Lignocellulose-based Ethanol & Chemicals, Vancouver, January 13, 2009 Challenges in a fully integrated biorefinery –

1. Lignocellulose-based Ethanol & Chemicals, Vancouver, January 13, 2009 Challenges in a fully integrated biorefinery – Scaling up the Science David Turner, Lignol Energy Corporation

2. Caution concerning forward looking statements Certain statements contained in this presentation may constitute "forward-looking statements". When used in this presentation, the words "may", "would", "could", "will", "intend", "plan", “anticipate", "believe", "estimate", "expect", “investigate”, ”looking at” as they relate to Lignol or its management, are intended to identify forward-looking statements or information. Such statements or information reflect Lignol’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause Lignol’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, those which are discussed under the headings "Risk Factors" and elsewhere in documents that Lignol files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. and does not assume any obligation, to update such forward-looking statements or information. 2

3. Presentation Overview • Lignol Introduction • Technology description • Commercialization plans • Scale up considerations • Challenges & Opportunities

4. Lignol Introduction • Emerging cellulosic ethanol company • BC, Canada based, public company • LEC:TSX-V • 36 employees • Offices in Burnaby, BC and Berwyn, PA • $20 million in equity raised • Government funding to date >$13 million • $30 million of DOE funding pending for Colorado plant • Promising corporate relationships, including Suncor, Weyerhaueser, Huntsman, HA International

5. Lignol’s Technology Position Lignol’s solvent-based pre-treatment technology originally developed by General Electric (GE),subsequently commercialized by Repap for pulp mill applications (Alcell) Approximately $100 million spent commercializing technology Lignol acquired and modified the pre-treatment process for biorefinery production of cellulosic ethanol & biochemicals Integrated proprietary process capabilities to convert the cellulose to ethanol and capture co-products e.g. Lignin ADVANTAGES: Rapidly converts cellulosic biomass into fermentable sugars with substantially lower enzyme costs Improved plant economics through valuable biochemical co-products 5

6. Lignol’s Technology High-yield ethanol production and high-value biochemicals (High Purity HP-L™ Lignin) HP-LTM LIGNIN Separation Lignol Extraction Process Extractives & biochemicals Enzymes & Yeast Distillation ETHANOL Saccharification & Fermentation Distillation 6

7. Process Features and Benefits • Process is a true biorefinery with multiple products such as CE, HP-LTM lignin and furfural +++ • Process economics enhanced by multiple revenue streams – process can be economic at smaller scale • Well-proven organosolv pre-treatment process provides very clean cellulose substrate and natural, high purity lignin (HP-LTM) • Enzymatic saccharification enhanced by clean substrate – 50% less enzyme loading, faster bioconversion • High value HP-LTM, compared with other “lignins” 7

8. Lignol’s “Clean” Pretreated Biomass Lignol’s Pretreated Wood Substrate Other leading pretreatment technologies: Dilute-Acid-Pretreated Corn Stover Steam-Exploded Wood ~95% Fermentable Components Hydrolysis is many times more effective with same enzyme dose Only ~60% Fermentable Components 8

9. Process Features and Benefits • Pretreatment proven on wood-based feeds and agricultural materials • Versatile process with few feed-related limitations • Co-products displace petrochemicals • Major GHG emissions reductions beyond just transportation fuel benefits • Extensive demonstration and piloting facilities provide design data • Technology is “demo-ready” 9

10. Lignol’s Integrated Pilot Plant • Capacity: 1 tonne per day (dry basis) • Fully integrated mini-biorefinery • 100,000 l/yr ethanol • Feedstocks: Hardwood & softwood chips, agricultural residues • Products: Ethanol, HP-LTM lignin, furfural, other chemicals • Operation: 24/7 in campaigns • Controls: Full Distributed Control Systems, 80 loops, data-logging, full lab support on-site

11. Lignol’s Integrated Pilot Plant

12. Lignol’s Demonstration Biorefinery • Capacity: Nominally 100 tonnes per day (dry basis) • Fully integrated biorefinery to be built in Colorado • 10 million l/yr of ethanol • Feedstocks: Local aspen and beetle-killed lodgepole pine (agricultural residues in future) • Products: Ethanol, HP-LTM lignin, furfural • Operation: 24/7 , 300-350 days per year, start-up 2010/11 • Total project cost: ~$80 million

13. Lignol’s Commercial Biorefinery • Capacity: Nominally 1000 tonnes per day (dry basis) • 100 million l/yr of ethanol • Feedstocks: Locally available wood and/or ag. residues • Products: Ethanol, HP-LTM lignin, furfural, biochemicals • Operation: 24/7 , 350 days per year • Total project cost: ~$300 million • Location: TBA

14. Scaling up the Science • Pilot plant critical to data generation • Success of pilot plant critical to establishing magnitude of scale up to demonstration or commercial plant • Process risk versus equipment scale up risk • Step-wise process is slow and requires multiple rounds of financing • Management of technology risk • Proceeding cautiously vs. urgency to get to the finish • Scale up factoring 10X risk? Or 100X risk? • Financial risk - $10MM, $80MM, $300MM

15. Get the basics right Ooops!

16. Scaling up the science • Knowledge creation has to shift from science to engineering through appropriate stages of scale-up • Feed handling – Substantial volumes of material need to be handled • Batch versus Continuous Process • Connections between process stages, buffer storage, transportation of solids, fluids and slurries, recycle of streams, control of the process • In situ enzyme production • Separate or simultaneous hydrolysis & fermentation • VOC (Volatile Organic Compound) assessment • Proof of plant economics

17. Design considerations • Feed characteristics • Process optimization considerations • Lignin recovery and quality • Co-products

18. Process Optimization Feedstock Process/equipment design Enzymology Ethanol & Biochemical yields, functionality & value

19. Plant Location/ Variable Feed characteristics – = plant design needs to be robust and flexible • Plant locations are feedstock unique: multiple species with regional variations • Management of feedstock availability, seasonality, logistics • Age of trees impacts relative amounts of heartwood and sapwood; sawmill chips vs. whole tree chips • Biochemical output is feedstock dependent – lignin functionality is species and process condition dependent = application and value differences

20. Biochemicals – need to be accepted as value added specialty chemicals and not waste products • Represent significant revenue opportunity • Can substantially increase GHG reductions – to the extent that outputs can replace petroleum derivatives • Quality and quantity dependent on feedstock and process conditions • Additional process steps need to be developed for each bioproduct • Market acceptance hurdles

21. Lignin Macro-molecule: Native lignin is a matrix polymer which the Lignol process cleaves into smaller fragments with minimal condensation preserving functionality Representation of a theoretical lignin macro-molecule 21

22. Value proposition for HP-LTM: • A unique green, renewable, sustainable GHG positive family of specialty chemicals tailored to meet specific chemical/functional application requirements • Proven functional benefits in a number of polymeric systems incl PF resins • Material is within generally accepted tolerances of composition and purity for industrial products = reproducibility

23. Lignol HP-LTM - color variations:

24. HP-LTM Lignin vs. other commercial lignins: 24

25. Applications identified for Alcell Lignin provided basis for initial application screening

26. Challenges & Opportunities • Continuity of financing from lab to pilot to demonstration to commercial plants – particularly in current economic climate • Opportunity to be an expert in new sustainable, renewable biochemicals • Availability of financing for development and commercialization of biochemicals • Identification of biochemical application development partners and research centers of excellence • Alternatives for C5 sugar utilization