Madeira 2008December 10, 2008

Lynn Wright, WrightLink Consulting, Adjunct Faculty, University of Tennesseewrightlld@gmail.com

US biofuels market/current ethanol production

Status of cellulosic biofuels production and technology development

Cost targets and current estimates of cellulosic biofuels costs with examples

Feedstock supply requirements, costs, new technology

Alternative advanced transportation biofuel

The Energy Independence and Security Act of 2007 Mandates : 2008 Ethanol Production:

9 Billion Gallons

2022 Total Biofuels Target: 36 Billion Gallons

2022 Advanced Biofuels Target: 21 Billion Gal. Cellulosic Biofuels target:

16 Billion Gal.

Feedstocks include:

Corn starch – 99%Wheat starchMilo starchBarley starchCheese wheyPotato wasteBrewery wasteWood waste*Sugar Cane Bagasse*

* Two demo facilities are currently producing up to 3 mgy of cellulosic ethanol

Total capacity is 11,051 million gallons per year (mgy) at 180 refineries

Source: Renewable Fuels Association: www.ethanolrfa.org

Commercial Demonstration

Pil0t

Completed none 3 7Under Construction

1 2 2

Plans Announced

14 13 6

Total 15 18 1548 cellulosic projects total;29 projects are currently receiving US or Canadian federal and state support as of December 2008

Both US and Canada have recently announced new programs to assist advanced biofuels commercialization. Source: Lynn Wright survey of biomass information sources in 2008

BioEnergy Science Center: Oak Ridge National Laboratory and partners:

•cell-wall deconstruction

•consolidated bioprocessing microbes

• poplar and switchgrass engineering

Great Lakes Bioenergy Research Center: Univ. of Wisconsin / Michigan State University and partners:

• new crops (e.g. Miscanthus)

• increasing plant production of starches and oils

• sustainable systems

Joint BioEnergy Institute: Lawrence Berkeley National Laboratory and partners:

• rice and Arabodopsis plant models

• microbal-based synthesis of Biofuels

DuPont Danisco Cellulosic Ethanol, LLC and the University of Tennessee broke ground on October 14, 2008 for an innovative pilot scale biorefinery.

The feedstocks will be corn cobs, corn fiber and switchgrass grown by Tennessee farmers

Ethanol production is anticipated by end of 2009

Technology Product (s)

Commercial projects

Demo & pilot projects

Thermochemical (Gasification/catalysis)

FT liquids 4 4

Thermochemical(Gasification/fermentation)

Ethanol, other chemicals

3 5

Biochemical (enzymatic hydrolysis – yeasts, various pretreatments)

Ethanol & electricity from lignin

4 7

Biochemical (ICB and other)

Ethanol 3 8

Fractionation & separation

Sugars +fiber + lignin

1 2

Fermentation of Citrus peels

ethanol 1

Combined thermo + bio processes and other

Ethanol & chemicals

6

Based on reports Aug 2008 conference, both biochemical and thermochemical processes show similar estimated costs in $1.50 to $2.50/gallon range

Graph from US National Biofuels Action Plan published October 2008: available from www.brdisolutions.com

Some companies are already claiming new technologies with potential ethanol production price of < $1.00 per gallon

Biochemical biofuels costs and 2012 targets

Ponderosa Mill – Base Case Biochemical Ethanol Process Substituted

Source: Phillips, Jameel & Clark (NC State University), Aug 2008, TAPPI International Bioenergy and Bioproducts Conference Presentation “Technical and Economic Analysis of Repurposing a Kraft Pulp and Paper Mill to the Production of Ethanol”

Source: Phillips, Jameel & Clark (NC State University), Aug 2008, TAPPI International Bioenergy and Bioproducts Conference

All cases assume $0.30 enzyme cost

Source: Koch et al (Georgia Institute of Technology), August 2008, TAPPI International Biomass and Bioenergy Conference.

Effect on Minimum Ethanol Selling Price (MESP)

= MESP $2.21= MESP $1.89

= MESP $1.57

Feedstock cost significantly affects ethanol cost

Key assumptions: total alcohol yield/dry ton ~92.5 gal (ethanol ~ 78 gal; higher alcohols ~ 14.5 gal); feedstock is bark and residue of southern pine; steam from gasifier used for pulping processes.

Scenario 1

Scenario 2

Scenario 3

Scenario 3 results in adequate feedstocks to meet 2022 mandate, at lowest price ~ $45 per dry ton.

Inclusion of 4 Billion Gallons per year of biofuel imports reduces residue use more than energy crop production.

Most wood residue captured at < $30/dry ton (roadside)

All types of forestland wood, is captured at < $50/dry ton (roadside)

Source: Report by Biomass Research and Development Board entitled: “Increasing Feedstock Production for Biofuels”. Released Dec 2008.

www.brdisolutions.com

Region Farm Cost$/dry ton

Harvest Cost$/dry ton

Total Cost$/dry ton

Pacific Northwest

31 32 63

North Central

30 30 60

Mississippi Valley

24 28 52

Source; Report by Jake Eaton of GreenWood Resources at Aug 2008 Short Rotation Crops Meeting

Poplar Biomass Production Costs1

1 Growing costs reported as NPV (6.5% discount rate) per dry ton, inclusive of the cost of land rent, site preparation, planting stock, planting, and crop care through the rotation

Energy Performance Systems patented technologywww.energyperformancesystems.com

•Cuts, accumulates & loads trailer•Cuts 1 tree/second w/o stopping•Field transports up to 90 tons •Travels up to 12 MPH empty•Handles large size range of trees•Size: 50 ft long, 16 ft wide, 28 ft tall

Whole Tree Harvester for Planted Trees

Status: prototype harvester fabrication nearly complete

GPS guided, 6 row, high-speed tree planter

•Tree injection operates by hydraulics•6 trees injected in ground every 1.5 seconds•Optimum rate at 5ft x 5 ft spacing = 8.3 ac/hr•No. injection positions/spacing can vary

Status – tested in 2007Design improvements ongoing.

Source: Yang and Wyman, Aug 2008, TAPPI International Biofuels &Bioenergy Conference

Vehicle Type Biomass Type

Miles/acre

Total VMT

% U.S. VMT2

Ethanol (current technology)

Corn grain 4,640 93 billion

3.5%

All-electric (current technology

Hybrid poplar

34,000 688 billion

26%

Biogasoline (new technology

Hybrid poplar

34,000 660 billion

25%

All-electric (new technology

Hybrid poplar

134,000 2.68 trillion

100%

Source: Draft paper by Ragland, Ostlie and Wright entitled “Electric Vehicles Compared to Ethanol-Fueled Vehicles (paper still in review as of Dec 2008)

Estimated Vehicle Miles Traveled (VMT) using 20 million acres of land.

1 20 million acres of land is currently used to produce corn grain for ethanol fuels2 Current total vehicle miles traveled in US is 2.69 trillion

* US Energy Independence and Security Act of 2007 requires consideration of indirect land-use effects

N.A. cellulosic biofuels market are/will be large. Government support strong.

Many projects started/planned, one near commercial start.

Cost range of $1.00 to $2.50/gal.Feedstocks include plantation grown

woodFeedstock and equipment engineering

will reduce plantation wood costsBiomass electric/ electric vehicle

technology should be considered.

Ask me later about my hybrid poplar project in Minnesota