Hart Energy ConsultingGlobal Biofuels Outlook: 2010-2020Presented byHart Energy Consulting TeamOctober 7, 2010Hart Energy ConsultingPresentation Overview•Global Overview–Biofuels Mandates in 2010–Regional Ethanol Supply andDemand Outlook to 2020–Regional Biodiesel Supply andDemand Outlook to 2020•Regional Findings for NorthAmerica–Findings–Policy Outlook–Global Ethanol and BiodieselOutlook•Regional Findings for LatinAmerica–Findings–Policy Outlook–Global Ethanol and BiodieselOutlook•Regional Findings for Europe–Findings–Policy Outlook–Global Ethanol and BiodieselOutlook•Regional Findings for AsiaPacific–Findings–Policy Outlook–Global Ethanol and BiodieselOutlook•Next Generation BiofuelsFindings–Overall Findings–Demand Growth–Capacity Outlook• ConclusionHart Energy ConsultingGlobal OutlookHart Energy ConsultingEthanolBiodieselEthanol& BiodieselNo known biofuels programNorth America:RFS2 & LCFS implementationIntermediate blends?LatinAmerica:morecountries pushing formid and higherLevel BlendsEurope:RED implementationGHGs, sustainabilityAfrica:startmandatedbiofuels usageMiddle East:Ethanol &JatrophaR&D projects;AlgaeAsia:Blend levelsvary highlyBiofuel Mandates in 2010Half the Programs in Developing CountriesSource: Global BiofuelsCenter, September 2010Hart Energy ConsultingTotal Biofuels Supply and Demand 

# Substantial Growth for Ethanol, Modest Growth for Biodiesel-20,000.0040,000.0060,000.0080,000.00100,000.00120,000.00140,000.00160,000.00180,000.00200,000.00Total SupplyTotal DemandTotal SupplyTotalDemandEthanolBiodiesel

M i l l i on Li t e rs201020152020•Ethanol demand represents 73%of biofuels demand in 2020.•Capacity will likely need tobe added to keep up withdemand requirements forboth ethanoland biodiesel by 2020.•Biodiesel analysis generally includes only on-road diesel but forsome countries we notesignificant demand foroff-roadbiodiesel applications as well.Source: Hart’sGlobal Biofuels Center, September2010; data taken fromGBC’s Global BiofuelsSupply & Demand Outlook 2010-2020Hart Energy ConsultingGasoline v. Ethanol Demand by Region



# S i gnificant Penetr a tion in A m er icas Region by 20200%20%40%60%80%100%Asia PacificEU27LatinAmericaNorthAmericaAsia PacificEU27LatinAmericaNorthAmerica20102020Ethanol•Over 25% ethanol penetration in the Latin America region by 2020•Gasoline demand to decline in North America by 2015 driven by fuel efficiency,ethanol penetration could increase with intermediate blends•10% penetration in Asia-Pacific by 2020•Strong demand growth in Europe driven by member state National Action PlansSource: Hart’sGlobal BiofuelsCenter,September2010;data taken fromGBC’sGlobalBiofuels Supply& DemandOutlook2010-2020and WorldRefining& Fuels ServiceHart Energy ConsultingOn-Road Diesel v. Biodiesel Demand by Region



