Strategic Partnering in Advanced Biofuels

Brian Foody Iogen Corporation

ABLCNext San Francisco Oct 10, 2013

Cellulosic Ethanol

Overview

Strategic Partnering in Advanced Biofuels

•  Who is Iogen?

•  The Technology Demonstration Challenge

•  The Commercialization Challenge

•  New Opportunities in the Market

•  Outlook 2

Making Cellulosic Ethanol Since 2004

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2011

2009

2004 2010

2005

Who is Iogen?

2010 2009

2007

Who is Iogen? Team – Assets - Relationships

Team: One of the world’s largest and most experienced teams in cellulosic biofuels

•  Over 30 years in second gen biofuels, with $500 million invested

•  9 years developing, designing, de-bugging and scaling-up cellulosic ethanol technology in our integrated demo plant

•  Strong focus on technology – including integration of biotech, process tech and engineering

•  Projects developed in Canada, US, Germany and Brazil

•  Extensive feedstock supply chain experience, with contracts totaling 2.8 million tonnes per year.

•  Very active in legislative and regulatory advocacy 4

Who is Iogen? Team – Assets - Relationships

Assets: Developed extensive physical assets and intellectual property assets

•  $500 million technology investments •  $100 million demonstration plant in Ottawa, Canada •  World class enzyme production facility in Ottawa, Canada

(enzyme business sold to Novozymes in 2013 transaction) •  Over 300 issued and pending patents

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Who is Iogen? Team – Assets - Relationships

Relationships: History of developing relationships with blue-chip partners:

Second Generation Biofuels: Current and historical relationships include:

Enzyme Business: Historical relationships include:

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Overview

Strategic Partnering in Advanced Biofuels

•  Who is Iogen?

•  The Technology Demonstration Challenge

•  The Commercialization Challenge

•  New Opportunities in the Market

•  Outlook 7

The Technology Demonstration Challenge

•  Starting with new Process Technology •  Incorporate numerous novel or different components

•  Chemical engineering scale-up principles •  How rigorously should one test at sub commercial scale vs “just doing it”

•  Rigorous scale-up is extremely capital intensive •  $10 to $100 million to build and run a demonstration plant – the last stage

before commercial operation

•  How can a firm put the money together? •  Do you need to fund the cost of large scale demonstration? •  What source: partners, investors or even internal capital?

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What could possibly go wrong?

Problem:   Straw bridging

  Problem:   Lines plugging

What could possibly go wrong?

Problem:   Severe deposits leading

to system shut-downs

What could possibly go wrong?

Problem:   Severe erosion

problems in pumps

What could possibly go wrong?

  Problem:   Distillation tray

plugging

What could possibly go wrong?

At Iogen: Emphasize Design Cycles & Integrated Demo

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Develop

Implement

Operate

Cycle of Process Design Improvement R1 to R8

De-risking through integrated 24/7 operation

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Demonstration Plant 24/7 Integrated Operation

Operated like a regular production facility   Four crews of operators; 12 hour shifts   Dedicated maintenance & instrumentation staff   Team of full time process engineers

Extensive sampling, analysis, and continuous improvement

  1100 samples per week   Demo plant data feeds our technology program and leads

to design decisions and improvements

Experience at this scale matters!   Key to reliability on scale-up 16

Progress in Sequential Technology Releases

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R8 R7 R6

Upgrade Upgrade

R8: Double the Process Concentration to Hydrolysis

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R8: Potential ethanol titer Sustained cost reduction

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The Technology Demonstration Challenge

•  Iogen approach focused on extensive validation and testing – 24/7 integrated operations

•  This does not come cheap •  Iogen’s demonstration facility cost $100 million •  All in costs of demonstration probably exceed $250 million

•  We had supportive partners who believed strongly in high quality demonstration

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Overview

Strategic Partnering in Advanced Biofuels

•  Who is Iogen?

•  The Technology Demonstration Challenge

•  The Commercialization Challenge

•  New Opportunities in the Market

•  Outlook 21

The Commercialization Challenge

•  Cellulosic ethanol is a very large commercial opportunity with great margin potential

•  16-24 billion gallons per year

•  But, it is extremely capital intensive •  $5 to $25 per annual gallon of production capacity

•  How does a firm find partners / investors willing to take a first plant risk

•  DuPont •  Beta-Renewables (M&G, TPG, Novozymes) •  Poet / DSM •  Abengoa

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•  50:50 JV between Cosan and Shell •  Raízen assumed Shell’s position in the Iogen Energy JV

when Shell abandoned pursuit of its Canada project in 2012

•  Raízen has rights to Iogen technology in Brazil and sugar cane worldwide

•  Brazil’s largest cane processor •  24 mills, crushing capacity ~ 65 million tonnes per year •  ~ US$ 30 billion sales

•  ~40,000 employees

•  Strategic commitment to cellulosic ethanol •  Previously said they plan to invest $2 billion in the construction of cellulosic

ethanol facilities in Brazil

Iogen’s Key Partner

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Why Brazil?

