When is 2nd generation coming ?

1. When is 2nd generation coming ? 7th Inter-Parliamentary Meeting on Renewable Energy 05-10-2007

2. Agenda slide Use: Help the audience to a better understanding of the presentation progression by visualizing the agenda when changing topic. guide • Biofuels now … • … next, biomass to ethanol … • … biomass challenges … • … Beyond biofuels AGENDA

3. Biofuels now …

4. CONCEPT: MOVING SPRAY ANIMATION EXPERIENCE: RUNS AUTOMATIC FROM BEGINING OF SLIDE ANIMATION TIME: 5 SEC. POSSIBLE TO CHANGE COLOURS OF THE SPARY Global bioethanol production growing strongly Sources: US Energy Information Administration, F.O. Licht, Novozymes estimates

5. USA Bioethanol boom Estimated 2007 production ~ 6.5bn gal. 1 1 Gallon = 3,785 liters Source: 1 – U.S. Energy Information Administration/ Renewable Fuels Association; 2 - SJH & Company Inc.; 3 – Novozymes est.

6. American ethanol plants Jan 7, 2007 In operation 110 Construction 79 Proposed >200

7. Novozymes and biofuels • ~10% of total revenues in 2006, ~12% of total H1 2007 revenues • 20-25% growth over next 3-4 years • Largest supplier of enzymes to the fuel ethanol industry • Mainly an US business but Europe & Asia nice growth from lower levels • Collaborations in Biomass with industry leaders • Poet Energy in the US • COFCO in China • Abengoa in Europe • CTC in Brazil

8. … next, biomass to ethanol …

9. Why biomass-based ethanol? - There is a limit as to how much ethanol you can produce from grain and sugar - You can produce much more ethanol from biomass - If the ambitious objectives are to be carried out, we need to base production on biomass in order to produce sufficient amounts of ethanol - Better utilization of agricultural production - Biomass has superior environmental advantages because a larger part of the plant is used

10. Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK guide BIOETHANOL AND CO2 REDUCTION Gasoline 1st gen. wheat starch 2nd gen. wheat straw g/MJ 30% saving 80 45% saving 70 70% saving 60 85% saving Reduction of CO2 emission from producing and combusting 1 MJ fuel 50 40 30 20 10 0 Energy from straw 2nd generation Conv. boiler CHPtech. Gasoline

11. Cellulosic ethanol is taking off 2030 global vision for biofuel Hydrogen regenerative ~4% Natural Gas ~35% Latest quote from President Bush: “35 billion by 2017” Oil Based < 10 ppm sulfur ~38% Oil Based <500 ppm sulfur 2nd generation of biofuel based on biomass ~23% 1st generation grain-based bio-ethanol & biodiesel 30F 2005 10F 20F Source: McKinsey Analysis

12. Cellulosic ethanol developing worldwide • Three main regions have a head start in cellulosic ethanol: the USA, China and Europe • All on-going pilot/demonstration plant projects experience very basic feedstock / logistics issues (supply chain, grinding, conveying, mixing…) • USA: • New RFS of 35 bill. gal. by 2015 ~9-10% of total road transport fuel consumption • 2030 target of 30% alternative fuels • 6 to 8 final contenders for the DoE grant on the construction of 2 to 3 commercial bio-refineries • Overall, corn stover / fibers and wheat straw are the two types of feedstock considered to hold the most potential • Other companies are looking at woody substrates (sawdust, wood trimmings, soft wood (pine trees, poplars), hard wood) or rice straw, citrus peels and urban waste • Energy crops are being considered • POET-Novozymes partnership • No pilot plan running yet… but several will start up by the end of 2007

13. Cellulosic ethanol in Europe • EU Energy Strategy - 2020 targets: • 20% renewable energy • 20% reduction in GHG emissions • 20% energy savings compared to projections • 10% binding min. target for biofuels • EU Biofuel directive: • Encouarges member states to reach 5,75% biofuel before 2010 • Only 1,4% has been reached, but Member States show increasing commitment • Some EU Members have a biofuel share of 1+%: AT, FR, SE, DE • Cellulostic ethanol status: • A few pilot plants will run in 2007 and one larger scale demonstration plant • Main feedstock: wheat straw • The drive is more technological and opportunistic

