Attachment 10Hypothetical Proposal

Applicant: New and Clean Biofuels Company (NCB)Title: Increased efficiency for processing low carbon intensity biodiesel feedstocks at an

existing biorefineryCEC Funds Requested: $4,000,000 Matching Funds: $6,000,000

PROJECT NARRATIVE

Introduction

Biodiesel (fatty acid methyl esters produced from vegetable oils and/or animal fats) is a clean-burning, renewable fuel that can be blended at any level with petroleum diesel and used by most diesel engines with few or no modifications. Results from several recent life cycle assessments (LCA) demonstrate that displacing petroleum diesel with biodiesel reduces greenhouse gas (GHG) emissions by 65-95%1. Using biodiesel in place of petroleum diesel therefore offers California consumers of transportation fuels an immediate and relatively inexpensive means of meeting GHG emission reduction targets mandated by the state’s climate change policies and legislation. If biodiesel use grows to 10-20% of the total diesel fuel use in California’s transportation sector in response to the Low Carbon Fuel Standard (LCFS), the demand for biodiesel could reach 427-765 million gallons per year by 20202. Meeting these demand levels will require significant expansion of the biodiesel industry in California.

Suppliers of biodiesel to California markets must be able to produce fuel from feedstocks that result in a calculated carbon intensity value below the LCFS reference baseline of 83.25 gCO2e/MJ (i.e., the carbon intensity value for soy biodiesel). Feedstocks derived from inedible waste greases and agricultural byproducts result in fuels with low carbon intensity values, but these types of feedstocks typically contain high levels of free fatty acids (5-30% by weight). Free fatty acids (FFA) contained in the feedstock will interfere with the transesterification reaction used to produce fatty acid methyl ester biodiesel (FAME) from fats and oils. The alkali catalyst used in the transesterification reaction will react with FFA to form soap, which consumes the catalyst and inhibits the production of FAME. Soap formation also leads to the formation of emulsions and gels in the post-reaction mixture, which causes difficulties in separating FAME from the glycerin co-product of the reaction. In order to use high FFA feedstocks for biodiesel production, it is therefore necessary to remove FFA from feedstocks prior to the transesterification process.

We propose to add an acid-catalyzed esterification system for processing high-FFA feedstocks at New and Clean Biofuels Company’s (NCB) existing commercial

1 Wang, M., Huo, H., and S. Arora, 2011, Energy Policy, 39(10), 5726–5736; Pradhan, A., Shrestha, D., Van Gerpen, J., McAloon, A., Yee, W., Haas, M. and J.A. Duffield, 2012, Transactions of the ASABE, 55(6), 2257-2264.

2 California Energy Commission, Transportation Energy Forecasts and Analyses for the 2011 Integrated Energy Policy Report, Draft Staff Report, August 2011, CEC-600-2011-007-SD, Sacramento, CA, pp 270

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biorefinery, which is located in San Diego. CA. In the esterification process, FFA is converted to FAME through a reaction between FFA and methanol in the presence of a strong acid catalyst (such as sulfuric acid). Following this reaction, the excess methanol is removed and the mixture of FAME (from the converted FFA) and fats/oils (from the original feedstock material) can be subjected to the alkali-catalyzed transesterification reaction to convert the remaining fats and oils to FAME3. The acid-catalyzed esterification reaction is a straightforward process based on proven methodology and technology. Several commercial biodiesel production facilities use a two-step process in which high-FFA feedstocks are subjected to acid-catalyzed esterification followed by alkali-catalyzed transesterification.

We also considered other commercially proven methods for removing FFA from feedstock materials, including caustic refining, physical refining, and short path distillation. While each of these methods has its advantages, they also have significant drawbacks, such as consuming large amounts of energy and process chemicals and having high capital costs for equipment and installation. In addition, all of these methods remove FFA from the feedstock materials (often with significant loss of desirable fats and oils) as opposed to converting the FFA to FAME, which reduces the yield of biodiesel that will be obtained from a given amount of feedstock. NCB commissioned an assessment study by a world-recognized engineering firm to evaluate currently available technologies and recommend the best method for processing high-FFA feedstocks at our existing biorefinery. The study concluded that acid-catalyzed esterification achieved the most favorable balance between maximizing cost effectiveness while minimizing energy intensity, product loss, and chemical usage.

