2013 socio economic prospects of advanced biofuels voetmann wfes

THE FUTURE IS BIOBASED:

SOCIO-ECONOMIC PROSPECTS OF ADVANCED BIOFUELSWFES

NOVOZYMES IN BRIEFWORLD LEADER IN BIOINNOVATION

WE GREEN THE WORLD: Enzymes save energy, chemicals, raw-materials and water In 2011, Novozymes helped customers save 45 million tons of CO2

BASED ON INNOVATION: 14% of sales re-invested in R&D 7000 patents granted or pending

Novozymes' R&D locations

LEADING THE WAY IN ENABLING TECHNOLOGYFOR ADVANCED BIOFUELS

3

World leader in biofuel enzymes

Global R&D focus on advanced biofuels

Broad partnership strategy – we are working on many feedstocks and technologies

More than 150 people dedicated to advanced biofuels

Transport is the second largest energy user and by far the largest oil user

By 2050 there will be an estimated 2.3 billion additional cars worldwide – 1.9 billion of these in developing countries

Transport continues to be the fastest growing CO2 emitter

Source: International Energy Agency: ”World Energy Outlook”, 2011 and International Monetary Fund: ”Mass Car Ownership in the Emerging Market Giants”, 2008

WHY WE NEED BIOFUELS 2010

Source for total number of cars: IMF World Economic Outlook (April 2008); Chamon, Mauro and Okawa in Economic Policy (April 2008) Source for distribution of cars: Source: Various statistics found on WWW – distribution is only indicative of development.

Total number of cars is 760.000.000

WHY WE NEED BIOFUELS 2050

Total number of cars will be 2.900.000.000

Source for total number of cars: IMF World Economic Outlook (April 2008); Chamon, Mauro and Okawa in Economic Policy (April 08) Source for distribution of cars: Source: Various statistics found on WWW – distribution is only indicative of development.

THIS IS A POWER PLANTPOWER FOR FOOD, FEED AND FUEL

FOOD, FEED AND FUEL

ELECTRICITY AND FEED

ADVANCED BIOFUELS

THE TECHNOLOGY IS READY AND PRODUCTION IS BEING SCALED UP

2013201220112010 2014

Europe

Commercial scale

Demonstration scale

Pilot scaleBrazil

US

Commercial scale Demonstration scalePilot scaleChina

Commercial scaleDemonstration scale

Commercial scale

Demonstration scale

*Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012

BNEF STUDY BASED ON THE AGRICULTURAL POWERHOUSES

United States

Mexico

Brazil

Argentina Australia

China

India

EU-27

G20 countries not included: Canada, Indonesia, Japan, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey

Advanced biofuels 17,5%

Residue left on field75%

Power 2,5% Husbandry 5%

A maximum of 17.5% is assumed to be available for advanced biofuel production

Collecting only 25% of agricultural residue is a conservative methodology that takes into accounts technical and ecological constraints

This purposefully aim to preserve soil quality and are in the low-to-medium range of comparable studies

AGRICULTURAL RESIDUE AVAILABILITY IN THE 8 SELECT REGIONS

Total = 4,6bn

Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012

Billion dry tons, 2030

150

200

250

100

50

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

AGRICULTURE ISA HUGE UNDER-UTILIZED RESOURCE

Million dry tons


The agricultural powerhouses have enough biomass for a good realisticscenario on car fleet mix

Wheat residue

Maize residue

Sugarcane residue

Rice residue

Soybean residue

Other residues

Five major crops represent 88% of the 24 crops analysed, totalling 800m tonnes in 2030 available for advanced biofuels

THE RESIDUE POTENTIAL IS HUGE

17.5%75% RESIDUES LEFT ON FIELD

5% HUSBANDRY2.5% POWER

914 million tonnes of residues will be availablein eight selected regions and can replace

half of the gasoline needs

2030 figures agricultural residues only

PRODUCTION POTENTIAL BY 2030LOWERING FOSSIL FUEL IMPORT BILL

United States

China

EU-27

Brazil

Mexico

India

Australia

Argentina

53

24

9

8

8

4

3

1

10% blending scenario Residue Potential Scenario

Bn. liters

10% of gasoline could be replaced by advanced biofuels by using only 5% of the available agricultural residue supply

50% of the forecast 2030 gasoline demand could be replaced by advanced biofuels using only 20% of agricultural residue

72

89

60

71

8

37

7

7


Note: India and Argentina meet 100% of their gasoline requirements without using all their availableresidues. Mexico uses all its residues before reaching 10%.

INVESTMENT IN BIOENERGY WILL BRING ECONOMIC GROWTH AND DEVELOPMENT FOR RURAL AREAS

• Biofuels is the only large-scale alternative when it comes to transportation

• The technology is ready

• Biofuels is competitive to oil

• … and holds great potential in countries resting on an agricultural base

APPENDIX IWFES

WHAT ARE THESUSTAINABILITY ASSUMPTIONS?

