Platts 2nd Annual Biofuels Conference June 10-11, 2013, Amsterdam, The Netherlands Marko Snellman, Commercial Manager, UPM Biofuels

RENEWABLE DIESEL – FROM WOOD-BASED RAW MATERIALS

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Contents

• UPM – The Biofore Company • UPM Biofuels strategy • UPM Lappeenranta Biorefinery • UPM BioVerno – Unique renewable diesel • Solid wood biomass to biofuels • Summary

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UPM – The Biofore Company

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Engineered materials 5,300 employees

Paper 12,600 employees

• Hydro, nuclear and condensing power

• Biofuels • Pulp • Forestry and biomass

businesses • Plantation operations • Wood sourcing • UPM Timber

• Focus on graphic and printing papers

• Label • Plywood • UPM ProFi

Energy and pulp 3,700 employees

UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future

UPM today

• 22,000 employees • Sales 10,4 billion euros in 2012

- Sales operations in 67 countries, production in 17 countries - Listed in the NASDAQ OMX Helsinki stock exchange

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Biorefining industry of tomorrow: High value-adding products with all materials,

including residues, processed

Pulp and paper industry today: Relatively low value-adding products mostly

from primary raw materials

Biofuels a key step on transformation towards biorefining industry

Future growth avenues Current focus areas

Woody biomass • Logs • Pulpwood • Energy wood • Recycled fibre • Saw dust • By-products

Labels

Energy

Paper

Pulp residues

Biofibrils

Tissue

Packaging

Sawn timber

Plywood

Pulp

Pulpwood and recycled fibre

Wood residues

End users

End users

End users

Biofuels

Biochemicals

Biocomposites

Hygiene products

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Wood raw material is the basis of many different businesses at UPM

Bark and branches to renewable diesel and energy

Fibres to pulp

Extractives to renewable diesel or biochemicals

Logs for sawn goods and plywood

Fibres to biofibrils

Ligning, Cellulose or hemicellulose To biochemicals

Fibres to biocomposites

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1. UPM was listed as the only forestry and paper company worldwide in the Dow Jones Sustainability Indexes

– UPM was assessed as the best company in the environmental dimension within the Forestry & Paper sector

2. UPM Biofuels won Sustainability Award 2013 for Breakthrough Innovation in Technology in WBM conference in Rotterdam

UPM and Sustainability

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UPM Biofuels strategy

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UPM Biofuels strategy

Renewable fuels

Wood-based raw materials

Sustainable operations

• Drop-in fuels fully compatible with all vehicles and fuel distribution systems

• Renewable wood-based raw materials not suitable for food production

• Significantly, even 80%, less greenhouse gas emissions

• Sustainable raw-material sourcing

UPM will be a big player in advanced biofuels market Revenue targeting > 1 billion €/a

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GROWTH OF BUSINESS

EXPANDING BUSINESS

ENTERING BUSINESS

UPM Biofuels growth strategy

HYDROTREATMENT Liquid raw materials Tall oil

THERMAL CONVERSION Energy wood Gasification (BTL) / Pyrolysis

FUTURE DEVELOPMENT New technologies, processes & raw materials R&D activities & co-operation with strategic partners

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UPM Lappeenranta Biorefinery

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First step in biofuels business - UPM Lappeenranta Biorefinery

RENEWABLE DIESEL

• Commercial-scale industrial investment - Total investment 150 M€ - Production 100 000 tons/a of renewable diesel - Production starts in 2014 - Employs in total 200 persons (incl. indirect) - Contributes to 25% of Finland’s biofuel target

in 2020

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Raw material: Crude Tall Oil (CTO)

• Residue of chemical pulping process

• Yield 20−50 kg CTO/ton of pulp

• Global production now > 1 700 000 tons/a - Additional CTO supply potential clearly

above demand globally - Significant share burnt for energy

• UPM Lappeenranta refinery minor addition

to total demand, therefore will not affect demand-supply balance

• Utilization of low grade CTO

Residue

No indirect land-use change

Outside food value chain

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Growing UPM Kaukas mill site in Lappeenranta, Finland

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RESEARCH CENTRE BIOREFINERY

SAW MILL PAPER MILL

BIOMASS POWER PLANT PULP MILL

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UPM BioVerno – Unique renewable diesel

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UPM BioVerno – Renewable diesel

RENEWABLE RAW MATERIAL

100 % CO2 EMISSIONS

(VS. FOSSIL FUEL)

–80 % COMPATIBLE WITH

DIESEL STANDARD EN590

100 %

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Sustainably produced renewable diesel

• Unique renewable diesel - Drop-in hydrocarbon - comparable to fossil fuel - Ready component for commercial blends - No blend wall limitations - Compatible with fossil diesel EN590 standard quality

• Tested in engines & vehicles with independent research centres

- Fully compatible with current diesel motors and fuel distribution network

- Tail pipe emission benefits

• Fleet tests started with VTT (Technical Research Centre of Finland)

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Solid wood biomass to biofuels

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Second step in UPM Biofuels business - Solid biomass to fuels

Raw material

• Sustainably sourced forest residues: logging residues, woodchips, bark - Collected without increasing wood harvesting - No change in indirect land-use (ILUC) - Added value for wood biomass

Technology concepts

• BTL: Gasification – FT synthesis – Wax up-grade - Input 1 million tons of wood biomass (wet) - Output 100 000 tons of renewable diesel - UPM granted EUR 170 million EU NER300 grant - Decision by 2014

• Pyrolysis & Bio-oil upgrade to transportation fuels - Ongoing development

BTL= Biomass-to-liquid

EU NER300 = New Entrants Reserve. The purpose of this programme is to finance and advance new renewable energy technology and it is funded from the sale of emission allowances in Europe. NER300 is also one of the political decisions targeted for reducing Europe's carbon footprint. Total fund EUR 1.3 – 1.5 billion.

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Summary: UPM Biofuels and competitive edge

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• 2nd generation hydrocarbon

• Compatible with current fleet

• No blend wall issues • Helps to reach bio-

obligation • High energy content

• Technology based on UPM’s and partner’s innovations & know-how

• Efficient use of raw material

• Integration synergies

• Part of the UPM ecosystem

• Steady supply • Outside food value

chain • No indirect land-use

change • Meets sustainability

criteria

UPM's competitive edge in biofuels

Competitive raw material

Efficient production process

High quality product

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Sustainable biofuels are an essential part of UPM – The Biofore Company

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