The proposed project comprises the design, construction, and commissioning of an acid-catalyzed esterification process at NCB’s existing biorefinery. This will include a reactor, feedstock dryer, neutralization tank, and other related system components. The project also will include upgrades to the facility’s existing methanol recovery and purification system to accommodate the higher volumes of recovered excess methanol resulting from the addition of the esterification process. Successful implementation of the proposed project will extend the upper limit of feedstock FFA levels that can be effectively processed by the facility while maximizing product yields and reducing the amount of chemicals and energy required for product purification. This will make it feasible to process a wider range and greater volumes of waste greases, agricultural byproducts, and other lower-grade feedstocks with low carbon intensity values.

The development stage of the proposed project is Stage 3 (Commercial Facilities). Work can begin immediately and will be expedited by the substantial amount of existing infrastructure and permitting in place at the current facility. This project will contribute directly to achieving the ARFVTP objective of lowering the carbon intensity of fuels produced at existing California-based production facilities. The project meets the eligibility requirements for three categories:

enhancement of commercial biofuel production technology,

3 Van Gerpen, J., Shanks, B., Pruszko, R., Clements, D., and G. Knothe, Biodiesel Production Technology, July 2004, NREL/SR-510-36244, National Renewable Energy Laboratory, Golden, CO, pp. 110.

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facility process efficiency improvements leading to reductions in GHG emissions, and

process improvements to accommodate lower carbon feedstock and fuel production.

Background

The entity that will own and operate the proposed project is New and Clean Biofuels Company (NCB). NCB has extensive experience in the renewable fuels industry and currently operates one of the largest continuously operating biodiesel production facilities in California. The facility occupies a total area of approximately 6 acres: 3 acres dedicated to production (with 2 acres outside and approximately 1 acre under roof) and an additional 3 acres under development as a high throughput biodiesel fuel terminal.

NCB’s biodiesel production facility began production in late 2009 and currently has a maximum production capacity of 10 million gallons per year. The proprietary production process utilizes a hybrid processing approach designed to allow certain feedstock flexibility while also enabling high throughput volume and efficient production rates. The facility was designed specifically to support multiple stages of expansion to an ultimate capacity of 80 million gallons of biodiesel per year. NCB is able to process multiple feedstocks at its existing facility and has produced commercial volumes of biodiesel from a variety of vegetable oils (e.g., soybean, canola, safflower, and Camelina sativa), rendering products (e.g., poultry fat, waste and/or off-spec oils) and bio-oils derived from algae. NCB recognized the importance of feedstock flexibility during the original design. As part of the initial phase of development, the feedstock tank farm was constructed to allow the simultaneous storage and blending of up to five different types of feedstock. This allows blending of different feedstocks in order to achieve specific processing and fuel quality objectives.

NCB’s proprietary production process includes robust product separation and purification processes that result in exceptional fuel quality. Currently installed process equipment includes a distillation column, dryer, filtration system, vacuum pump, evaporators, separation tanks, centrifuges, heat exchangers, chillers, condensers, pumps, and mixers. Additional facility infrastructure includes storage tanks and loading/unloading equipment for raw materials (feedstock, methanol, catalyst) and products (biodiesel and glycerin), a natural gas fired boiler (to produce steam for process heating), an emergency electricity generator, a nitrogen generator (for blanketing tank headspaces with an inert gas), air compressors, and extensive controls, instrumentation and piping.

