Hydrous Ethanol in Gasoline “Wet is better than dry”

1. Hydrous Ethanol in Gasoline “Wet is better than dry” World Biofuels 2010 – Seville

2. Why We’re Here Introduction of hydrous ethanol blending as a technology Hydrous ethanol instead of anhydrous ethanol in gasoline Improves economics No need to dry ethanol above 95% (less investment and on average 14% less energy according to DOE) Increased engine performance by a little “water injection” Lowers carbon footprint of bio-ethanol Corn ethanol energy ratio would go up from 1.35 to 1.6 Reduces corrosion of aluminum by ethanol Enables higher ethanol blends Cleaner engines Easier to transport and store Foreign Oil Redux Makes ethanol blending above E10 more economical

3. Conventional wisdom in blending • Gasoline and water do not mix (2-liquid-phase system). • Ethanol has to be free of water to be blended in gasoline – when blended in small quantities. • Blends of dry ethanol with gasoline will pick-up water, e.g. from air humidity, water transportation.

4. Composition of ethanol containing fuels Code E5 E10 E15 E25 E85 E100 max 25% anhydrous ethanol ~7% water max 10% anhydrous ethanol Composition max 15% anhydrous ethanol max 5% anhydrous ethanol 100% hydrous ethanol (contains about 7% water) max 85% anhydrous ethanol min 95% gasoline min 90% gasoline min 85% gasoline min 75% gasoline min 15% gasoline Countries Western Europe today USA today (Western Europe in near future) USA in near future Brazil USA / Europe Brazil Flex Fuel Vehicles Gasoline blends for use in regular cars

5. Wet Corrosion Tests by Sasol Sasol’s wet corrosion tests (ASTM D665) of E2 and E10 on aluminum parts. Wet corrosion is corrosion in the presence of water. Sasol found: “Both the base gasolines and the ethanol containing fuels (at 2% ethanol content) were corrosive during the wet corrosion test. These fuels required additisation in order to prevent wet corrosion. At 10% ethanol (bioethanol and synthetic ethanol) none of the fuels were corrosive in the wet corrosion test.” Presented at the XVIII International Symposium on Alcohol Fuels (Delhi – India ISAF 2010)

6. ETHANOL 80% 20% stability stability stability 60% 40% Weight Percent Ethanol Weight Percent Water 40% 60% instability instability 20% 80% GASOLINE 80% 60% 40% 20% WATER Weight Percent Gasoline Phase behavior

7. Capture H2O

8. Patents: E1-E95 with 1-10% water on ethanol Use Blends

9. Confirmation one can use hydrous ethanol Confirmation example: Shell - Amsterdam Sept. 2006 • Straight gasoline: haziness observed at -5ºC • Straight gasoline + 5% hydrous Ethanol (hE5): haziness observed at -34ºC • 10, 15 and 20% hydrous Ethanol: haziness could not be detected at -60ºC Phase separation is not observed in any of the above blends!

10. Water Tolerance Standard Withdrawn Withdrawn Standard: ASTM D6422-99 Standard Test Method for Water Tolerance (Phase Separation) of Gasoline-Alcohol Blends (Withdrawn February 2007) Developed by Subcommittee: D02.A0.01 “This standard is being withdrawn without replacement; it lacks a precision statement and no acceptable precision statement could be developed from the round-robin program.”

11. CONCAWE – 2008 Ethanol ReportPhase Stability Hydrous Ethanol Blends

12. CONCAWE – 2008 Ethanol ReportEffect of TBA on Phase Stability

13. C4 alcohols instead of MTBE or ETBE C4-olefins can also be hydrated using acid catalysts: Isobutene: CH2=C-(CH3)2 + H2O  CH3-CH(OH)-(CH3)2 (TBA) 1-butene or 2-butene: H2C=CH-CH2-CH3 + H2O  CH3-CH(OH)-CH2-CH3 (IBA) H3C-CH=CH-CH3

14. Test Observations hE15 Observations hE15 test car, 100.000 km (62000 miles) Cleaner engine interior, no engine deposits No damage to seals, gaskets, fuel system whatsoever • Note: Test car is not modified or optimized, just a standard VW Golf V as could be bought at your local car distributor!

15. hE15 Performance Evidence VW Golf FSI, hE15 test car, 100,000 km (62,000 miles) SGS (Austria) measured a 2-3% lower fuel consumption compared to regular gasoline without any engine tuning Vespa 4-stroke 50 cc on hE15 15% lower fuel consumption (no motor management system) Cleaner spark plug, no engine deposits Kreidler 2-stroke 50 CC hydrous vs. anhydrous Reduced emission of nanoparticles Higher mileage Higher maximum speed with hydrous ethanol

16. 2-stroke motor cycle tests: nanoparticles Czerwinski, J. et al., Emissions of 2-Stroke Small Motorbike Kreidler 50cc with Ethanol Blends, Berner Fachhochschule, Switzerland, 2009

17. 2-stroke motor cycle tests: max. speed Czerwinski, J. et al., Emissions of 2-Stroke Small Motorbike Kreidler 50cc with Ethanol Blends, Berner Fachhochschule, Switzerland, 2009

18. Further R&D in Germany 60% Area of interest 80% Euro95 100% Fuel consumption 120% 140% 160% E0 E20 E40 E60 E80 E100 HE15 Ethanol E85

19. Price Difference Source: www.cepea.esalq.usp.br/english/ethanol/?id_page=243

20. Advantages of hydrous ethanol: Cheaper Higher mileage Better performance Less corrosive Easier to produce Easier to handle & store Fewer CO2 emissions Better air quality (fewer CO, HC, nano-particles and NOx) Could be used in both existing engines and FFV’s Helps Foreign Oil Redux

21. 2008 Launch of hE15 in the Netherlands July 7th, 2008: Official market introduction by Minister of Environmental Affairs Mrs. Cramer hE15

22. Current Status Netherlands since April 2008: hE15 sold at public gas stations no fuel-related complaints standardization in process 2010 Europe introduction of other hydrous blends like hE10 and hE15 and hE85 New York City Fleet hE15/hE20 and hE85 pilot

23. Business Model • SHE Blends Holding (IP owner) • HE Blends - International licensing to: • Oil Majors • Independent Retailers • Hyper markets • Cities • Governments • HE & SHE are looking for partners