Nippon Paper Biomass Co-Generation Project

1. Nippon Paper Biomass Co-Generation Project June 7 2011

2. What is Green Power? Source: EPA Green Power Partnership

3. Logistics – DNR Partnership NPI USA is partnered with Washington State DNR for beneficial usage of Forest Biomass including State Funding of $2MM

4. Logistics:Forest Biomass Supply(NPI USA was selected as DNR biomass initiative partner) Fuel from sawmills and forest slash from Private Timberlands and DNR NPI Mill Port Townsend Mill NPI Forest Biomass Basket Shelton Projects Grays Harbor Mill

5. In Forest Reclamation: Processing & Grinding Land Awaiting Recovery Dumping @ Mill Collection & Transportation

6. Timeline The NPI Project has an aggressive schedule for engineering, construction and start up. • Initial Project Scope Defined - December 2009 • Project Approved by NPI Japan Board of Directors - August 2010 • Environmental Permits – 2nd Quarter of 2011 • ISIS & BPA Review – 4th Quarter of 2010 • Equipment Engineering – 3rd & 4th Quarter of 2010 • Site and Foundation Engineering – 1st Quarter of 2011 • Equipment Ordered – 3rd & 4th Quarter of 2010 • Visible Construction (On Site) Start – 2nd Quarter 2011 • Equipment Testing & Check Out – 3rd & 4th Quarter 2012 • Boiler On Line - 1st Quarter 2013 • Turbine & Generator On Line – 1st or 2nd Quarter 2013

7. Project Description The NPI Cogeneration Project includes replacement of the existing boiler with a new boiler and infrastructure including: • Boiler • 225,000 lb per hour of steam at 900 psig and 945° F • Membrane Wall with Vibrating Grate Configuration • Suspension firing boiler – Detroit Stoker • 100% Biomass Fuel • Ultralow Sulfur Diesel Fuel for Start Up • Environmental Controls designed to meet EPA 2013 MACT Regulations • Steam Turbine & Generator – 20 MW Condensing Turbine • Biomass Fuel System – Dumpers, Storage, Screening and Conveying • Electrical Substation, Switchgear and Metering • Digital Process Control System • Boiler Feed Water System

8. Conceptual Sketch New Boiler & Turbine Fuel Delivery & Storage Old Boiler To be Retired

9. Environmental Permits Air PermitCity PermitsWA Dept Energy (Started Dec 2009) (Started Mar 2010) July 2010 ApplicationEIS Shoreline NEPA(for grant) 1st Revision Sep 2010 2nd RevisionAppealed Nov 2010 Withdrawn 3rd Revision Appealed to SHB Jan 2011 4th Revision Feb 2011 Preliminary Determination April 7 Hearing EA Dismissed Draft Permit 4/17/11 30 days to appeal Public Comment June 6 30 day Public Comment 30 Days to complete (mid June) City Of PA Planning Commission (Approved Sept 10 City Of PA Dec 27 Appeal denied Construction allowed Monitoring Discovery Plan Construct Construction allowed even if appealed to PCB.

10. Using Every BTU Available:(Why Combining Heat with Power is Better)

11. Slashing Emissions: Replacing our 1950’s boiler with a new boiler built for low emissions and equipped with MACT Control Technology will allow NPI to dramatically reduce most emissions in spite of increased fuel loads.

12. Environmental - Particulate Department of Ecology 2005 Emissions Inventory Summary 2.5 Micron Particulate Matter Department of Ecology 2005 Emissions Inventory Summary

13. Reliability of Supply Why NPI is more reliable Choice for Supply • Continuous Operation - 355 Days per Year & 24 Hours per Day • Decades of Experience Running Biomass Boilers • Experience with Buying, Handling and Usage of Forest Biomass • Industry Contacts & Contracts in Procurement of Forest Biomass • Combined Heat & Power Process - Paper Mill requires 80-120Mlb of Steam per Hour • Experienced Operators & Maintenance Work Force • Engineers (Mechanical & Electrical) Experience with Biomass Boiler & Turbine • Environmental Engineering Group • Management Experience with Biomass Boiler & Turbine • NPI Ownership of Electrical Lines from Mill to BPA Substation • Owner/Operator of Washington State Permitted Ash Landfill

14. Reliability of Supply • NPI owns Electrical Power Lines & Switch Gear from Mill to BPA Substation. • Ownership of these assets reduces project complexity, cost and permitting processes.

15. Economic Benefits • Direct and indirect Economic Benefits for Port Angeles and Clallam County (11.6% unemployment March 2011) including: • Direct Benefits: • New Jobs – More than 20 generated in forest harvesting • Retained Jobs – more than 200 at mill alone • Construction & Trades Jobs – 40-100 over 18 month period • Property & Sales Taxes – same or increases • Electricity & Utility Fees – same or increases • Charitable Contributions & Community Support by Nippon • Indirect Benefits: • Support & Preservation of Indirect Jobs – Area Suppliers & Businesses • Community Stability • Demonstrates collaboration of DNR pilot biomass initiative

16. Reliability of Supply • Biomass is more reliable choice for supply than Solar or Wind Power. • NPI Co-Gen plant will run 24 hours per day, 355 days per year • Wind Power supply tends to be inverse of usage and demand curves. • Charts are real data from the California ISO Web Site on September 16th. • Top Chart – Predicted and Total Demand for ISO Balanced Area in Mega Watts • Chart to Right – Supply of wind power in Mega Watts.

17. BPA Balancing with Wind(Not Reliable Power)

18. What’s Next • Discussions on Contracts between NPI and Local Utilities • NPI USA looking to market 20 MW bundled power (includes REC) • Memorandum of Understanding signed between City of PA and NPI USA • Similar MOU’s signed with other Utilities • City of PA interest in 1+ MW bundled power (includes REC) • UFT required to transmit power to City of PA (almost zero transmission costs) • BPA System Impact Study almost complete (LGIP) • NPI USA investigating other sales options with transmission capability • Buy from us!