NCB is currently implementing a project to expand its biorefinery. The expansion will leverage the substantial amount of existing infrastructure at the facility and increase its production capacity from 10 million to 25 million gallons per year. The project

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comprises the design, construction, and commissioning of a parallel transesterification reactor line and related augmentations to equipment to support higher production volumes. This project was awarded funding through a California Energy Commission grant. Because our project team began equipment procurement and installation activities immediately after receiving the notice of proposed award in November 2013, the project is progressing quickly and is ahead of schedule. The expanded production capacity is expected to be operational by March 2015. The facility expansion project is complementary to the project proposed in this application. It is likely that the same construction contractors for mechanical, electrical and controls will be selected for both projects. It is desirable to have the construction for both projects take place concurrently since it would reduce the number of times that contractors are mobilized and brought on-site to work on installations. Having the projects completed concurrently also would minimize the amount of time that production would be taken off-line due to construction, reducing impacts to our customers. In addition, mobilizing contractors to work on multiple projects at once should contribute to lower overall costs and result in greater efficiency in completing both projects.

NCB also is in the process of completing construction of a biodiesel fuel terminal on a 3.3-acre parcel of land adjacent to the existing production facility. When completed, the terminal will feature 500,000 gallons of biodiesel storage, loading and unloading equipment for tanker trucks and rail cars, and an automated fuel delivery system. The terminal will be compatible with standard operating procedures and equipment used for loading and transporting petroleum products, allowing seamless integration with existing fuel distribution infrastructure. This project was awarded funding through a California Energy Commission grant and is expected to be completed by October 2015. The terminal project is on an adjacent land parcel that is separate from our production facility. Therefore, the construction of the terminal will not have any impact on our operations or ability to complete the expansion and pretreatment projects.

The existing NCB production facility includes a state-of-the-art on-site quality control laboratory equipped with instrumentation for analyzing incoming feedstocks and other raw materials and outgoing biodiesel and glycerin. Samples are collected and analyzed regularly to verify that all finished biodiesel meets the fuel quality specifications under ASTM D6751 (Standard Specification for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels) as well as far more stringent internal specifications and customer specifications. These in-house laboratory resources, which far surpass industry norms, contribute fundamentally to the exceptional quality assurance and quality control practices that have earned NCB a reputation within the marketplace for supplying fuel of impeccable quality.

Project Description

The proposed project will be implemented at NCB’s existing biorefinery and substantially increase its ability to process high-FFA feedstocks efficiently. A new reactor will be installed for carrying out the acid-catalyzed esterification of high-FFA feedstocks. New equipment also will be installed in conjunction with upgrades and

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modifications to existing equipment for separate storage of high-FFA feedstocks, feedstock pre-treatment, reaction mixture separation and neutralization, and recovery of excess methanol. Successful implementation of the proposed project will extend the upper limit of feedstock FFA levels that can be effectively processed by the facility while increasing product yields and reducing the amount of chemicals and energy required for product purification. This will make it feasible to process a wider range and greater volumes of waste greases, agricultural byproducts, and other lower-grade feedstocks with low carbon intensity values. It is anticipated that 25% of the facility’s total output capacity of 25 million gallons of biodiesel per year will be produced from high-FFA feedstocks processed by the proposed acid-catalyzed esterification system. The proposed project will therefore result in the production of 6.25 million gallons of biodiesel per year derived from high-FFA, low carbon intensity feedstocks.

While the system design will emphasize feedstock flexibility and the ability to process a range of fats and oils, we will focus on corn oil derived from the distillers grains co-product of ethanol production (prior to the drying process). Corn oil is a high-FFA feedstock increasingly being used as a feedstock for biodiesel production. A carbon intensity value of 4.00 gCO2e/MJ is specified in the LCFS lookup tables for FAME biodiesel produced from this feedstock, which represents a 95.9% reduction in GHG emissions relative to ultra low sulfur petroleum diesel (98.03 gCO2e/MJ) and a 95.2% reduction relative to soy biodiesel (83.25 gCO2e/MJ). In the 2014 U.S. Baseline Briefing Book Projections for Agriculture and Biofuels Markets, the Food and Agriculture Policy Research Institute (FAPRI) forecasts rapid growth in the number of dry mill ethanol plants that extract oil from distillers grains, which will increase the volumes of corn oil available for use as biodiesel feedstock. The FAPRI report projects that the relative proportions of feedstocks used for biodiesel production in the U.S. will shift significantly as a result of the increasing availability of corn oil (Fig. 5). FAPRI estimates that the demand for corn oil used for biodiesel production will nearly triple over the next decade, from just under 1.1 billion tons in 2013 to 2.85 billion tons in 20244. NCB has established relationships with reliable suppliers of corn oil and will be able to source this material as feedstock for its biorefinery.

