Changing World Technologies, IncBiomass Initiative

for the

State of California

“Anything into oil”

Eliminate WasteProduce Renewable Energy

Reduce Global WarmingImprove Quality of Life

…A new beginning; Thermal Conversion Process

A biomass bio-refinery which safely converts waste into clean fuels and industrial products

Thermal Conversion ProcessFeedstock Prep• Mixing and pulping

1st Stage Reactor• Aqueous depolymerization• 250°C and 50 atmospheres

2nd Stage Reactor• Organic oil reforming• Fuel-gas to power plant• Bio-derived hydrocarbon oil to separation

Product oilstorage

1st stage organic oil

Water, minerals, solubles

Pressurizing and Heating

Flash Tank• 1st stage product separation• Organic oil to 2nd stage• Water to evaporation• Minerals to drying

Oil Separation• Water and solubles to evaporation

Market Opportunities

Future Market Opportunities

Pulp & Paper

Heavy Oil & Coal

Hazardous Waste

Distribution of Solid Waste in the U.S.

6%

51%

3%

39%

1%Industrial

Agriculture

Municipal

Mining/Milling

Utility

12 Billion tons per year

Food & Agriculture Auto & Rubber Municipal Solid &Sewage Sludge

Disposed Waste Streams (~ 35 million tons) 1999

Statewide totalsCATEGORY POUNDS GALLONS TOTAL DAILY DAILY

OIL/TON OIL/TON TONS TONS GALLONS of OIL

__________ _________ ___________ _______ ______________

Paper 520 69 10,742,707 29,432 2,030,808

Plastics 1400 186 3,161,711 8,662 1,611,132

Organics (other) 520 69 12,490,171 34,220 2,361,180

Tires 880 117 145,899 400 46,800

Gallons per day 6,049,920

Gallons per year 2,208,220,800

Sub-category of statewide totals

•HDPE, PET Containers 1400 186 436,559 1,196 222,456

•Food 880 69 5,584,506 15,300 1,055,700

Source: California 1999 Statewide Waste Composition Study

144,045Barrels

(Every Day)

California Energy Conversions

Comparison of Available Technologies

High

Yes

Yes

Yes

No

CreatesAdditional

No

Yes (must be rendered first)

Incineration/Gasification

HighHighHighLowCost

YesYesYesNoCreates problem by-products

YesYesYesNoEmissions issues

YesYesYesNoGroundwater contamination

YesYesNoYesCreates “Green” Energy

NoNoNoYesDestroys Dioxins

NoYesNoYesDestroys Prions

NoYesNoYesHandle High Risk Material

DigestorsPyrolysisLandfillTCP

Multiple available sources of renewable

energy

Municipal solid wasteAgricultural waste

Utilization of Existing Infrastructures

Water is Utilized Under Pressure Energy Efficiencies Over 80%

Water available to utilize in arid or

water intense environments

No Incineration or Combustion Avoiding Pollution and Formation of BAD ACTORS

Industrial operating plant, processing

organic and inorganic waste

Fuels MeetD-975D-396

No special handling

of products

Thermal Conversion Process Products

Carbon Minerals Gasoline SplitsTDP 40

Diesel Split

RawProductOrganic

Liquor

TCP Typical Process Flow for Sewage Sludge

Bar grates &grit removal Aeration

Primaryclarifier

Concen-tration

Aerobictreatment

Secondary clarifier Disinfection

Water, debris, and ~300 ppm

organics

Grit/debris

Fuel - gas Oil

Water discharge

dissolved organics

~20% dry solids

Sludge

All scum

Concentrate Grease(optional)

Thermally treated water

Minerals Carbon CWT-TP

Dissolved organics + inorganics

Water with

Replace digestors

Food CompositionA mixed wet waste stream - provides opportunities

FatFat

CarbsCarbs

ProteinProtein

Hydrocarbon Fuels• Hydrocarbons contain hydrogen and carbon

MethaneMethane

H C

H

H

H

Cetane, a 16Cetane, a 16--carbon straight chain hydrocarboncarbon straight chain hydrocarbon