# Small Penetration of Biodiesel into the D i esel Market in 2020 – 10% or Less0%10%20%30%40%50%60%70%80%90%100%AsiaPacificEU27LatinAmericaNorthAmericaAsiaPacificEU27LatinAmericaNorthAmerica20102020On-Road DieselBiodiesel•EU-27 and Latin America tosee greatest penetration of biodiesel into the diesel market by 2020 at 10%•Sluggish growth in North America –about 2% penetration•Significant growth in Asia,representing 6% penetration by 2020Source: Hart’sGlobal BiofuelsCenter,September2010;data taken fromGBC’sGlobalBiofuels Supply& DemandOutlook2010-2020and WorldRefining& Fuels ServiceHart Energy ConsultingRegional Findings:North AmericaHart Energy ConsultingStudy FindingsRegional Highlights for 2010-20•Cellulosic biofuels requirements under RFS2will not be met as contemplated in EISA.We expect the renewable fuel (corn ethanol) and possibly advanced biofuels(sugarcane) will be increased.•We continue to expect thatobligated parties will look toBrazilian sugarcane ethanolfor additional volumes to meetthe LCFSin the 2011-2015 timeframe. Imports mayquadruple through 2020.•Regional ethanol outlook (2010-20):–Utilization rates increased from2009 (85%) to 2010 (90%) and will stay ator above 90% through2020–Total demand to reach 84 billion liters in 2020 and supply 79 billion liters–Intermediate blends (E15) could see represent 30+ marketpenetration by 2015 in U.S.–Near 100%E10 penetration in U.S.–Canadian RFS2 to increasedemand for ethanol in Canada•Regional biodiesel outlook (2010-20):–Utilization rates around 10% of capacity–We project supply will meet demand by 2020 of 4.5 billion liters–We have estimated anoverall 2-3% penetration inthe on-road diesel poolthrough the study period–Aside from mandates, no independent demand driver for biodiesel–Renewable diesel may capture some of this demandHart Energy Consulting200820102013202220152011Note:•Green –mandate•Red –suspended/notineffect•*MandatesinLouisiana,Montana (E10),Pennsylvaniaand Washington dependonmeeting local productiontriggers20092009: Minnesota: B52013: Minnesota: E202007: Minnesota: B22015: Minnesota: B2020072005:U.S. RFS 1 Enacted2006: Hawaii: E10Policy Timeline: North AmericaConstant Changes in Policies Create Investment Uncertainty2009: Iowa: StateRFS(un-enforced)2007: Ontario: E520122012: Minnesota: B102012: New Mexico: B52008: Washington:E2, B2*2008 Manitoba: E8.52008: Missouri: E102008: Saskatchewan:E7.52007: U.S. RFS2 Enacted2010: Canada: E5, B22010: Ontario: E102010: Quebec: E52010: British Columbia:B5U.S.RFS 2: 36 BGY2020California: 10%GHGReduction Target20302009: Oregon: E10, B22010: Florida: E102010: Massachusetts:B22013: Massachusetts: B52005: Louisiana:B2, E2*2002:California: CaRFG3Standards effective2010: Pennsylvania: B2*2009: Montana: E10*1997: Minnesota: E10Source: GBC, September 2010Hart Energy ConsultingPractical 2010 Ethanol Blend Wall Range 

# Hart Low Case Shows Near Maximum E10 Penetration50-74% PenetrationBelow 10% Penetration10-50% Penetration75-100% Penetration90%Alaska –10%Hawaii –95%Source:Hart’sNorthAmerican Ethanol Database,June2010.Hart Energy ConsultingRegional Ethanol & Biodiesel Growth by 2020Strong Growth for Ethanol inU.S.Driven by Intermediate Blends-10,00020,00030,00040,00050,00060,00070,00080,00090,000SupplyDemandSupplyDemandEthanolBiodiesel