4 Food and Agricultural Policy Research Institute, U.S. Baseline Briefing Book: Projections for Agricultural and Biofuel Markets, March 2014, FAPRI-MU Report #02-14, University of Missouri, Columbia, MO, 59 pp.

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Projected volumes of biodiesel produced in the U.S. from various feedstocks (figure from the 2014 U.S. Baseline Briefing Book Projections for Agriculture and Biofuels Markets, the Food and Agriculture Policy Research Institute, pg. 37.)

In addition, NCB has been working with suppliers to develop other sustainable sources of biodiesel feedstock (including used cooking oil (UCO) and other inedible greases, Camelina sativa, jatropha, pongamia, meadowfoam, and microalgae) and may incorporate these feedstocks when available. The actual types and amounts of feedstocks sourced by NCB for its biodiesel production operations will depend on a combination of market factors (pricing, quality, availability, customer preference) and sustainability criteria.

The proposed work will comprise the design, procurement, installation, and commissioning of the following equipment :

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A simplified schematic diagram of the biodiesel production process at NCB’s biorefinery and proposed modifications to increase the efficiency of processing high-FFA feedstocks (system components show in red will be added/modified).

High-FFA feedstock storage : A new storage tank will be installed exclusively for receiving and storing high-FFA feedstocks. This will allow these feedstocks to be handled separately and subjected to additional processing steps before being sent to the existing transesterification process. This will also make it possible to account explicitly for the volumes of finished fuel derived from high-FFA feedstocks for the purpose of calculating carbon intensity values.

Feedstock pre-treatment equipment: A feedstock dryer was installed during the initial construction of NCB’s biorefinery, but it has not yet been made operational. The dryer will be connected to the existing piping and instrumentation systems (and further modified, if necessary) so that it can be used to remove water from high-FFA feedstocks prior to esterification. It may also be necessary to incorporate a gravity separator or centrifuge to remove solids from high-FFA feedstocks.

Esterification reactor : A stainless steel reactor will be installed for carrying out the acid-catalyzed esterification of high-FFA feedstocks. Ancillary equipment – pumps, mixers, valves, etc. – will also need to be procured and installed. The reactor will be installed in the space currently occupied by an existing process tank that is not being used. The structural support for the reactor is already in place and no further permitting is anticipated.

Separation equipment : A separator and centrifuge will be installed to remove water, soaps, and other impurities from the mixture transferred from the reactor following the esterification of high-FFA feedstocks.

Neutralization tank : A stainless steel tank will be installed for neutralizing the acidified ester/oil mixture produced by the esterification of high-FFA feedstocks. The mixture must be neutralized before it is sent on to the transesterification process to prevent it from interfering with the base catalyst used in the transesterification reaction.

Methanol recovery, purification and recycling : A larger proportion of excess methanol is required to drive the acid-catalyzed esterification reaction relative to the base-catalyzed transesterification reaction. Processing high-FFA feedstocks will therefore significantly increase the amount of methanol that must be recovered and purified for reuse. The existing methanol distillation column will be modified and/or a new distillation column and vapor control condenser will be installed in parallel in order to accommodate the higher throughput volumes of recovered excess methanol resulting from the esterification process. Heat exchangers, additional chiller capacity, additional boiler capacity, pumps, and other ancillary equipment may also be installed. The existing equipment and steel support structure in place at NCB’s biorefinery will allow the upgrades to the methanol recovery and purification system to be implemented immediately.

Instrumentation and controls : It will be necessary to upgrade the existing instrument and controls system at the biorefinery to integrate the new installations. The control system automates key aspects of production and was originally designed to accommodate upgrades required to support future expansions of the facility.

