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U.S. Department of Energy Biomass Program. Growing A Robust Biofuels Economy. Office of Biomass Program. June 2007 Corporate Presentation. 2005 Global Petroleum Product Consumption. 2005 Global Biofuel Production. 388 billion gallons/yr. 454 billion gallons/yr. 13 billion gallons.

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U.S. Department of Energy Biomass Program

Growing A Robust Biofuels Economy

Office of Biomass Program

June 2007 Corporate Presentation


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2005 Global Petroleum Product Consumption

2005 Global Biofuel Production

388 billion gallons/yr

454 billion gallons/yr

13 billion gallons

Total = 862 thousand barrels/day

Total = 82.4 million barrels/day

Sources: BP Statistical Review of World Energy; National Biodiesel Board, European Biodiesel Board, Renewable Fuels Association

Navigant

2005 Biofuels Market Below 2% of Global Transportation Fuel Use


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U.S. Presidential Commitment to Ambitious Biofuels Goals

  • Cost-competitive cellulosic ethanol” by 2012

  • “20 in 10”

    • Reduce U.S. gasoline* use by 20% by 2017 through…

      • 15% reduction from new Alternative Fuels Standard at35 billion gallons/year

      • 5%reduction from enhanced efficiency standards (CAFÉ)

  • “30 in 30”

    • Longer-term DOE biofuels goal

    • Ramp up the production of biofuels to 60 billion gallons

    • Displace 30% of U.S. gasoline consumption* by 2030

* light-duty vehicles only


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Biomass R&D Initiative (BRDI)

  • Multi-agency effort to coordinate and accelerate all Federal biobased products and bioenergy research and development.

  • Mandated under the Biomass Research & Development Act of 2000, further revised by Energy Policy Act of 2005 (Sec 937).

  • BRDI coordinating bodies

    • Biomass R&D Board, a cabinet level council co-chaired by DOE and USDA – also includes DOI, DOT, EPA, DOC.

    • Biomass R&D Technical Advisory Committee – 30 senior individuals from industry, academia, state government

  • Aims to deliver National Biofuels Action (NBA) Plan by Fall 2007.

www.brdisolutions.com


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How Do We Achieve These Goals?

Three-pronged approach

  • Effective RD&D Program

  • Effective policies

  • Private sector investments

Policy

DOE

Biomass

Program

RD&D/ Technology

Market/Capital Investments


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Biomass Program Mission

Develop and transform our renewable and abundant biomass resources

into cost competitive, high performance biofuels, bioproducts, and biopower.

Collaborative R&D

  • Partnerships

  • Policy

  • Interagency Coordination

Integrated Biorefineries: Systems Integration and Demonstration

Core activities accelerate the technological advances needed to supporta domestic bioindustry producing cellulosic ethanol and other biofuels in integrated biorefineries.


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Office of Biomass Budgets

Biomass Program Budget FY2002-FY2008

Millions of Dollars

The Advanced Energy Initiative and 20 in 10 have provided a boost in funding for biofuels in FY2007 and FY2008


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“First generation” biofuels are commercially developed technologies, but have high costs and limited scalability…

R&D

Demo

Market Entry

Market Penetration

Market Maturity

Corn and Sugarcane Ethanol

Cellulosic Ethanol

Mixed OH; Fischer-Tropsch

Rapeseed and Soy Biodiesel

Renewable Diesel

Butanol; DME

  • 1st Generation Biofuels

  • Ethanol is a clean burning, high-octane alcohol fuel used as a replacement and extender for gasoline

    • Has been commercially produced since the 70s in the US and Brazil, still the market leaders

    • Corn ethanol is cost competitive (with no subsidies) with gasoline when crude oil is above $50/barrel ($30/brl from sugar cane)

  • Biodiesel is a high-cetane, sulfur-free alternative to (or extender of) diesel fuel and heating oil

    • Commercialized in Europe in the 90’s

    • Worst economics (and smaller market) than ethanol

  • 2nd Generation Biofuels

  • R&D efforts are focused on:

    • Increasing the range of feedstock from which to produce biofuels

    • Reducing biomass-to-liquid conversion costs

  • Two main technology platforms in development:

    • Biochemical pathway: conversion of the cellulose to sugars and fermentation to alcohol fuels

    • Thermochemical pathway: gasification of biomass to syngas and synthesis to fuels

  • Commercial renewable diesel plants are under construction (e.g., Neste oil “NexBTL”)

Second generation” technologies aim to resolve these limitations

Source: Navigant


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Targeted R,D &D: technologies, but have high costs Overcoming Barriers

Future efforts will address obstacles to biochemical and thermochemical routes to biofuels, support demonstrations, and resolve infrastructure issues.

