Workshop “Energy from Renewables” Budapest, November 29 th , 2007

1. Chances and Challenges for the Development of Biofuels Francesca Ferrazza and Mario Marchionna Workshop “Energy from Renewables” Budapest, November 29th, 2007 Corporate Strategies & Development

2. General Scenario • Fossil fuels are expected to dominate the world’s energy supply portfolio for some decade to come. • However, satisfying future energy needs while meeting the challenge of energy security and mitigating the risk of climate change has brought energy conservation to the forefront of public discussion. • Among renewables, wind, solar and biofuels are growing rapidly, albeit from a small base. • Other technologies, such as hydrogen, are considered to hold promise, but face substantial challenges in terms of costs and large-scale implementation.

3. Eni Vision • In the short term,energy-saving-oriented technologies and behaviours are the most economical and practical measures. • Carbon Sequestration and Storage technologies will make use of fossil fuels more sustainable. • In the long term, it will be important to identify energy sources that could be alternative or complementary to fossil energy. • However, most of the current alternative energy sources (especially the renewable ones) are neither economical nor able to secure adequate supply. • R&D investment could generate technological and market discontinuity.

4. Eni “Energy Saving” Program • Eni has recently launched a major national communication and education project to stimulate energy saving at family level. • 24 virtuous behaviours have been suggested that can enable a four member family to save up to 1,600 Euro at no or affordable cost. • These behaviours would permit an abatement of emissions of about 27 Million t of CO2, i.e. 25% of the Italian gap to the Kyoto target. • Other initiatives are being evaluated within Eni industrial plants, such as energy recovery from low temperature streams through Organic Rankine Cycles ...consume less, consume better...

5. Explore alternative technical solutions for the total elimination of gas flaring. Improve energy efficiency in production operations Assess the potential for safe CO2 storage in aquifers and depleted reservoirs. Participate in CO2 Capture Project (CCP) together with most of the major O&G companies. Promote CO2 assimilation in greenhouse plant cultivation. Eni Projects for Carbon Sequestration and Storage Eni owns a specific inter-wells seismic technique able to appreciate any fluid movements within the reservoir. Ability to monitor CO2 injection both at the surface and inside the reservoir is paramount.

6. Eni R&D Program “Along with Petroleum” • Biofuels Production phytoplankton, micro-algae, bacteria Lipids for biodiesel Conversion Processes (BtL, hydrogenation) CO2 Sun light Sun light Biodiesel Plants for energy • Solar Energy Conversion Energy efficiency New photo-active material, nanotechnology “Third Generation” PV Systems Hydrogen Solar energy concentration E. E. generation via Hybrid Cycles

7. Biofuels • Biofuels appear to be the only realistic short term solution to provide a renewableenergy alternative to fossil fuels in thetransportation sector. • Their liquid nature and compatibility with traditional fuels are their main strength points. • As a fuel product, biofuels offer a number of technical advantages: they are sulphur and aromatics free and have good combustion properties. • However, biofuels have a lower heat content than petroleum derived fuels due to their oxygen content. This means that they are less efficient in terms of fuel economy (km per liter).

8. Carrier Production Process Carrier Storage Energy Source Final Use Energy Carriers for Transportation Fuels • Existing infrastructure is a major barrier for any new fuel/energy carrier incompatible with it. Distribution • Gasoline / Diesel • LPG (DME) • Natural Gas • Electric Power • Hydrogen • Bio-Fuels Performance & Impact on Environment

9. Biofuels : current scenario • The European Union requires biofuels (biodiesel + bioethanol) to reach 10% of total automotive fuel consumptions by the year 2020. • US President has announced a target of 15% of the national gasoline pool by the year 2017. • However, the current generation of biofuels cannot be an answer to market demand because of their scale limitations due to cost and large land requirements. • Land use impacts, fertilizer requirements and water use are other important factors to be taken into account when considering the potential of biofuels. • Competition “fuel versus food” is a major issue to be circumvented not to impact on the living of poorer mankind and on the prices of food staples.