•  Cellulosic ethanol is a natural fit for Brazil •  Offers a solid, practical path to grow the industry

•  Increases yield per acre by 50% or more •  Takes the pressure off opening (expensive) new cane plantations •  Uses materials that now go to waste or are burned •  Enables mills to “extend” their operating season

•  Sugar cane mills are already producing bagasse •  Sugar mill add-ons offer capital cost savings through site

infrastructure and use of existing equipment •  Bagasse is available at low cost, prepared for use, in steady

supply •  Operating costs can be lower, shared across an existing site 24

Extensive validation program with Bagasse

•  Conducted demo plant operations with bagasse over 6 months

•  Initial lab & pilot screening

•  Compared operating data with multi-year baseline experience

•  Baseline primarily wheat straw

•  Additional experience on corn stover

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The Costa Pinto Cellulosic Ethanol Project

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Picture of Mill

Brazilian Sugar Mills and Distilleries Raízen Costa Pinto Mill, Piracicaba, Brazil

Raízen Costa Pinto Mill, Piracicaba •  24,000 MT/day crushing capacity •  82 million litres ethanol/ yr

The Costa Pinto Cellulosic Ethanol Project

Capacity: •  40 million litres/yr cellulosic ethanol

Site and Process Strategy: •  Existing bagasse stream as feedstock •  Maximum utilization of existing assets •  Lignin feeding to boiler (replacing bagasse)

Capital cost: •  US ~$100 million

Schedule: •  Operational by the end of 2014

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Overview

Strategic Partnering in Advanced Biofuels

•  Who is Iogen?

•  The Technology Demonstration Challenge

•  The Commercialization Challenge

•  New Opportunities in the Market

•  Outlook 28

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The Renewable Fuel Standard targets energy security and CO2 emissions

Total renewable fuel mandate

Com

pone

nts

of th

e R

enew

able

Fue

l Man

date

Rising fuel economy standards target energy security and CO2 emissions

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VW Passat MultiFuel Running Cellulosic E-85 160 HP 50 g CO2/km

How can we tackle Energy Security and CO2 emissions?

GM Yukon Denali Running Cellulosic E-85 320 HP 75 g CO2/km

VW Jetta Hybrid Running Gasoline 170 HP 125 g CO2/km

Hybrid Technology

Fuel Technology

Fuel and Vehicle Technologies: Are they competitive, complimentary or unrelated?

VW Jetta Hybrid MultiFuel Running Cellulosic E-85 170 HP 25 g CO2/km

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If they deliver the same benefits, how do their costs compare?

North American RPE Austin et al, Sierra Research

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If they deliver the same benefits, how do their costs compare? 2G Biofuels are very competitive.

Total Cost of 2G Biofuel supply

Capex (net of term value)

10 year NPV of Opex

Can we structure a proposal to EPA to:

•  Provide Auto sector with additional compliance options/flexibility

•  Enable the lowest cost to society for achieving the government’s GHG/petroleum reduction goals

•  Pass the test of being:   Accountable – e.g. relying on a robust RIN system   Additional – e.g. increasing 2G deployment   Achievable – e.g. relying on existing regulatory authority –

no legislation needed 34

Overview

Strategic Partnering in Advanced Biofuels

•  Who is Iogen?

•  The Technology Demonstration Challenge

•  The Commercialization Challenge

•  New Opportunities in the Market

•  Outlook 35

Iogen’s 2014 Goals

1.  Successful start-up of first cellulosic ethanol facility at Raízen’s Costa Pinto sugar cane mill

•  Piracicaba, Brazil

2.  Release Iogen’s next generation of processing technology:

•  New drop-in cellulosic biofuel

•  Cellulosic biofuel yield of 150+ gal/ton

•  Capital cost of less than $5/gallon/yr.

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Outlook for Iogen

•  We expect cellulosic biofuel production to be a strongly profitable business for the long term

•  Iogen plans to catalyze project investment with alliances & partnerships

•  Targeting strategic alliances to drive US & EU implementation

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Strategic Partnering in Advanced Biofuels

Thank You

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