  • Barriers

  • High cost of enzymatic conversion

  • Inadequate technology for producing ethanol from sugars derived from cellulosic biomass

  • Limitations of thermochemical conversion processes

  • Demonstration/integration of technology in biorefineries

  • Inadequate feedstock and distribution infrastructure

  • Solutions

  • R&D to improve effectiveness and reduce costs of enzymatic conversion

  • R&D on advanced micro-organismsfor fermentation of sugars

  • Re-establish thermochemical conversion as a second path to success

  • Fund loan guarantees, commercial biorefinery demonstrations, and 10% scale validation projects

  • Form interagency infrastructure and feedstock teams


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Biomass Program Portfolio technologies, but have high costs

Removing barriers to large-scale production of cellulosic biofuels

Collaborative R&D

  • Feedstocks: integration of feedstocks with conversion processes

  • Conversion Technologies: biochemical and thermochemical

Integrated Biorefineries

  • Systems Integration: feedstocks, conversion, biopower, infrastructure

  • Demonstrations: pilot scale and commercial scale for diverse feedstocks

Infrastructure (New)

OBP organizes to deliver against barriers


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Cellulosic Ethanol Growth technologies, but have high costs

$6.0

U.S. Ethanol Production

$5.0

$4.0

Billion Gallons of Ethanol

$3.0

2002 Dollars per Gallon/Ethanol

$2.0

Cellulosic

Corn

$1.0

OBP RD&D Activities & Timeline

Biorefinery Demos

10% Scale

Validation

Pre-Validation

Integrated Biorefineries

IBRF

Commercial

Ethanologen

Adv. Feedstocks & Conversion Technology R&D

1st Generation Feedstock, Biochemical,Thermochemical Core R&D

11


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Collaborative R&D Is Producing Results technologies, but have high costs

Achievements

  • Achieved substantial decrease in cost of ethanol production – from over $5 to approximately $2.26 per gallon

  • Developed organisms with superior ability to convert mixed sugars to ethanol – an important step toward cellulosic ethanol and the 2012 goal

  • Developed high-value plastics, foams, and coatings from oil crops and corn sugar

Cell phone casings made from bio-based polymers developed through DOE-industry cost-shared R&D

The program can already claim many successes


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DOE Office of Science: technologies, but have high costs Complementary Basic Research on Biomass

  • Invests $375 million to fund three new Bioenergy Research Centers to accelerate basic research on the development of cellulosic ethanol and other biofuels.

  • Recently issued a joint biofuels research agenda with the EERE Office of Energy Efficiency and Renewable Energy – Breaking the Biological Barriers to Cellulosic Ethanol.

  • Part of the NBA Plan effort


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How Do We Achieve These Goals? technologies, but have high costs

Three-pronged approach

  • Effective RD&D Program

  • Effective policies

  • Private sector investments

Policy

DOE

Biomass

Program

RD&D/ Technology

Market/Capital Investments


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Policy Drivers & Incentives Supporting Biofuels technologies, but have high costs

Examples of Policies

  • Energy Security/ Political Tensions

  • Resource Diversification

  • Petroleum Prices/Volatility

Energy

  • United States

  • Energy Policy Act of 2005 (federal policy)

  • State tax credits, blend requirements…

  • Europe

  • Tax credits: most common incentive

  • EU set target for biofuels consumption (similar to RFS, but not a mandate)

    Asia

  • China, India, and Malaysia introducing policies to support biofuels

  • Japan has tax credits in place

    South America

  • Brazil: Ethanol blending requirements in place and a requirement for biodiesel starting in 2008

Environment

  • Climate Change

  • Air Pollution

  • Economic Development

  • Farm Income

Agriculture

  • Ethanol is currently the most prevalent US biofuel

Biofuels

Source: Navigant

Biofuels require a comprehensive & effective policy framework


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Policies Accelerating Biofuels Production technologies, but have high costs

Energy Policy Act 2005 (EPAct 2005)

  • Section 932: Commercial Integrated Biorefinery

    • Secretary Bodman recently announced six awards

    • $53 million in FY 2007 budget request

  • Section 941: Revisions to Biomass R&D Act of 2000

    • Vision document released November 2006; updated Roadmap due May 2007

  • Section 942: Cellulosic Ethanol Reverse Auction

    • Request For Information and Options papers completed

    • $5 million requested for FY 2008

  • Sections 1510, 1511, and Title XVII: Loan Guarantees

    • DOE issued guidelines for the first Loan Guarantees under Title XVII in August 2006

    • Loans for conversion of Municipal Solid Waste and cellulosic biomass to fuel ethanol and other commercial byproducts also considered under this offering

EPAct 2005 goals are integrated into core technology priorities.


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New Policies May Foster Market Expansion technologies, but have high costs

  • National strategy for low level blends/ Regional strategy for E-85

  • RFS with greater requirements for cellulosic ethanol

  • Stronger incentives for all biofuels

    • Extension of ethanol subsidies to 2015

    • Payments to lignocellulosic biomass suppliers for residues and energy crops

  • Tougher greenhouse gas regimes

  • State support – individual state mandates/ legislation

Ramp-up of ethanol production will require innovative and focused policies for infrastructure and feedstocks


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How Do We Achieve These Goals? technologies, but have high costs

Three-pronged approach

  • Effective RD&D Program

  • Effective policies

  • Private sector investments

Policy

DOE

Biomass

Program

RD&D/ Technology

Market/Capital Investments


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The future of biofuels will depend on the creation of new partnerships among several industries

Agribusiness

Petroleum

Industrial Biotech

BANKING

Forest Products

Future Biorefineries

Utilities

Chemicals

Source: Navigant


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Global Ethanol Status partnerships among several industries

13% Increase

  • 2005 Production: 12,150 million gallons

    • 35% -- U.S. (corn)

    • 35% -- Brazil (sugarcane)

    • 8% -- China (feedstock unknown)

    • 22% -- Other Countries (wheat, barley, beet)

  • 2004 Production:10,770 million gallons

Other

China

U.S.