10. Rapeseed Biodiesel Sugar can Bio-ethanol First Generation Biofuels • Current liquid biofuels are mainly Bio-ethanol/ETBE and Biodiesel • Low conversion efficiency • Only a small portion of the biomass is converted to fuel • Low yield per hectare (mainly for bio-diesel) • Low energy efficiency • High production cost

11. New Generation Biofuels • Current biofuel’s limitations are a technological challenge, stimulating intensive R&D efforts towards omnivorous, efficient conversion technologies able to: • use massive low cost resource (e.g. agriculture/forest waste, wood, grass, cane, etc.) • make the most of the biomass resource • integrate with manufacturing infrastructure • convert biomass to market compatible fuels (e. g. gasoline, diesel) • be linked to distribution infrastructure • be sustainable and economical

12. Eni position • Direct involvement in biofuel production is planned by Eni in the next future • Eni’s vision is that only 2nd generation biofuels will have the possibility to gain significant shares of transportation fuel market • Strong R&D actions are necessary to overcome current problems: • high costs • energy balance (often questionable) • competition with food crops • induced environmental damages (e.g. deforestation) • low conversion efficiency • unwanted side products

13. Eni R&D activity on biofuels Short term approach • EcofiningTM process • new technology, developed together with UOP, based on hydro-treating • high performance product, better than conventional biodiesel • no glycerol as side product • full scale demonstration plant (250 kt/y) planned to be completed in an Italian refinery by 2010

14. Eni R&D activity on biofuels Medium to long term approach • Biomass to Liquids • biomass gasification followed by biofuel synthesis • compatible with ligno-cellulosic biomass • full use of input biomass • strong technical background • High yield biomass for energy use only • database on biomass and relevant conversion routes • Micro-organism based biofuels • no competition with edible crops • extremely high productivity • demo plant currently under evaluation

15. 2nd Generation Biofuels • Second generation biofuels are needed to close the gap: • Require massive low cost resource • Ag./forest waste, wood, grass, cane, … • Want omnivorous, efficient conversion technology • Makes the most of the resource • Should integrate with manufacturing infrastructure • Linked to distribution infrastructure • Need conversion to market compatible fuel Gasoline, Diesel • Other issues: sustainability, economics

16. Hydro processing Green Diesel Vegetable Oil OIL SEEDS Fischer Tropsch Synthesis BIOMASS BTL Gasification 2nd Generation BiofuelsBiomass conversion Routes

17. FEED FEED PROCESS PROCESS PRODUCT PRODUCT Vegetable Vegetable Oil Oil Biodiesel Biodiesel Esterification Esterification ( ( conventional conventional ) ) Methanol Methanol Glycerol Glycerol Vegetable Vegetable Oil Oil Green diesel Hydroprocessing Hydroprocessing (Green Diesel) (EcofiningTM) Hydrogen Hydrogen EcofiningTM process • Alternative to conventional esterification, without glycerol co-production • High quality product (high heating value and cetane number, low density) A joint effort of UOP and Eni to develop a processing route to convert vegetable oil to high quality diesel using conventional hydroprocessing technology that is already widely deployed in refineries and utilizes the existing refinery infrastructure and fuels distribution system.

18. Biomass to Liquids (BTL) • Target: processes based on biomass gasification followed by liquid biofuel synthesis (in principle: FT diesel, DME and alcohols) • Activity: feasibility studies (economic analyses, energy balances, LCA) based on literature data and internal know-how • Eni’s background: • Fischer-Tropsch synthesis proprietary technology development (20 bpd pilot plant scale operating) • deep knowledge of refinery residue gasification technologies (Shell and Texaco) and of Methanol/DME production process, through engineering subsidiary Snamprogetti

19. 3rd Generation Biofuels • Growing biomass by means of micro-organisms (such as phytoplankton, micro-algae, bacteria) to produce lipids suitable for conversion into diesel fuel. • CO2 produced from power station and industrial plants can be used to feed the process (CO2 recycling and biofixation). Biomass Collection Lipid Extraction CO2 Open ponds, fotobioreactors or hybrid systems Conversion to Green Diesel A promise of high productivity

20. High yield biomass for energy use only • Eni’s Activity: data collection on high yield biomass for energy use only and relevant conversion routes • performances and requirements (productivity, soil quality, etc.) • production cost evaluations • energy balances • LCA • These data will provide input data for feasibility studies on biomass exploitation, addressing production costs and energy and environmental performances (CO2 recycle capability)

21. Micro-organism based biofuels • Activity: development of a new generation of high performance, environmentally compatible biofuels based on micro-organisms such as phytoplankton, microalgae, yeasts and bacteria • micro-organism study and selection • process development • Feasibility studyin progress on a demo plant for the production of high-yield microalgae, which in turn produce vegetable oils for the manufacture of biofuels

22. Further Developments • Potential breakthrough might come from development of plants fully dedicated to energy use: • jatropha curcas in India/Indonesia • switchgrass in the USA