Renewable jetfuelUPEI Autumn meeting – Oct ’11

Bart-Willem ten CateDirector Biofuels

15,000,000,000

725,000 m3

90+

350

years of history

employees worldwide

liters of fuel

storage capacity

• Founded in 2009 following the merger of the Van der Sluijs Groep and FNR+

• European based: marketing and physical trading of mineral oil products and biofuels

• Significant terminal infrastructure

UPEI Autumn meeting

Key figures North Sea Group

1st MARKET PLAYER TO START BLENDING BIOFUELS IN HOME MARKETS

• biodiesel 2006• bio ethanol 2007

→ North Sea Group 1st player to offer Benelux consumers lower carbon transport fuels

FRONTRUNNER SUSTAINABILITY BIOFUELS

• sustainability = license to operate

• focus on highest CO2 reduction and sustainability

• biodiesel from waste streams• bio ethanol from sugarcane

Our history in road transport biofuels

UPEI Autumn meeting Awarded ‘Bioethanol Corporation of the Year 2010’

by World Refining Association

BIOFUELS VOLUMES

BIOFUELS FEEDSTOCK MIX

Volumes & feedstock

UPEI Autumn meeting

Main driver for renewable jetfuel is CO2

UPEI Autumn meeting

• Aviation contributes for 2% to global green house gas emissions (IPCC, 2007)

• Governments are introducing mechanisms to force GHG reduction (e.g. Emission Trading Scheme)

• Interest of aviation in renewable jet fuel is rising

• Effective way to reduce GHG as 97% of emissions from commercial airline come from flight operations (combustion of kerosene)

• Solution to move to more sustainable aviation

• Green marketing / PR / branding• Unpredictable oil price

fluctuations / secure future supply

→ Biofuel requirements airlines: safe, drop-in, sustainable, affordable

6

CO2 reduction options for aviation till 2020

20202005

GH

G e

mis

sion

s

Market price of fossil fuel

Baseline

Low Carbon fuels

Technological improvements (e.g. wing tips, fleet renewal)

Operational improvements (e.g. direct routes, gliding)

Business as Usual; forecasted emission growth without reduction measures

To reduce aviation’s GHG emissions there are only three realistic options; technical & operational improvements & low carbon fuels

UPEI Autumn meeting

2010 2015

Technical & operational improvements are already on the agendaThere is need to make the market for renewable jetfuel!

UPEI Autumn meeting

Founding partners Sustainability Advisory Board

Copernicus Institute

Technically acceptedSustainableEconomically viable

SkyNRG aims to develop and sell renewable jetfuel for global aviation market that is:

An important hurdle has been removed per July 1st 2011: ASTM certification for Hydrotreated Renewable Jetfuel (HRJ) is a fact – we can fly on bio jetfuel

Certification milestones of first two renewable jetfuels

50% blend Fischer-Tropsch

ASTM ballot

ASTM approved

Dec ‘08 Jun ‘09

50% blend HRJ

ASTM ballot

ASTM approved!

DEC ‘10 June ‘11

1

2

Bio-kerosene (HRJ) often exceeds current jet fuel specification

Property (selection) Jet A/Jet A-1 HRJ ASTM Test Method Distillation temperature, °C: Max 205 168Flash point, °C Min 38 46.5 D56 or D3828 Density at 15°C, kg/L 0.775-0.840 0.749 D1298 or D4052 Freezing point, °C Max -47 -57 D5972, D7153, D7154 or D2386 Viscosity -20°C, mm2/s Max 8 3.663 D445 Net heat of combustion, MJ/kg Min 42.8 44.3 D4529, D3338 or D4809 JFTOT (2.5 h at control temperature, °C ) Min 260 340 D3241 Existent gum, mg/100 mL Max 7 >1 D381, IP 540

Although already certified, there is currently no production capacity for bio-based Fischer-Tropsch jet fuel

UPEI Autumn meeting

Our main priority was to start a first continuous stream of renewable jetfuel right after ASTM out of Schiphol: we did it!

