Renewable

Jet Fuels

Carbon War Room

September 2014

Contents

2

I. Introduction to Renewable Jet Fuel and

Leading Companies

II. Overview of the RJF Forward Access Model

Carbon War Room

5

The Market

Policy

Technology

CWR: Dismantling Market Barriers

Capital

Renewable Jet Fuels and the Valley of Death

How do Scale Proven Technologies?

Renewable Jet Fuels and the Valley of Death

How To Scale Proven Technologies?

Renewable Jet Fuel Pathways

7

Natural Oils

Jatropha

and Other

Perennial

Oilseeds

Camelina Waste

oil/tallow

Aquatic

Micro-

Organisms

Hydrolysis of

Biomass to

Produce Sugars

Biomass

Hydrotreating

Thermochemical Conversion of

Biomass

Pyrolysis

Oil

Gasification

to Fischer-

Tröpsch

Fermentation of

Sugars through

GMOs to Produce

Alcohols, Oils or

Hydrocarbons

Further Refining to Produce Finished Fuels

Liquid-

Phase

Catalytic

Processing

• Food-based

starch crops (corn,

sugarcane)

• Dedicated Energy

Crops

• Residues/Waste

streams

Certain Demonstrated

Technologies Exist

8

$60.00 $77.50 $95.00 $112.50 $130.00 Base Value

Base Value = $80.81 cost per barrel in 2018 Dollars

Variable

Seed Yield at Maturity Scenario High Low Base

Non-Labor Irrigation ($/HA) 0.00 600.00 100.00

Average Labor Per Harvesting Man Day 5.00 30.00 10.00

Hectares Harvested Per Man Day 2.00 0.15 0.40

Crop Maintenance Labor ($/HA) 40.00 400.00 100.00

3rd Party Crushing ($/Tonne) 11.00 55.00 35.00

Seed Oil Content Scenario High Low Base

Number of Harvests Per Year 1 10 6

Cost of Crude Oil Scenario Low High Base

Years to Production 2 0 1

Renewable Jet Fuel Deal Model

9

Airline Challenge: Airlines are subject to escalating, unpredictable fuel (&

carbon) costs that are currently the largest single portion of operating costs.

Supplier Challenge: Low carbon, renewable jet fuels are not yet at

commercial scale. Certain demonstrated technologies exist, but suppliers

are facing the “Valley of Death”

Solution: Connect fuel consumers and fuel producers through a

transaction that solves for both challenges.

What Do Airlines Need?

10

Fuel

• Certified (technical, sustainability)

• At or below market price (at volume)

Complete solutions

• Able to be integrated into existing business model without additional infrastructure or human capital

investment

Airlines’ constraints:

• Cannot purchase more than small volumes of fuel at price premium

• Generally do not make direct investments in external companies/assets

• Creditworthiness insufficient to support project loan with offtake agreement

• Limited control over physical fuel delivery infrastructure

• Challenges in sustainability credentials/messaging

Financial Structure

11

Airlines RJF

Supplier(s)

• Airlines buy long-dated contracts for sustainable renewable jet fuels

specifying future volumes at a predetermined price structure.

• Fuel delivery will begin 1-5 years from date of contract signing and will

continue for a specified multi-year period.

• The offering will be syndicated among a select number of airlines,

limiting the expense and individual exposure of any one airline. The

money raised through the sales of the RJF contracts creates a pool of

non-dilutive capital that can be infused into selected renewable fuel

producer(s).

Financial Structure

12

The opportunity is to access the rights to future output of competitively priced renewable fuels

for physical delivery and carbon credits

Fossil Jet Fuel – Cost of Physical

Delivery + Regulatory Credits

Renewable Jet fuel

production cost

Upper price collar

Lower price collar

Time

$/bbl

Where the price of fossil Jet-A and

the cost of production of renewable

Jet fuel meet

While fossil Jet A is the main supply, the market price of renewable will

follow the red line – even though the production cost will likely diminish

Financial benefit to

the airline

• Net Present Value of Contract = Total Fuel Savings Adjusted By Discount Rate

• Discount Rate = Airline’s WACC + Fuel Project Risk

Mutual Benefit

13

Benefits for Airlines

• The right/ability to purchase lower cost RJF over a long-term time

horizon

• Reduced fuel prices and price volatility over the medium-long term

• An innovative vehicle to meet carbon emission reduction targets

• Airlines need not make direct investment in upstream companies or

assets. No need to pay premiums for fuel today.

• Public relations benefits: taking concrete climate action, setting a

precedent for the airline industry.

Mutual Benefit

14

Benefits for RJF Producers

• The fuel producer receives a much-needed short-term, non-dilutive cash

infusion and a long-term off-take contract for fuel;

• Improved ability to attract the growth capital it needs to produce

commercial volumes of fuel.

Thank You

Dan Fuller, Senior Advisor

djf@fullersmith.com

Mobile: +1 202 256 6013

Suzanne Hunt, Senior Advisor

shunt@carbonwarroom.com

Mobile: +1 202 256 6013

Aaron Tyrell Mitchell, Associate

amitchell@carbonwarroom.com

Office: +1 202 717 8446