Implications for Agriculture, Energy, and Automotive

Implications for Agriculture, Energy, and Automotive

Copyright © 2006 Global Insight, Inc. 2

The Bio-fuels Boom


Value Proposition

Providing an Integrated Perspective Agriculture, Transportation, and Energy perspectives

combined – from Field to Wheels.

Identifying the Issues & Answering the Questions in Context Long-standing expertise in competing and

complementary businesses Based on an economic analysis platform

GLOBAL INSIGHT Independent, reliable analysis


Three Major Policy Drivers…

…Are They Compatible?

Reduce criteria emissions at local, urban, metro, and national levels

Reduce greenhouse gas emissions

Create new markets for agricultural crops

Reduce subsidies

Energy security Reduce dependency

on petroleum-based energy sources

Diversify energy sources

Energy Environment Agriculture


Strategic Questions Addressed in The Bio-fuels Boom

• What are the global drivers of bio-fuels consumption?

• What role do the major economic powers play in bio-fuels growth? (U.S., NAFTA, EU-25, Asia, Latin America, Africa)

• What is the range of long-term policy objectives? How will they vary from country to country

and at the regional and local levels?

How will policy influence the creation of a commercially viable bio-fuels industry?


Strategic Questions Addressed in The Bio-fuels Boom

• How is the bio-fuels infrastructure evolving internationally?

• What is the current state of technology and how will it develop?

• What is the tipping point, where bio-fuels will impact the energy, agriculture and automotive markets?

• What are the expectations and limits to growth in the bio-fuels industry?


Ethanol Production Capacity: Growing Rapidly

- 5.0 10.0 15.0 20.0

United States

Brazil

China

India

France

Russia

Germany

South Africa

Spain

U.K.

Billions of liters per year

2004

2005

Source: F.O. Licht


A Scenario-based Approach

• The global bio-fuels industry will unfold based on the evolution of several key factors: Government mandates and support Production and process technology in the agricultural, automotive,

and energy industries Cost evolution International trade issues Distribution and infrastructure Global oil prices

• Alternative scenarios of future supplies and prices are a core element of the study


Proposed Scenarios

Market Re-managed: Supply Growth Keeps

Pace with Demand

Cornucopia: Significant Supply Surplus,

Price Drops

Supply constrained: Production Does Not

Meet Demand

Global Insight will also build scenarios with the charter subscribers to the study.


Bio-fuels Growth Ranges from 5-to-25% by Scenario

0%

5%

10%

15%

20%

25%

30%

2005 2008 2011 2014 2017 2020 2023 2026 2029

Market Re-managed

Supply Constrained

Cornucopia

To

tal G

lob

al P

etro

leu

m S

up

ply

(%)

Global Insight Petroleum Scenarios


FUEL TYPES

Study Coverage

FEEDSTOCKS

CORN SUGAR BEETS SWITCH GRASS & WOOD CHIPS(NEXT GENERATION FUELS)

SUGAR CANE SOYBEANS CROP RESIDUES (NEXT GENERATION FUELS)

WHEAT & BARLEY RAPESEED, JATROPHA OIL & PALM OIL (BIO-DIESEL)

OTHER NON-CONVENTIONAL SOURCES (E.G., ALGAE, FARM & MUNICIPAL WASTES)

(Study does not include alternative fuels such as LPG, LNG, CNG, hydrogen, gas-to- liquids, or coal-to-liquids)

NEXT GENERATION BIO-FUELSBIO-DIESEL

BIO-ETHANOL


Final Report: Proposed Table of Contents

• Executive Summary

• Description of ScenariosKey components of scenariosMajor uncertaintiesSummary of scenario storiesSignposts

• Major Government Bio-fuels Programs and Policies Incentives, targets, restraints

• U.S.• Europe (by country)• Africa

• Bio-fuels Consumption ForecastsBy bio-fuel type By scenarioBy major consumption countryTrade flowsTo year 2030

• Bio-fuels Production ForecastsBy bio-fuel typeBy scenarioBy major production country/region

• Automotive Sector ResponseTechnologyStrategies of each of 10 major OEMsComponent sourcing

• Agricultural Sector ResponseStrategies for the Agricultural SectorMarketingMajor stakeholder responses

• Energy Sector ResponseMarkets for bio-fuels in energy sectorStrategies for the Energy SectorMarketingMajor stakeholder responses

• Conclusions and Recommendations

• Appendices Detailed data tables provided electronically

• Asia (by major country)• Latin America


Bio-fuels and the Automotive Industry

Bio-fuels Automotive Technology

Strategies for the 10 Major OEMs

• How are the on-vehicle systems impacted by each fuel? (e.g., storage, delivery, energy management)

• What technical solutions are needed and at what cost?