OctaneOctane

H CCCCCCCC

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

HH CCCCCCCCCCCCCCCC

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

Fatty Acids are Similar to Hydrocarbons

Palmitic AcidPalmitic AcidCarboxylicgroup-COOH

HCO

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

C

H

H

O

H

CetaneCetane

HH CCCCCCCCCCCCCCCC

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

Amino Acids – Protein

• Amino acids contain a carboxylic group• They also contain an amine group

CarboxylicCarboxylicgroupgroup--COOH O N

HC

H

HH

C

O

COOH HAmine group, Amine group, --NHNH22

GlycineGlycine

Carbohydrates• Carbs have the general formula C(H2O)

– Blood sugar is glucose, C6(H2O)6

– Sucrose is two sugars attached through an “O”

SucroseSucrose

GlucoseGlucose

Breakdown of Plastics

Vehicle Recycling PartnershipVehicle Recycling PartnershipAuto Shredder ResidueAuto Shredder Residue

•• Oxygen/chlorine bondsOxygen/chlorine bondsIncluding Dioxins

PVCPVCPETPET

•• CarbonCarbon--carbon bondscarbon bonds

PolypropylenePolypropylene

PolystyrenePolystyrene

The biomass produced oil can be utilized in the refined oil markets of California. The refined oil markets in the United States can be categorized into two broad uses…

Fixed energy production market

6,576

Residential/CommercialResidential/Commercial

Distillate fuel 657Kerosene 36LPG 505Gasoline 20Residual fuel 30

1,248

IndustrialIndustrial

Distillate fuel 603Kerosene 7LPG 1,648Gasoline 159Residual fuel 87Petroleum coke 398Other petroleum1,435Lubricants 78Asphalt 513

4,926

Electrical power

Electrical power

Distillate fuel 51Petroleum coke 61Residual fuel oil 291

402

(000’s barrels per day)2002 statistics

Total: 19,665 barrels which is equivalent to 2.9MM tons a day

Transportation fuel market

13,089

Motor gasoline 88,355Fuel additives* 310Distillate fuel 1,800LPG 10

Distillate fuel 665Kerosene 1,608Aviation gasoline 18 Residual fuel oil 250Lubricants 73

10,475

2,614

On RoadOn Road

Off RoadOff Road

*Ethanol production between 170 and 200 of total fuel additive production

…petroleum use involves a complex and well developed supply chain.

Blend and deliver hydrocarbons to the end users. Various uses of petroleum are very specific in quality standards so precise blending is necessary. Often managepipeline distribution systems.

Crude oil Gatherers

Source crude oil from oil fields and manageinbound logistics for oilrefineries. Often own ormanage pipelines.

Guard DogsRemove water and saltSeparate various fractionsRemove sulfur and other

impurities

Can be either wholesale/retail customers or both.

Imports-60%Domestic-40%

End users

Blenders/distributorsRefiners

Enter product as a crude oil into supply system by using the gatherers.

Why use them?-Logistics-Security blanket torefiner

Enter product asa crude oil directly tothe refiner.

Why do this?-Bypass gatherer-Get recognition ofattributes of AFcrude

Enter product as fuel additive which is blended by refiner, blender or end user with other refined oils.

Why do this?-Increase value as AF is a fully refined product whichwould only need blending

Enter product as an intermediate feed stock in the refinery.

Why do this?-Increase value of AFproduct as it would reducerefinery operating costs

Enter product as refined finished product capable of being used by end user straight or blended.

Why do this?-Maximize value

… governments have altered the value proposition for both fixed energy production and transportation fuel markets.

Renewable fuel requirementsRestrictions on air emissions (including KYOTO) Mandatory government purchasing guidelines

Renewable fuel requirementsRestrictions on air emissions (including KYOTO) Mandatory government purchasing guidelines

Fixed energy production marketFixed energy production market

Policies requiring/restricting use

Subsidies

Transportation fuelmarketTransportation fuelmarket

Mandatory sulfur reduction in diesel fuelsMandatory government purchasing guidelinesKYOTO?

Mandatory sulfur reduction in diesel fuelsMandatory government purchasing guidelinesKYOTO?

Environmental restrictionson production of productEnvironmental restrictionson production of product

Emissions standards Permitting processesEmissions standards Permitting processes

Financial incentives for environmentally friendly production processes

Financial incentives for environmentally friendly production processes

Fixed energy production marketFixed energy production market

Loan guaranteesDirect capital supportLoan guaranteesDirect capital support

Production credits for manufacturers of products based upon environmental value of product in its final usageBlenders credits for users of the productLoan guaranteesDirect capital support

Production credits for manufacturers of products based upon environmental value of product in its final usageBlenders credits for users of the productLoan guaranteesDirect capital support

Transportation fuelmarketTransportation fuelmarket

Carbon credits for clean production of fuelCarbon credits for clean production of fuel

…it has been the belief of lawmakers that alternative fuels offer an opportunity to provide energy independence and petroleum reduction, however we have actually limited competition by enacting “exclusive definitions” at the federal government for incentive to stimulate change.

