SHIFT IN COMMERCIAL INVESTMENT CONFIDENCE IN CORN ETHANOL?

1. Advanced biofuel competition greatly diminished — perhaps nil Conventional domestic consumption “mandate” Forever limited to E10 EPA rules are complex, non-forecastable, and late Probable legal challenge to “inadequate domestic supply” could last years, adding uncertainty But with strong world crude oil price and low corn price Ethanol exports look encouraging Corn ethanol = cheapest and safest octane agent for 200+ billion gallon foreign gasoline pool Brazil sugarcane competition looks less daunting Rail freight problems are temporary SHIFT INCOMMERCIAL INVESTMENT CONFIDENCEIN CORN ETHANOL? March 31, 2014 • Bill Hudson

2. With Passage of EISA 2007, investors treated the RFS as a 15-year MANDATE A viable 15 billion gallon corn ethanol industry is now in place

3. As recently as 2010, EPA’s “Control Case” was Optimistic for 36 bil gals!

4. But in 2013 & 2014, US-DOE began to say,“No Way!”

5. And in 2014, EPA proposed using all its “must” and “may” waivers to cope with E10 Blendwall

6. EPA will make some two dozen determinations on 2014 and every new year!

7. Congress gave EPA no guidance on incentivizing, or not, Sugar Ethanol Imports

8. In 2014, Bipartisan Policy Center Sponsored Two Studies by Law Firms

9. Guesswork on what triggered 2014 General Waiver by EPA

10. “What is the target RIN Price? What is EPA’s expected RIN price if the numbers in the proposal were the same in the final? The agency (EPA) doesn’t provide any benefit/cost analysis to ascertain which option maximizes social net benefits. Please provide the analysis. Council of Economic Advisers would argue that a better way to approach this question is to estimate costs . . . in terms of dollars per ton of CO2 emissions reduction. Were the price differential determined by the updated (SCC) Social Cost of Carbon, the D6 RIN price would be between 5-10 cents. RIN prices well in excess of that would in this sense not be ‘reasonable.’” OMB Reviewers’ Comments to EPAregarding 2014 Proposed Rule’s RINs & E85[EPA Docket, November, 2013] Guesswork on what triggered 2014 General Waiver by EPA, continued

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12. Administration committed to 17% GHG reduction for country in 2020 (vs. 2005) RFS provides only 5% of needed GHG reductions, but at “unreasonable cost”

13. With waivered RFS, growth of US Corn Ethanol depends on exports

14. If crude oil price strong, and if corn price moderate, then corn ethanol = cheapest (& safest) Octane Agent for world market

15. Conser-vative