8- Lucas Pedevilla

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Copyright © 2009 Accenture. All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

Betting on ScienceDisruptive Technologies in Transport Fuels

Marzo, 2011



Report objectives and scope

Evolution

•Next generation internalcombustion engine

•Next generation agriculture

•Waste to fuel

•Marine scrubbers

Revolution

•Sugar to diesel

•Butanol

•Biocrude

•Algae

•Aviation biofuels

Game Changer

•PHEV engines and batteries

•Charging

•Vehicle to Grid

12 Technologies 25 Companies 10 Markets

1Copyright © 2009 Accenture All Rights Reserved.



The Study – Assessment methodology

• For a technology to be considered “disruptive”, it needed to meet the following criteria:

– Scaleable: Greater than 20 percent potential impact on hydrocarbon fuel demand by 2030.

– GHG impact: Savings greater than 30 percent relative to the hydrocarbon it is replacing.

– Cost: Competitive at an oil price of $45 to $90 per barrel, at commercial date.

– Time to market: Commercialization date in less than five years.

• Technologies were divided into 3 groups

– Evolutionary: Technologies that stretch today’s assets and resources.

– Revolutionary: Technologies that support the creation of fungible fuels, enabling the use of the existingdistribution infrastructure.

– The game changer: Electrification and the technologies that are needed for the scale-up of PHEVs and to enablethe opportunities that PHEVs could bring in optimizing generation and transportation resources.

2

“80% of the most important data/content is in the minds of the

scientists in the companies and research centres (not in papers)”



9 Key Messages




Key Message #1: The improvement potential of manyexisting technologies is underestimated

• Increasing yields withoutsignificantly increasing land use

• Rewarding improvements in waterand energy use

• Supporting the use of waste tocreate energy or fuel

• Continuing roll-out of higher-efficiency standards

Corn Yield Trends

(Bushel Per Acre)

1990 2000 2005 CAGR

World Average 59 70 75 13%

USA 113 137 149 15%

Argentina 60 93 109 35%

China 74 78 80 4%

Brazil 33 47 54 28%

India 23 29 31 16%

Sub-Saharan Africa 22 24 25 7%

Source: Ceres, Monsanto/Doane Forecast

“Already, farmers in Iowa are producing as many as 200 bushels an acre. Mr Grant (Monsanto’s

COO) believes that 300 bushels are achievable by 2030” Source: “The parable of the sower”, Nov 19th 2009 ST LOUIS, From The Economist print edition

“I do think 300 is attainable as a national average. Using corn, cobs and a portion of the stover

we should be able to yield over 1000 gallons of ethanol per acre - as opposed to 450 today”

Source: Accenture interview with farmer/ethanol producer

Copyright © 2009 Accenture All Rights Reserved.

Key points:



Both sugarcane and corn will continue to improve significantly,in yield, water and energy use

Copyright © 2009 Accenture All Rights Reserved. 5

POET: 80% reduction in water use in the last 20 years and 33% reduction in energy in the last 12

Brazil cane yields have increased 1.3% CAGR since 1992

Water use vs. Ethanol production (POET plants)

Natural gas use in ethanol production

Brazil sugarcane yields (MT/Ha)

30

40

50

60

70

80

90

100

2008200620052004200320022001200019991998 2007 200919941993 19961995 19971992

Weighted avg. Yields (1.3% CAGR)

S-C (1.3% CAGR)

N-E (1.0% CAGR)



Key Message #2: Biotechnology is transforming biofuel production

Wider Applications Of Genetic Engineering


Examples (non-exhaustive):

• Genetically engineered feedstocks thatincrease the yield density and reduce theintensity of pre-treatment and required enzyme

• A “diesel” solution through synthetic biologythat allows sugar cane to be converted into a

clean diesel

• Bacteria and yeast are being selected andengineered to produce more selective, higheryields of butanol, and to have higher toleranceto inhibitors and the end-product

• Genetically modified algae that have higher

yields and are lower cost to cultivate, harvestand extract



Key message #3: Algae could exponentially increaseavailable feedstock

Table 1. Comparison of algae and soybean resource requirements

*Based on algae grown in open ponds with daily productivity of 10 grams/m2 with

15 percent triacyglycerol (TAG).