14. Cellulosic ethanol in China • E-10 required in nine provinces • Current production ~0.25 billion gallons per year (2.3% of total Chinese consumption) • Goal of 7.5% ethanol in 2010 • An enormous sense of urgency! • A number of companies are going ahead in the cellulosic ethanol field (organisms, pre-treatment…)…only four companies have officially been granted a license to produce ethanol (subsidies for cellulosic ethanol are pending) • COFCO – NZ partnership Provinces: Heilongjiang Jilin Liaoning Province: Henan Hebei Provinces: Hubei Shandong Jiangsu Anhui

15. Cellulosic ethanol in the remaining world • Latin America • 85% of all cars sold in Brazil are FFVs • Strong industry growth • Legislation on burning creating significant additional biomass increasing awareness of bagasse as an important biofuel resource • Brazil focussing on export opportunities, target is 10% of the global demand • International recognition of Brazil as key supplier and example of a sustainable fuel economy • Major agricultural land expansion potential • NZ partnership with CTC • Japan & Korea • Japan will be a net importer of ethanol from Brazil • Biofuel target of 500 mill l. in place by 2010 • Limited feedstock availability due to limited agriculture. Wood is the primary possibility • Africa & Middle • East: • Potential major region for growing crops, incl. sugar cane • No biofuels effort so far • South East Asia & Indian Sub. • Political drive for ethanol production from local feedstocks • Political instability limiting implementation of long term biofuel policy • Biodiesel dominates the landscape due to feedstock availability • Food for fuel debate will foster alternative feedstocks incl. lignocellulosic bionmass

16. … biomass challenges …

17. What about the cost structure? Enzymatic hydrolysis Pre-treatment Fermentation Corn stover Pre-treated corn stover Glucose Ethanol Showstopper?

18. Enzyme cost no longer dominates the picture - Cost comparison after the BioEnergy Project: grain vs. biomass in USD/gallon ethanol, April, 2005* Estimate for Nth-plant production, current cost based on lab-scale is $2-3/gal Major cost reduction In enzyme price *Modified from “Determining the Cost of Producing Ethanol from Corn Starch and Lignocellulosic Feedstocks”, NREL/TP-580-28893 joint USDA, NREL study released in October 2000.

19. Proteomic analysis of a cellulase producer GH74 CDH CBH I CBH I CBH II EG II EG I GH61G EG III GH61B EG V GH61F EG IV GH61D GH61C SOD

20. Understanding GH61 ?

21. From starch to sugar -> biomass based fuel ethanol Enzymes are one of the keys to the process, but are no longer the major barrier for biomass conversion Fuel Ethanol Pre-treatment Fermen-tation Enzyme Hydrolysis Recovery/ distillation Biomass Collection

22. Novozymes and cellulosic ethanol • Ethanol from cellulosic feedstock - market and technical leadership in the development of processes for the conversion of cellulosic biomass to economically viable ethanol. Pre-treatment, hydrolysis and fermentation expertise • Extensive leverage from our manufacturing, R&D and marketing capabilities in Europe, North America, Latin America, India and China • ”Cellulase Cost Reduction for Bioethanol” with the DoE as a subcontractor funded at 17.8 million USD • Current further cellulase performance improvement through an unprecedented R&D effort • Development of several hemicellulases • Most importantly putting our enzymes to work through partnerships

23. How far to go before 2nd generation ethanol will be commercial? • The process need be up scaled from lab to factory • Further reduction in overall process costs required • First pilot plants are starting • Larger scale demonstration plants on-line within 2-3 years • Commercial plants on-line within 4-5 years

24. …… Beyond Biofuels

25. The future potential for sustainable solutions

26. Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK Bio-PDO™ -DuPont/Tate& Lyle Joint Venture guide

27. Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK Tomorrow has already started! guide Loudon Facility- DuPont Tate & Lyle BioProducts October 2006

28. Conclusion • Novozymes is committed to actively participate in the commercial development of a viable biomass-to-ethanol process • Enzyme costs have been viewed as the major barrier for biomass conversion - this is no longer the case even though improvements still need to be achieved to make it an economically viable process • Continued enzyme research has delivered improved performance which translates into lower costs • Enzymes need to be integrated into the process developments in order to truly optimize the costs in conjunction with other parameters. We are teaming up with strong partners with complementary technologies and with whom we can develop the best solutions to achieve commercial success