M illio n L i t e r sUnited StatesCanadaSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingRegional Findings:Latin AmericaHart Energy ConsultingStudy FindingsRegional Highlights for 2010-20•Biofuelspotential in Latin America is strongconsidering many countrieshave significantland available for expansion of feedstock production,and the goals of energy securityand job creation coming out of the financial crisis is a priority among many governments.•RegionalEthanolOutlookfor 2010-2020–Brazil will continueto set the tonefor theregion–Most blendmandates range between 5 vol%-25 vol%,10 vol%is most common–LatAm supplytoreach 65.35 billion liters (17.26 billiongallons) by2020–LatAm demand to reach 50 billion liters(13.21 billion gallons)by2020–Exports mayrise to 15.35 billionliters(4.05 billion gallons) by2020•Regional Biodiesel Outlook for 2010-2020–Most blendmandates range between 2 vol%-10 vol%–LatAm supplytoreach 15.34 billionliters (4.05 billion gallons) by2020–LatAm demand to reach 12.56 billionliters (3.32 billion gallons) by2020–Most countries’supplyexpectedtosatisfyinternal demand–Exports could reach 2.77 billionliters (733 milliongallons)by2020•Increasing flex-fuel vehicle (FFV) sales inBrazil and the approaching FFV mandate inColombia (2012) will be significant driversin ethanol demand aslong as pricesstaycompetitive. Also, Jamaica and Paraguay have lowered tariffs onFFVs.•Colombiaand Argentina continue to raise biodiesel blend levels when supplies warrant,hoping to eventually reach B20.Hart Energy ConsultingPolicy Timeline: Latin AmericaInvestment Opportunities Exist as Mandates Continue to Increase2002Brazil: E20-E25Paraguay:E242007Colombia: B52008Costa Rica: E3,B5Jamaica: E10Brazil: B22009Costa Rica: E52010Argentina: E5, B5-B7Brazil: B5Colombia: E10, B7-B102011Peru: E7.8Venezuela: E72012Uruguay:B5Mexico: E6 (GDL, MTY,DF)Colombia: B20FFV mandatebegins:60%of all vehicles soldless than 2.0 Liter mustbe FFV2015Uruguay:E52016Colombia: All vehiclessold must be FFVUruguay:B2Source: GBC, September 2010Hart Energy ConsultingExpected Ethanol Growth by 2020Brazil will continue to lead the region in supply and demandSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingExpected Biodiesel Growth by 2020Brazil will continue to lead, Argentina and Colombia closely followSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingRegional Findings:EuropeHart Energy ConsultingStudy FindingsRegional Highlights for 2010-20•Two directives, the amended FQD and theRED are shaping the biofuels market.–They introduce a renewable energy intransport mandate for 2020,sustainability criteria(includingminimum GHG reductions)and a GHG reduction targetfor fossil fuels by 2020.•Involumes, 2010 biodiesel demand is twice that ofethanol linked todieselization ofthe carfleetbutethanol demand is projectedto growmore rapidly and reach 43% oftotal demand volumes in2020•Regional ethanol outlook (2010-20):–Current blending levelsstand at 5-10 vol% (amended Fuel Quality Directive)–Utilization rates around50% of capacity butrising to 69% by 2020–Total EU demand to reach13.3 billion litersin 2020 and supply 7 billion liters–Imports to meet 47%of demand by 2020•Regional biodiesel outlook (2010-20):–Current blending levelsstand at 5-7 vol% (amended Fuel Quality Directive)–Utilization rates around57% of capacity butrising to 66% by 2020–Total EU demand to reach27.1 billion liters in2020 and supply 17.6 billion liters–Imports to meet 35% of demand by 2020•Sustainability is a major issue inthe EU27 and with potentially huge impact onindustry with Indirect LandUseChange still an unknown factor•Advanced biofuels promoted under newRenewable Energy Directive but nosignificant volumes expected by 2015Hart Energy ConsultingPolicy Timeline: EU 27Implementation of RED20102015202020172011EU:Dec. 2010 Implementation ofRenewable EnergyDirectivein ALLMSGHG cut target 35%EU:10%byenergycontentrenewables into transportEU:GHG cut target 50%60%for new biofuelsplants2030Sweden:Independent ofCrudeOilAustria, Belgium, Cyprus, Czech Republic,Finland, France, Germany,Ireland, Italy,Latvia, Lithuania,Luxembourg, Poland,Portugal, Romania,Slovakia, Slovenia,Spain, the Netherlands and the U.K have aMANDATE alreadyALL MS toreleaseNationalAction PlansCommissionstarted PublicConsultationon ILUC untilOct. 31 2010Source: GBC, September 2010Hart Energy ConsultingExpected Regional Ethanol Growth by 2020France toLead in Supply and the U.K. to Lead inDemandSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingExpected Regional Biodiesel Growth by 2020Spain to Lead inSupply and Germany toLead in DemandSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingRegional Findings:Asia PacificHart Energy ConsultingStudy FindingsRegional Highlights for 2010-20•2010 saw an increase in ethanol blending under the national mandate for Indonesia,and biodiesel blending under the nationalmandates for Indonesia, South Korea,Taiwan and Thailand.However, full implementation in Indonesia has yet to be successful.•Ethanol supply is not expectedto meet demand through 2020due to higher blendingrequirements at 5-10 vol% and issues withfeedstock supply and pricing. If proposed plantsdo not proceed with construction orexisting capacity is expanded to meet demand, ethanolimports from Brazil willcontinue to suffice.•Biodiesel supply is expected to meetdemand up until 2020due to lower blendingrequirements at 1-5 vol% and overcapacity (even with utilization rates as low as 10%).Excess supply is expected to be absorbed byincreasing blending levels, orusage in offroad vehicles and sectors, orexport to Europe orothercountries.•On a regional basis, total ethanol demand isestimated to comprise 1.8% ofthe totalgasoline demand in2010, which is expected to grow to5.5% in 2015 and 8.2% in 2020.•Total biodiesel demand is estimated tocomprise 1.6% ofthe total automotive dieselfuel demand in2010, which is expected to grow to 3.4% in 2015 and 4.7% in 2020. Thisshows that ethanol accounts fora highershare in the gasoline pool than biodiesel and isexpected to grow fasterthan biodiesel in the region.•No current or future policies or mandates require use ofadvanced biofuelswhich areproduced at pilot level in Australia, China, India, Japan, New Zealand, Taiwan and Thailand.Hart Energy ConsultingPolicy Timeline: Asia PacificVarious Mandates and Targets SetNote:National MandatePartial MandateUnder legislative process/discussion tobecome a mandateVoluntary2008201020122020201720112009Thailand: B2Taiwan: B1Indonesia:E1, B1Philippines:B2, E5Taiwan: B2Japan:500,000 kl of biofuelsChina:200,000 tons of biodiesel2million tons ofethanolTaiwan: E3Philippines: E10South Korea:B3China:2 milliontons ofbiodiesel10 milliontonsofethanolThailand: B5South Korea: B1Thailand:E20, E85India:E20, B202007Philippines: B1India: E5Thailand: B102025Indonesia:E15, B20Malaysia: B5China(10 provinces):E10Australia (NSW):E4, B2Philippines:E15, B1020152022Philippines: E20, B15Thailand: B3Australia (NSW):E2Philippines:B20Philippines: B5Source: Hart’sGlobal Biofuels Center, Sept. 2010Hart Energy ConsultingExpected Regional Ethanol Growth by 2020Thailand to Lead in Supply andChina to Lead inDemand0.002000.004000.006000.008000.0010000.0012000.0014000.00AustraliaChinaIndiaIndonesiaJapanNewZealandPhilippinesTaiwanThailand