Brazil

2004

2005

The market is placing bets on biofuels


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While biofuels represent only 3% of US transportation fuels today, production is growing rapidly.

US Markets Driven by High Prices and RFS: Building Capacity

U.S. Ethanol Production Capacity

Capacity Under Construction:

6.14 Billion Gallons per Year Expected by End of 2008

Total Capacity with Current & New Construction:

11.7 billion gallons per year

Billion Gallons

Current Production Capacity:

5.58 Billion Gallons per Year

*Estimated as of February 7, 2007. Source: Renewable Fuels Association.


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Ethanol Plants Focused on Midwest; “Destination” Plants Increasing

One of the drivers for destination ethanol plants is to produce DDGS closer to market.

Source: Navigant


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U.S. Ethanol Infrastructure Increasing

FFV’s in Service (millions)

Operating E85 Stations

Industry Background

Operating Plants

Source: Alternative Fuels Data Center, March 8, 2007

78

As of 3/8/07

114

Source: Renewable Fuels Association

As of 2/25/07

Existing infrastructure must expand & improve to meet future biofuels demand


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DOE absorbs some of the risk through focused RD&D program Increasing

Value vs. Time

Technical & Market Risk vs Time

HIGH RISK, LOW VALUE

LOW RISK, HIGH VALUE

Value of Investment

Risk of Investment

Operating Cellulosic Ethanol Facilities

Demonstration

Commercialization

Applied R&D

2011: Operation of 932 and 10% Scale Facilities

2006: Loan Guarantee Program; Section 932 Demonstrations

2018: Genomics-Improved Feedstocks

2025: Integrated Ethanol/ Bioproduct Facilities

RD&D Timeline

2012: Reduced Enzyme and Feedstock Costs ($1.31/gallon cost target)

2007: Ethanologen Solicitation

2014: Repeatable Plant Design Packages

DOE focuses on investment risk reduction to drive market


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Cellulosic Biorefinery Investments Increasing

Recently announced competitive selections to provide up to $385 million over four years for cost-shared integrated biorefineries in six states

  • Abengoa Bioenergy Biomass of Kansas

    Capacity to produce 11.4 million gallons of ethanol annually using ~700 tons per day of corn stover, wheat straw, milo stubble, switchgrass, and other feedstocks

  • ALICO, Inc.

    Capacity to produce 13.9 million gallons of ethanol annually using ~770 tons per day of yard, wood, and vegetative wastes and eventually energy cane

  • BlueFire Ethanol, Inc.

    Sited on an existing landfill, with capacity toproduce 19 million gallons of ethanol annuallyusing ~700 tons per day of sorted green wasteand wood waste from landfills


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Cellulosic Biorefinery Investments Increasing

  • Poet

    Capacity to produce 125 million gallons of ethanol annually (~25% will be cellulosic ethanol) using ~850 tons per day of corn fiber, cobs, and stalks

  • Iogen Biorefinery Partners, LLC

    Capacity to produce 18 million gallons of ethanol annually using ~700 tons per day of agricultural residues including wheat straw, barley straw, corn stover, switchgrass, and rice straw

  • Range Fuels (formerly Kergy Inc.)

    Capacity to produce 40 million gallons of ethanol annually and 9 million gallons per year of methanol, using ~1,200 tons per day of wood residues and wood based energy crops


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Upcoming solicitations Increasing

  • 10% Validation Solicitation: Imminent announcement

    • One-tenth of the projected scale of a first of its kind commercial facility

    • Integrated biorefinery demonstrations using cellulosic feedstocks and producing a combination of fuels, chemicals, and substitutes for petroleum-based feedstocks and products

  • Enzyme Solicitation: FY07

    • Second phase of cellulase development with cost-sharing industry partners

    • Create commercially available, highly effective & inexpensive enzyme systems for biomass hydrolysis

  • Thermochemical Conversion Solicitation: FY07

    • Integration of gasification and catalyst development

  • Freedom Prize


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Other ways to get involved Increasing

  • Advisory Committee (TAC): Seats renewed periodically

  • Comments to Biomass R&D Board, DOE, OBP, etc…

  • Participate in regional feedstock partnerships

  • Communicate benefits of cellulosic biofuels

  • Etc…all ideas are welcome


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Contact Info Increasing

  • Office of Biomass Programs

    • Jacques Beaudry-Losique, 202-586-5188

    • Web Site: http://www1.eere.energy.gov/biomass/

  • Golden Field Office

  • Office of Science

  • USDA

  • EERE INFO CENTER

    • http://www1.eere.energy.gov/informationcenter/

THANKS


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