• The addition of algae used as feedstock, with its incredibly high yields,changes the game on potential biofuel feedstock availability

• Algae is a diverse and complicated landscape and still 10+ years away

Soybean Algae*

Gallons oil/year 3 billion 3 billion

Gallons oil/acre 48 1,200

Total acres 62.5 million 2.5 million4%



Key message #4: There will be increased activity in theairline and marine industries on options to reduce GHG

• Global industries with strong industry bodiesand are difficult to regulate at a market level

• Aviation is moving much faster than expected-streamlining of ASTM approval process,commitment of airbus, boeing and enginemanufacturers, airlines

• Aviation biofuels and marine scrubbers are notcommercially competitive to traditional fuelstoday, and will be additive to what is beingdone today

• For aviation, there is a question of whetherthere will be enough biofuel feedstock to

meet both the road and air biofuel demand

• For marine, a further constraint is when improvements can be made to existing fleetsand how often ships are replaced





Examples that could accelerate the development of aviationbiofuels

Source: Accenture research

Comments from Airline Interviews

• Volume “ … we are hoping that some 5-10% of our aviation fuel portfolio will be biofuels. By 2020 we expect this percentage to haverisen to substantial levels.”

• Blend. “...focusing their efforts on Biofuels that can be blended into existing oil-derived aviation fuel or that are organic replications...”

• Industry. “This must be an industry change – even big airlines at any one location form a small part of airport operations and cannotafford to have their own infrastructure of fuels delivery, storage, etc.”

• Hubs. “There is potential for some hubs to grow disproportionately, linked to their favourable access to Biofuels. It would make sense incertain countries for state-owned carriers, airports and national oil companies to link up to enable this to happen.”

• Portfolio. “Airlines will manage a portfolio of routes … some flights may never use Biofuels, others that start or end at a Biofuels hub willuse a large proportion of fuel derived from Biofuels…”

Neste Oil has started up the world's largest renewable diesel plant in SingaporeNovember, 2010. Production of NExBTL renewable diesel will be ramped up on a phased basis. The 800,000 t/a plant was completed on-schedule and on-budget and marks a major step forward in Neste Oil's clean traffic fuel strategy

SkyEnergy

• Manufactured almost 6,500 gallons)• Started production of approximately 190,000 gallons for the US

Navy and approximately 400,000 gallons for the US Air Force /USDefense Energy Support Center (DESC

“Camelina-Based Biofuel Breaks Sound Barrier on

U.S. Air Force F-22 Raptor Test Flight “



Key message #5: PHEVs - Batteries are the “feedstock” ofelectrification and constrain its potential

Battery/ Energy storage Vehicle Examples of Players

Lead acid EV JCI (Johnson Controls)

Nickel metal hydride HEV Panasonic (Prius)SanyoCobasys

Nickel zinc HEV PowerGenix

Lithium-ion (hard

carbon - HC)

EV, small

HVPHEV

EnerDel

Lithium-ion (lithiumtitanium oxide – LTO)

HEV EnerDel

Lithium-ion (NCA -nickel-cobalt-aluminum)

EV, HEV,PHEV

Saft (joint venture withJohnson Controls)

Toyota

Lithium-ion (Mn Spinel,natural graphite)

EV, HEVPHEV

LG ChemAESC

Lithium iron phosphate(LiFePO4)

EV, HEVPHEV

BYD

Lithium nanophosphate(Li4Ti5O12)

EV, HEVPHEV

A123

Ultrabattery (R&D) CSIRO, Australia

Ultracapacitors (small) EV EEStor (Zenn MotoCompany)

Many PerformanceFactors

• Energy density

• Power density

• Cost/kWh

• Life cycle

• Recharge time

• Safety

Many (Lithium)Challenges

• Expensive

• Scarce (Bolivia,Chile, China)

• Productionconcentrated in3 countries (Japan,South Korea, China)

• Combustible

Many Batteries, but pipeline beyond lithium for PHEV/EV is small


“500/ kWh in 5 years” – Matt Rogers at theBaker Institute event on 26 January, 2010

Accenture estimated $500/kwh in 2025, nowrevised to 2020 but this is still 5 years behindthat number



