A Perspective on Renewable Energy and Biofuels

1. A Perspective on Renewable Energy and Biofuels SOCMA Corporate Excellence Conference Savannah, Georgia May 15, 2008 Gary McChesney Chief Technology Officer FutureFuel Chemical Company

2. My Perspective • There are more than enough renewable energy resources to meet the world's needs. • What is needed are technologies to efficiently capture and convert the available energy.

3. Figure 1. U.S. Energy and Geothermal Resources Note: U.S. Total Resource Base from Characterization of U.S. Energy Resources and Reserves, December 1989, U.S. Department of Energy, DOE/CE-0279. Data for “Estimated Accessible Geothermal Resource” and “Estimated Developable Resource” are from Table 4 of this report.

4. Current Generation of Biofuels • Biodiesel from Vegetable Oil and Fat • Ethanol from Starch

5. Future Biofuels • Cellulosic Ethanol • Plus Many Others

6. Lignocellulosic Biomass Figure adapted with from C. Somerville, Stanford University, 2004. Source: Genome Management Information System, Oak Ridge National Laboratory

7. Pretreatment of Biomass Figure adapted from N. Mosier et al. 2005. “Features of Promising Technologies for Pretreatment of Lignocellulosic Biomass,” Bioresource Technology 96(3), 673–86. Source: Genome Management Information System, Oak Ridge National Laboratory

9. Fermentation of Sugars Sawdust Corn Stover Rice Hulls Cellulases Sugar Cane Sugar Beets Sweet Sorghum Yeast Yeast EtOH Amylases Corn Wheat Rice

10. Consolidated Bio-Processing Sawdust Corn Stover Rice Hulls GMO EtOH Sugar Cane Sugar Beets Sweet Sorghum Yeast Yeast EtOH

11. Syngas to Ethanol

12. Khosla Ventures: Green Investing Strategy

13. Biofuel Political Issues • Food versus Fuel • Scalability • Energy Balance • Environmental Impact

14. Commodity Prices • A Very Complex Issue- Currency values- Speculation - Hedging - Input cost inflation- Demand for more and higher quality foods- Trade restrictions- Weather-related crop failures- Biofuel production

15. Scalability • Annual Gasoline and Diesel Consumption is 210 Billion Gallons • Potential Annual Corn Ethanol Production is18 Billion Gallons • Potential Annual Biodiesel Production from edible oils and fats is 2 Billion Gallons • First Generation Biofuels are Not Scalable

16. Scalability Means Biomass

17. DOE Timing Projections

18. Energy Balance • Argonne National Laboratory Center for Transportation Energy • Greenhouse gases Regulated Emissions, and Energy use in Transportation or "GREET"

19. Ethanol Lifecycle

20. Energy Balance • Fossil Energy Required to Deliver 1,000,000 BTUs to the PumpFuelBTUs of Fossil EnergyGasoline 1,230,000 Corn Ethanol 780,000 Diesel 1,200,000 Biodiesel 300,000 Cellulosic Ethanol 100,000

21. Green House Gas Emissions • Corn Ethanol – 18%-28% Reduction in GHGs • Biodiesel – 57-74% Reduction in GHGs • Cellulose Ethanol – 87% Reduction in GHGs

22. Factors Impacting Industry Development • Technology – Timing • Feedstock Cost – Purchase and Delivery • Capital Cost – Co-location

26. Potential Biofuel Co-Location Sites Organic Chemicals Plants* Pulp & Paper Mills* Corn Ethanol Plants** Sources: *EPA Industry Sector Notebooks; **Iowa State website

27. Federal Government Support • Grants • Federal Funded R&D • Renewable Fuel Standard • Tax Credits • Loan Guarantees • Federal Purchasing Programs

29. Energy Independence and Security Act • Defines Biofuels-Conventional biofuels (corn ethanol)- Advanced biofuels• Cellulosic biofuels • Biomass-based biodiesel • Undifferentiated advance biofuels • Biofuel Definition Includes Target Minimum GHG Reduction Standards • Establishes Annual Goals for Biofuel Usage Requirements

30. Energy Independence and Security Act

31. Routes to Make Biofuels