Demand U.S. 2002 annual: 25MM gallons, which is less than 600,000 barrels in entire year.Europe 2003: 341MM gallons, which is only 8.2MM barrels a year.

Environmental: EPA reducing sulfur in diesel fuel which will create lubricity problem.Biodiesel is supposed to be able to solve this problem. Farm policy: Theory is that biodiesel will create demand for vegetable oil which will increasesoybean demand and therefore keep prices of soybeans above marketing support level.Soybean processing industry driven: Need demand for soybean oil as soybean meal is whatdrives crushing capacity. Follow European lead and mandate use of renewable energy into fuel supply.

Change drivers

The Problems

U.S. is not Europe, where 50% of the transportation vehicles run on diesel.Biodiesel fuel has variety of functional use limitations including lack of solubility in cold temperatures.Biodiesel may create variety of environmental hazards associated with emissions from dieselengines.Biodiesel has been expensive to produce.

BIODIESEL FACTS

THE SOLUTION: Treat all fuels equally, if produced from biomass. If we are successful these efforts will help expand alternative fuel use and fossil fuel extraction. A level playing field should stimulate competition and result in lower prices.

Alternative fuel suppliers benefit from a variety of non-subsidy programs being enacted by both federal/state governments as well as companies using green power…

Mandates 20% reduction in federal motor vehicle fleets by end of calendar 2005.Executive Order 13149Executive Order 13149

Requires all diesel fuel sold in State of Minnesota contain 2% biodiesel by June 30, 2005.

-Creates demand for 16MM gallons of biodiesel annually.

Minnesota Consumption RequirementsMinnesota Consumption RequirementsLAWS CREATING DEMAND

State renewable fuel use standardsState renewable fuel use standards 13 states have legislation that requires a certain percentage of power fuel to be from renewable sources by various times in future. “RPS”

Variety of power companiesare exploring whether sociallyconscious consumer will pay

premium for green fuel

Variety of power companiesare exploring whether sociallyconscious consumer will pay

premium for green fuel

If these programs can generate revenue for power generators then producers will receive a portion of that premium.

THE PRIVATE GREEN CARD

These efforts will result in the offset of traditional petroleum extraction, negatively impacting major industries (both power and petroleum). We must build a bridge between these established industries and alternative energy producers. We collectively can embrace change by working together.

…next steps to develop a biomass and biofuels program and achieve petroleum reduction

•Understand the driving force and how to enter the market

•Identify problems and recommend solutions or incentives

•Expand excise tax reduction incentives to include income tax deduction

•Embrace power markets during a transitional period

•Easier maintenance, more forgiving, and a central location

•Typically dirtier fuels and most have grandfather status

End users

Blenders/distributors

Crude oil RefinersGatherers

Enter product as a crude oil into supply system by using the gatherers.

Enter product asa crude oil directly tothe refiner.

Enter product as fuel additive which is blended by refiner, blender or end user with other refined oils.

Enter product as an intermediate feed stock in the refinery.

Enter product as refined finished product capable of being used by end user straight or blended.

…There is a desire to use biomass waste and eliminate landfills. There are energy shortages, quality control and special handling issues on existing alternative fuels. What can a public/private partnership do?

Biodiesel is complicated due to alcohols and glycerin…Help the

industry find a solution. Power is an obvious one

Alternative fuels need a refiner. They convert

CRUDE to useful products. Forward contracts with refineries mean 975 and 396 specifications can be

achieved

Refiners

Work with an infrastructure that has figured out how to keep equipment within the specification of engine manufacturers. Work with legislators that understand the balance of the tax system and production incentives needed for promotion of biomass and alternative fuels

We need alternative energy produced from waste biomass – Bridge the gap and engage big industry to accelerate noble changes. Market and demand is enormous.

Minimize complications of different blends. Avoid boutique

approach

Definition of ALTERNATIVE FUELS should

be inclusive, not exclusive