Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway Biofuels Law and Regulation Conference Sam

1. Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway Biofuels Law and Regulation Conference Sam JacksonMay 2, 2014

2. Company Overview • Privately held biomass supply solutionscompany based in Vonore, TN • Bringing an industrial approach and experience to agricultural biomass supply • Energy crop production, biomassprocessing, project management • The most experienced company in the countryproducing, handling, and processing a widevariety of biomass feedstocks • Purpose grown crops, residues • Proprietary biomass feedstock processing • Extensive partners up & down the value chain 167 Tellico Port Road Vonore, TN 37885 (423) 884-4111 – tel. www.generaenergy.com Dr. Sam Jackson accepting the 2013 Sustainable Biofuels Award for Sustainable Feedstock Innovation, Awarded at the World Biofuels Markets 2013 Congress & Exhibition, the largest international gathering of its kind. 2

4. What We Do Long-term land leases & easements Long-term biomass feedstock supply contract Land Owners & Farmers Biomass Consumers (primarily technology & project developers) Biomass crop services: establish, manage, harvest, collect, store, transport On-time, sustainable delivery of high quality biomass feedstock

5. Genera’s Integrated Solution Delivers ProprietaryGIS Model BIN-SPEC™ Processing Supply ASSURE™ System Energy Grange™ Management Planning Harvesting, Logistics & Inventory Milling & Material Handling Energy Crop Establishment & Production Preferred InputSupplier Network Moisture Management & Optimized Location Project-SpecificSystem Design Data-Rich Feedstock Supply & Cost Model Full Cycle Production & Maintenance Land Accumulation& Control Model Optimized Planting & Establishment Success Multi-system Cost Analysis& Harvest Scheduling Risk Management& QA/QC Maintain Quality & Minimize Cost

6. Managing Risk • Land recruitment • Real-world, grounded information is key • Integrated, long-term land control • Achieving projected crop yields • Weather impacts • Management consistency • Inventory risk • Storage degradation • Fire, other catastrophic events • Things beyond our control • Commodity price swings • Oil costs • Policy changes • The Unknown • Crops • Inventory • Land

7. Land Availability and Recruitment • Land is key in biomass production • Landowners will require: • Economic benefit • Long-term consistency in income through bankable contracts • Low cost or assisted cost establishment • Risk management tools • Technical assistance

8. Land Availability and Recruitment • Risk elements must be addressed in contracts: • Land ownership changes • Sales • Death • Bankruptcy • Production requirements • Volume • Quality • Compositional • Moisture • Grower contracts should: • Be backed by a bankable entity • Provide adequate economic return w/adjustments • Be of long duration (10 yrs or longer) • Share risk among partners • Provide sources of technical assistance • Annual crops provide flexibility • Contracts will take different forms, from full supply services to simple land leases

9. Crop Production Risk • Supplying biomass year round, with consistent quality is key • Feedstock production risk includes • Yield • Environmental impacts • Management impacts • Disease/Pests • Quality • Variability • Foreign materials

10. Inventory Risk • Long-term storage introduces risk • Quality loss/change over time • Chemistry • Dry matter loss • BTU loss • Catastrophic loss • Fire • Weather • Efficient industrial supply chain management required • Chain of custody • Proper handling and storage

11. The Unknown • Commodity price swings • Can significantly change availability of land (pricing) • Changes competitiveness of biomass crops • Defines the importance of long-term contracts to protect investment in perennial crops • Oil costs • Price at the pump matters to the majority of the voting public • Biofuels must be competitive and understood by the public

12. The Unknown • Government Policies • Inconsistency and variability deters innovation and investment • RFS • Annual evaluations on policy , whether positive or negative, do not help advance an industry • The RFS will drive investment at a low cost to the Federal Government if maintained for an extended period • Government Policies • EPA Approved Pathway Process • Must be streamlined and made more transparent • Biomass sorghum in pipeline for over two years!

13. Mitigating Risks • Government Policies • Consistency! • Loan guarantee programs tailored to feedstock supply chains • State-based incentives programs • Land Recruitment • BCAP and similar programs • Overcome high upfront costs for producers • Must be implemented effectively • Alternative biomass markets • State-based incentives/programs

14. Mitigating Risks • Crop Production • Crop insurance • Expand traditional yield-based risk management programs • Continued varietal improvement • Establishment • Disease and pest resistance • Herbicide tolerance • Productivity • Conversion efficiency

15. Addressing Risk Across the Supply Chain • Integrated Management • Systems matter • Biomass supply is more than a collection of individual unit operations • Integration of entire systems is critical • Consistency • Efficient and reliable supply of a consistent quality biomass requires the high degree of coordination • Continuous Innovation • Continuous improvement reduces cost significantly • Feedstock Portfolio • Multiple feedstocks to feed one facility • Provides land recruitment flexibility (annual vs. perennials • Increases ability to do year-round delivery • Reduces risk and cost associated with storage • Provides a buffer for climatic and disease/pest impacts

16. Genera’s Integration Improves Economics Reduce overall cost volatility, enhancing “financability” of downstream project Cost Per Ton Lower feedstock cost by as much as 33% $55 $85 Generate more consistent quality, improving yields and lowering operating costs Quality

17. Summary • Feedstock risks are real and must be addressed • Knowledgeable Planning eliminates many risks • Genera provides de-risked, scalable feedstock supply and processing solutions • Specialized in providingconsistent, uniform industrial biomass feedstocks

18. Sam Jackson sjackson@generaenergy,com