In this study we assume land use patterns will not change before 2030; existing activities are not altered nor is new agricultural land added

We assume a maximum of 17.5% is potentially available for bioenergy production; it is a conservative estimate which deliberately steers clear of removing a high level of nutrients. For sugarcane bagasse we assume that 30% is used for advanced biofuels. The rest for bioelectricity

Our methodology assumes stable yield growth rates, based on historic data between 1989 and 2010

We excluded energy crops and forestry residues. Taking them into account would however increase total biomass availability

LAND USE PATTERNS

HUMUS BALANCE

YIELD GROWTH

ENERGY CROPS


WHAT ARE THEECONOMIC ASSUMPTIONS

We assume total facility costs for a next-generation ethanol refinery will be approximately $1.50 per litre of annual capacity

For this example we used $0.44 per litre as it is roughly the energy equivalent price with an oil price of $100 per barrel

Following the EU Renewable Energy Directive indications, the study assumes next-generation ethanol, using the enzymatic hydrolysis technology, reduces emissions by 80%

PLANT COSTS

ETHANOL REVENUES

GHG EMISSIONS


AGRICULTURAL RESIDUE AVAILABILITYCHINA IN THE LEAD, 2030

United States

China

EU-27

Brazil

Mexico

India

Australia

Argentina

9

8

Fuel Demand Residue Potential

133

20

21

22

60

2

180

221

151

177

20

110

16

39

The agricultural powerhouses still hold great potential. If next-generation technologies fulfil their promise then these resources can be viewed in the same terms as a barrel of oil

Million dry tons


REQUIRED INVESTMENTS WOULD BOOST ECONOMY IN RURAL AREAS, 2030

United States

China

EU-27

Brazil

Mexico

India

Australia

Argentina

96

118

80

94

11

50

9

10

Investment Revenue

Total potential to generate revenues of $1 trillion between today and 2050 (Fuel Demand Scenario) when assuming oil is at $100 per barrel

633

779

532

622

70

329

58

65

Note 1: Revenues are for delivered next-generation ethanol and are generated by plants throughout a 20-year lifetime. Note 2: We assume total facility costs for a next-generation ethanol refinery will be approximately USD 1.50 per litre of annual capacity.


Bn. USD

JOB CREATION BY REGIONMILLION MAN YEARS OF EMPLOYMENT, 2030

United States

China

EU-27

Brazil

Mexico

India

Australia

Argentina

Fuel Demand Residue Potential

Harvesting a sustainable amount of agricultural residue will provide rural economies with an additional revenue source that will help diversify farmers’ income

Note: Job creation, or one man-year of employment, in the bioproduct industry comes in two parts: firstly, biorefinery construction and operation jobs; and secondly, agricultural residue supply chain jobs.


1.37

2.87

0.91

1.25

1.18

0.15

0.15

0.12

0.30

0.08

1.02

0.78

0.17

Millionman-years

JOB CREATION ACROSS THEADVANCED BIOFUELS SUPPLY CHAIN

COLLECTION TRANSPORT CONVERSIONCONSTRUCTION

ETHANOL DEMAND

CONSTRUCTION JOBS

OPERATION JOBS

TRANSPORT JOBS

FEEDSTOCKJOBS

# OF REFINERIES

FEEDSTOCK MIX

CONVERSION EFFICIENCY

INVESTMENT NEEDS ($BN)

BIOMASS DEMAND

AGRICULTURAL RESIDUE


25% OFF TRANSPORT EMISSIONSWITH ADVANCED BIOFUELS

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 20300

500

1000

1500

2000

2500

Note: EU sustainable transport group data demonstrates a litre of gasoline has a well-to-wheel emissions footprint of 2.42kg per CO2e. Following the RED methodology, the study assumes next-generation ethanol – using enzymatic hydrolysis – reduces GHG emissions by 80%.

Gasoline emissions

Fuel Demand Scenario

Residue Potential Scenario


Residue Potential Scenario: 475 million tons of CO2 less between today and 2030. Equates to not burning 2.6 million railcars of coal

Million ton CO2 equivalent

WHAT’S IN IT FORTHE WORLD

Agricultural Residues

Energy Security Growth Jobs CO2

China221 mio dry ton China could displace up to 37% of

its gasoline consumption in 2030 779 bn USD 2.87 million man

years 29%

US180 mio dry ton The US could displace up to 16%

of its gasoline consumption in 2030

663bn USD 1.37 million man years

11%

Brazil

177 mio dry ton Brazil could displace 83% of gasoline consumption in 2030. This is on top of sugarcane ethanol

622 bn USD 1.25 million man years

67%

India

110 mio dry ton India could displace up to 100% of its gasoline consumption in 2030 and still produce 4bn litres for export


80%

Europe151 mio dry ton The EU27 could displace

68% of its gasoline consumption in 2030


54%

Argentina

39 mio dry ton Argentina could replace up to 100% of its gasoline consumption by 2030 and potentially export ethanol


80%

Australia16 mio dry ton Australia could replace up to 19%

of its gasoline consumption by 2030


17%

Mexico20 mio dry ton Mexico could displace up to 7% of

its gasoline consumption in 2030, 70 bn USD 0.15 million man

years5%


WHAT’S IN IT FOR

BRAZIL?


The Brazil can replace 83% of its annual gasoline consumption by 2030 with advanced biofuels

Energy security

Create almost 1.25 million jobs between 2010 and 2030 mainly in rural areas

Brazilian players would be the major beneficiaries, including 94 billion USD domestic engineering, construction and feedstock market

Economy

Save CO2 and reducing GHG emission from gasoline related road transport by 67%

Environ-ment

Jobs

WHAT’S IN IT FOR

ARGENTINA?


Argentina can replace 100% of its annual gasoline consumption by 2030 with advanced biofuels and potentially export ethanol

Energy security


Argentine players would be the major beneficiaries, including 10 billion USD domestic engineering, construction and feedstock market

Economy


Environ-ment

Jobs

WHAT’S IN IT FOR

MEXICO?


Mexico can replace 7% of its annual gasoline consumption by 2030 with advanced biofuels and potentially export ethanol

Energy security


Mexican players would be the major beneficiaries, including 11 billion USD domestic engineering, construction and feedstock market

Economy


Environ-ment

Jobs

2013 socio economic prospects of advanced biofuels voetmann wfes

Technology

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