2011 customers

5 (to 10) airlines

Route Volume 2011 Feedstock

Amsterdam - Paris

Amsterdam - Helsinki

Birmingham- Palma

Various Undisclosed Undisclosed

500 ton bio50% blend

Used Cooking OilCamelina

Used Cooking Oil

500 ton bio50% blend

500 ton bio50% blend

Used Cooking OilCamelinaJatropha Babassu

UPEI Autumn meeting

→ into-plane delivery→ volumes low as prices currently very high compared to Jet A1

Other technologies are not that far away, they will result in significant price decreases in the mid term

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INDICATIVE & CONCEPTUAL

Fischer-Tropsch

Technology Feedstock

HRJ

Alcohol upgrading

Pyrolysis

Thermal upgrading

– Organic material– MSW

– Veg oils– Waste oils

– Starch/Sugars– Cellulosics

– Agri-waste– All biomass

– Cellulosics– Lignine

Certification timeline & Cost curve

(pre-) ASTM certification pathway (expected)

Construction production capacity

Cost curve

2 existing new build

Non existing (BtL) new build

“We would like to fly on it but we can’t afford it”

Producers

Off takersGovernment

“We’re not producing bio jet fuel because nobody wants to buy it and we can make more money with biodiesel”

“We would like to install a mandate but there is no supply yet”

So aviation is ready for a new fuel era, but what does this market currently look like? A near perfect chicken & egg situation

UPEI Autumn meeting

To break this deadlock, we position SkyNRG as market maker

SkyNRG: Facilitating the entire chain• Sustainability guarantees• Aggregate demand• Into plane logistics

“We’re not producing bio jet fuel because nobody wants to buy it and we can make more money with biodiesel”

Government Off takers

Producers

“We would like to fly on it but we can’t

afford it”

Off takers

Government

Producers

Current situation Desired situation

“We would like to install a mandate but there is no supply yet”

The need for government interference is still under debate. As of 2012, biokerosene in The Netherlands can be used to fulfill road transport obligation

UPEI Autumn meeting

Feedstock Sourcing Logistics Refining Blending &

LogisticsQuality Assurance Into Plane Paper Work Proposition

Upstream Midstream Downstream

Supply chain sustainable jet fuel

Our short-term (2011-2012) proposition to airlines: ‘one stop shop’ that guarantees delivery, sustainability & best all-in price

Order placed Feedstock bought Feedstock refined Biofuel deliveredFeedstock screened

1

Supplier fills in a “quick scan” and has the chance to give additional reports, studies etc.

OK? next phase Not OK? no more contact 2

Have our independent Sustainability Advisory Board assess the documentation and if needed ask more questions

OK? next phase Not OK? no more contact

If needed: • Additional documentation• Field visit• New SB meeting

3 All ok? Green light to buy

Our approach to sustainability, in absence of a global standard (a bridge solution till e.g. RSB is there)

Support

UPEI Autumn meeting

Sustainability is key along the entire value chain – It is our main focus point

In the longer run it’s all about getting the premium down

02011 2012 2013 2014 2015

•Legislation•Co-funding programs (e.g. airports, corporates, governments)

400

600

1.200

800

1.000

2.400

2.000

2.200

1.800

1.600

1.400

200

Fossil kerosene + carbon taxes

Bio jet premium (up-stream integration)

Biokerosine

Fossil kerosene

•Aggregate demand•Vertical integration•New technologies

€/ton 1

2

Final remarks

0Time

•Air passenger travel forecasted to be fastest growing transport sector till 2050 (OECD, 2010)

•Air transport 1 of few industries that have no alternative for liquid fuels for short and medium term

•The route to renewable and sustainable jetfuel in aviation is very challenging; the costs need to come down substantially and permanently

•This can be achieved through innovation, collaboration and the right legislation that stimulates bio jet fuel in the airline industry

•North Sea Group has decided to take action and start making this market

UPEI members, feel free to join us on our road to sustainable aviation!