biodiesel with ultra low sulfur heating oil will enable fuel oil distributors to compete environmentally against natural gas, the industries most formidable foe.

Bioheat® / ULSHOAllows Us To Compete

ULSHO/Bioheat® Advantages

• No retrofit or equipment modifications

• Enhances and extends equipment life

• Can help reduce periodic maintenance intervals

• No change in service protocols

• It’s ready for distribution

Compliments ULSHO

No.2 heating fuel, 0.04% Sulfur by weight

No.2 heating fuel, 0.18% Sulfur by weight

No.2 heating fuel, 0.34% Sulfur by weight

No.2 heating fuel, 1.08% Sulfur by weight

LegislationFederal• Biodiesel Blenders’ Tax Credit • RFS2, Renewable Fuel Standard

State • Requirements• Incentives • Low Carbon Fuel Standards• NYS, .01 per gallon credit on

every 1% blend of biodiesel into heating oil up to .20 for a 20% blend. Expires 12/17

• NY, blends of up to 20% biodiesel with ULSD for on/off road fuel receives a 20% reduced tax rate allowing a savings of an average.06 per gallon, expires, August 2013.

OEM Support &Bioheat Technical Steering

CommitteeR.W. Beckett Company

Supports the use of B5, as specified in ASTM D396. Reference Beckett Technical

Bulletin, January 2009 for all Alternative Fuel recommendations.

Oil heat Manufacturers Association

RielloEndorses B5 blends and lower percentage blends which meet the requirements of ASTM D396

CarlinFactory representatives acknowledge that the company endorses a 5% blend

SuntecEndorsements of Suntec products for use with Biodiesel fuels are only for fuels blended with biodiesels meeting ASTM D6751 and petroleum meeting ASTM D396. B5 is certified if specifications are above are in check.

Bioheat® FuelThe Evolution of Oil heat

The National Biodiesel Board 605 Clark Avenue

Jefferson City, MO 65101

PHONE: (573) 635-3893 FAX: (573) 635-7913

www.bioheatonline.com www.info@biodiesel.org - www.biodiesel.org

Paul Nazzaro978-258-8360