Product Offerings Marketing

• Which Vehicles?

• What Fuels?

• Are alternative fuels a strategic initiative?

• …OR a “must do” to be competitive?

Corporate Positioning Component Sourcing

• Wrap itself in green?

• Take the role of a responsible corporate citizen?

• View alternative fuels as an extension of product lines necessary to remain competitive?

• In-house technology development or outsource the expertise?

• In-house or outsource component production?


Bio-fuels and the Agricultural Industry

Bio-fuels Production Technologies

Strategies for the Agricultural Sector

• Major Feedstock Technologies Grain fermentation advancements Cellulosic ethanol

• Production Cost Estimates• Energy and Carbon Balances

• Government policies for use of agricultural surpluses• Land use management for food and energy production

• Current and future subsidization programs• Competition with food production and prices

Marketing Stakeholder Response

• What is the potential market for crops to produce bio-fuels? (by country & by U.S. state)

• How will this affect the agricultural industry?

• Large agricultural companies

• Farm co-ops

• Emerging bio-fuels companies

• Transportation – pipelines, trucks, ports

• Investors


Bio-fuels and the Energy Industry

Bio-fuels Markets in the Energy Sector

Strategies for the Energy Sector

• Fuel for electric power generation

• Substitute for distillates and home heating oil

• Blending agents for gasoline and diesel pool

• Government energy security policies• Government environmental policies• Product quality regulations• Taxes and import/export tariffs• Targets and mandates

Marketing Stakeholder Response

• What is the potential market for bio-fuels? (by country/region and within the U.S. by region)

• Large integrated energy companies

• Refiners

• Pipelines and retailers

• New business entities

• Investors


Who Should Participate?

InvestorsInvestors

Agri-BusinessAgri-Business

AutomotiveAutomotive

EnergyEnergy

Policy & GovernmentPolicy & Government

Bio-fuels IndustryBio-fuels Industry

TransportationTransportation

Equipment ManufacturerEquipment Manufacturer


Kick-off Meeting: October 2006

Study Timetable

Final Client Presentation: Early 2007

Final Report: The Bio-fuels Boom February 2007

Monthly Bio-fuels Webcast: December 2006


Interim Webcasts: SCENARIO REVIEW IMPLICATIONS FOR ENERGY, AGRICULTURE, & TRANSPORTATION SECTORS

Deliverables

Kick-off Meeting: NORTH AMERICA, EUROPE, ASIA

Results Presentation: NORTH AMERICA, EUROPE, ASIA

On-site: OPTIONAL, ON-SITE PRESENTATION OF STUDY RESULTS

Final Report: ANALYSIS & RESULTS; WEB-BASED DATA ACCESS


Project Team

Kevin Lindemer Refining Sector & Alternative Energy Economics

Phil Gott Automotive Technology

Stewart Ramsey Agricultural Economics

Juliette Kerr Latin American Bio-fuels Industry Policy & Analysis

Sarah Kingsbury Automotive Sector

Dick Buttigeig Automotive Sector

Mary Novak Energy Policy & Modeling

Margaret Rhodes Energy Policy & Modeling

Copyright 2006 Global Insight, Inc. 19


Previous Studies in Bio-fuels by Global Insight

1. Study of the Global Bio-fuels Market to Identify Business Opportunities – 2006

2. U.S Federal Highway Administration: Forecasting Revenues from Highway Trust Fund

3. Global Bio-fuels – The Next Step Towards Environmentally Neutral Transportation?

4. National Railroad – Prospects for U.S. Ethanol Production

5. The Potential for Increased Market Share for Alternative Fuels

6. Winners and Losers of Ethanol Mandates

7. Identification and Assessment of Alternative Fuels Market Drivers

For Further Information

Gil Rodgers Senior Director, Energy Group tel: 781.301.9142 em:[email protected]

www.globalinsight.com/energy

Documents

Implications for Agriculture, Energy, and Automotive