Mil lio n litersSupplyDemandSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingExpected Regional Biodiesel Growth by 2020India to Lead inSupply and Demand0.00500.001000.001500.002000.002500.003000.003500.004000.004500.005000.00 Au s t r a l ia C hi n a In di a I n d on e si a Ja p a n M a la ysi a Ne w Z e a la nd Ph i lip p in e s

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M i lli o n li t e r sSupplyDemandSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingNext GenerationBiofuels FindingsHart Energy ConsultingStudy FindingsNext generation Biofuels Highlights for 2010-20•Most development in Next Gen. biofuels is in cellulosic ethanol (bothnumber of projects and total capacity).–Most commercial plant capacity though isforrenewable diesel (combined HVO andBTL with FischerTropsch.•Several projects are based in Asia Pacific and supply will be kept in thatregion.•Global Cellulosic ethanol outlook (2010-20):–Deficit of supply versus demand in 2015–Deficit made worse when considering that most demandcomes from the U.S. whilesupply comes fromAsiaPacific–Additional capacity is required tomeet the 2020 forecasted demand•Global Renewable diesel outlook (2010-20):–Apparent overcapacity in 2015–In fact due to lack ofspecific government demand forrenewablediesel–Product quality expected tocreate demand forit–Forecasted demand for2020 should absorb planned capacity•Still financial and technological hurdles to overcomeHart Energy ConsultingGlobal Next Gen. Biofuels Growth by 2020Cellulosic Ethanol to Lead Supply and Demand in 2015-2020Source: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingExpected Regional Distribution of CapacityAsia Pac. largest cellulosic ethanol capacity, U.S. 2ndin cellulosicethanol, EU 1stin HVO, more variedSource: Global Biofuels Outlook 2010-2020,September 2010Hart Energy ConsultingConcluding ObservationsCountries Still Moving Progressively on BiofuelsEthanol may represent 13% of the gasolinepool by 2020; biodiesel, 6% of the onroad diesel pool.Hart’s analysis shows that most countries will be in a potential supply deficit forethanol by 2020. On a global basis, supply could be short by atleast 19 billionliters (5 billion gallons).The only country that will be in a position to supply the globalethanol market willbe Brazil, which Hart projectswill be able tosupply aminimumof 13.2 billion liters(3.5 billion gallons) to the global market by 2020. No other country comesanywhere close to being able to supply these kinds of volumes.Chief competitors for Brazilian ethanol are expected to be the U.S., EU 27, Chinaand Japan representing a combined demand of at least 15 billion liters (4 billiongallons). China is a surprise!The demand requirement will reach 8 billion liters (2billion gallons) by 2020, more than doubling over 2010.•We do not expect sufficient volumes of next gen biofuels to be commerciallyavailable on the market through 2015-2020 tomeet GHG-driven biofuels targets.–RESULT: Again, a scramble forsugarcaneethanol...will probably drive Brazil and AsiaPacific production.Hart Energy ConsultingConcluding Observations (2)Biodiesel Supply Will Need to Double to Meet DemandA number of countries have already moved or are considering moves to higherblends of ethanol (beyond E10) and biodiesel (beyond B5) and include: Brazil, theU.S., Colombia, Argentina, Indonesia, and several EU 27 member states.Global biodiesel supply will have todouble over the 2010-2020 timeframe toaccommodate demand requirements that are governments around the world areaiming to implement. We expect fewer new facilities will be built but that utilizationat existing facilities increases by 2020.Only 57% of existing biodiesel capacity is required in Europe in2010 and 2015compared to expressed demand, taking into account FAME and renewable dieselcapacity. The utilization could then rise to 66% of the capacityin 2020 as no newcapacity is added beyond 2015. But in spite of this capacity, imports shouldrepresent 7% of demand in 2010, increasing to 20% in 2015 and then 35% in 2020as no new capacity is added.Sustainability remains a very important issue with regard to biofuels, in particular,indirect land use change (ILUC) GHG emissions. The RED already mandatesGHG emission reductions and may limit the use of several feedstocks. Memberstates remain divided over how to take ILUC into consideration.The issue of howto handle ILUC has not been decided yet by the European Commission, butnevertheless could be a hurdle for future biofuels or biofuels feedstocks importsinto the EU.Hart Energy ConsultingThank you! Questions?Tammy Klein, Assistant Vice Presidenttklein@hartenergy.com; +1.701.323.0417