Key message #6: PHEVs - Electrification heralds two keyplayers in transport fuels—utilities and battery manufacturers

Many Diverse Players across the Electrification Value Chain

Generation Smart GridBattery

storage

Charging

Infrastructure

Comms

Infrastructure

Plug-in

Electric

Vehicles

Billing

System

Generation Distribution Retail

• A123 Systems

• LG Chem

• NEC

• Coulomb Technologies

• GridPoint

• Nu Element

• ECOtality

• Coulomb Technologies

• GridPoint

• Nu Element

• ECOtality

• Tesla Motors

• Th!nk

• G-Wiz

• Duracar

Utilities UtilitiesUtilities

Municipalities

More than 15 pilots in 14 countries testing• Capabilities• Roles of different players• Infrastructure requirements• Technology• Regulation and market models

Different combination of players in each pilot

Different elements of the electrification value chain

Different operating models

Copyright © 2009 Accenture All Rights Reserved.

Coming Jan 2011

The Electrification ofTransport Pilots



Key message #7: At least in the next five years, possibly even 10,PHEV scale up is not dependent on comprehensive “smart” grids

PHEV PHEVs commerciallyavailable butconsumer up-takelimited given highbattery costsunderminingeconomics

PHEVs with V2G capabilityincreasingly piloted

PHEVs with V2G capabilityintegrated into the SmartGrid tested

Battery Build up of battery

manufacturing capability andramping down of costs

Impact of V2G on battery

tested

Charging Smart charging units forPHEVs being deployed,charging PHEVs at levels I andII (i.e. between 4-10 hoursdepending on battery SOC)

V2G Vehicle-to-Grid technologybeing researched atuniversities and tested on asmall scale

AutoPort releases initial(limited) production line

V2G integration to the Smart Gridincreasingly tested

Battery Cost(no subsidies)

<5 Years 5-10 Years 10-15 Years

Years to integrated value chain

15+ Years

$1300/kWh $500/kWh

Lowerbattery costs

meansPHEVsbecome

moreeconomically

attractive

Battery chemistry improvesenabling faster charging time

Smart charging stations beingpiloted and tested

Limitedsmart

chargingstationsdeployed

Chargingstationswith V2Gcapability

tested

Econo-mically

competitiveV2G-

capablePHEVs

integratedinto the

grid

Smart Grids beingdeployed

Combined steps Cumulative/ ongoing12Copyright © 2009 Accenture All Rights Reserved.

$500/kWh



Key message #8: Technologies and assets will be combinedand will evolve because the lines between them are gray

• Custom application of novel technologies(e.g. synthetic biology) for multiple,differing processes

• Maximising the opportunity to leverageexisting assets (e.g. retrofit, co-production)

• Combining biochemical andthermochemical processes

• Recognising that technologies or practicescan be leveraged across multiple

pathways (e.g. pre-treatment)

1st and 2nd

POET’s Project Liberty – Emmetsburg, Iowa




Key message # 9: The trajectory of supply, demand andGHG footprint of transport fuels is being reshaped now

<5 Years 5-10 Years 10-15 Years 15+ Years

Internal CombustionEngine

• OEM developments(e.g. VW Bluemotion

• New gasolinetechnologies entermarket

• 100mpg test car

• Very efficient gasolineengines

Biofuels • 1st AND 2nd

• Waste to fuel

• Butanol

• Sugar to diesel

• New energy crops

• Biocrude

• Biorefineries

• Advanced enzymesand deconstruction

• Algae

• Combined

pretreatrment,deconstruction andpossibly evenconversion steps

Electrification • PHEVs becomecommerciallyavailable

• Batteries improve

• Fast charging pilotedand tested

• Scale-up starts • V2G

Aviation • Trial flights anddebate continues

• Slow and limited roll-out of small blends

• Expansion ofproduction

• Roll-out at one ormore hubs

• Volumes increase

Marine • Scrubberscommerciallyavailable but limitedtake up as regulationnot enforced

• Lighter, more efficientscrubbers

• Start to integrate intoship design

• Economicallycompetitive scrubbers

• Wider deployment

• Volumes increase

Evolution is cumulative, new technologies are added but existing ones continue to beimproved


8- Lucas Pedevilla

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