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A fully integrated control system allows automated operations that reduce total operating costs and ensure reliable, high quality fuel production: a screen shot from control system display.

The proposed work will dovetail with the projects currently being implemented at NCB’s biorefinery to expand production capacity and build a biodiesel fuel terminal on an adjacent parcel of land. By coordinating project tasks and work schedules, it will be possible to reduce costs and simplify construction by mobilizing contractors and equipment to work simultaneously on multiple projects. All of the projects will benefit by leveraging common resources and aligning themselves with a coherent overarching strategy for permitting and facility design. The objectives of the projects strongly complement one another and the impact of the individual projects will be reinforced as a consequence of being implemented over a similar time frame. The projects will comprise an integrated effort to increase the production capacity and distribution network for biodiesel in California while lowering the carbon intensity of the fuel. This end result will be a highly significant contribution to the fundamental ARFVTP objectives of reducing petroleum dependence and GHG emissions associated with transportation fuels in California.

Operational Goals and Objectives of the Proposed Project

1. Increase the efficiency of biodiesel production from high-FFA feedstocks at NCB’s existing biorefinery: A new reactor will be installed for carrying out the acid-catalyzed esterification of high-FFA feedstocks. New equipment will also be installed in conjunction with upgrades and modifications to existing equipment for separate storage of high-FFA feedstocks, feedstock pre-treatment, reaction mixture separation and neutralization, and recovery of excess methanol. Successful implementation of the proposed project will extend the upper limit of feedstock FFA levels that can be effectively processed by the facility while maximizing product yields and reducing the amount of chemicals and energy required for product purification. This will make it feasible to process a wider range and greater volumes of waste greases, agricultural byproducts, and other lower-grade feedstocks with low carbon intensity values.

2. Lower the carbon intensity of biodiesel produced at NCB’s existing biorefinery: It is anticipated that 25% of the facility’s total output capacity of 25 million gallons of biodiesel per year will be produced from high-FFA feedstocks processed by the proposed acid-catalyzed esterification system. The proposed project will therefore result in the production of 6.25 million gallons of biodiesel per year derived from high-FFA, low carbon

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intensity feedstocks. While the system design will emphasize feedstock flexibility and the ability to process a range of fats and oils, we will focus on corn oil derived from the distillers grains co-product of ethanol production (prior to the drying process). A carbon intensity value of 4.00 gCO2e/MJ is specified in the LCFS lookup tables for FAME biodiesel produced from this feedstock, which represents a 95.9% reduction in GHG emissions relative to the relevant fossil fuels reference baseline (98.03 gCO2e/MJ for ultra low sulfur diesel). Relevant calculations are presented in the “Responses to Scoring Criteria” section.

3. Contribute to petroleum displacement and reduction of GHG emissions in California: Delivering 6.25 million gallons of biodiesel per year into California’s diesel fuel supply will result in the displacement of 5.86 million gallons of petroleum per year. The associated reduction in GHG emissions (relative to ultra low sulfur diesel) will be 74,125 metric tons of CO2 equivalents per year. The total reduction in GHG emissions over the projected 20-year lifetime of the system will be 1,482,500 metric tons of CO2 equivalents. Relevant calculations are presented in the “Responses to Scoring Criteria” section.

4. Ensure that all biodiesel produced at the facility meets fuel quality specifications: Ensuring fuel quality is critical to the growth of the biodiesel industry in California and the smooth implementation of the LCFS. Low-quality fuel and fuel not suitable for commercial use in California’s diverse climates must be prevented from entering the California market. Extra care will be taken to insure that biodiesel produced from high-FFA feedstocks meets all fuel quality specifications, particularly those related to cold flow properties (cloud point and cold-soak filtration test). The existing on-site quality control laboratory will be used to evaluate prospective new feedstocks, verify the properties of incoming feedstock lots prior to releasing them for production, and certify that the finished biodiesel product meets the ASTM D6751 specification for B100 as well as other more stringent internal and customer requirements.

Successful implementation of the proposed project will contribute directly towards achieving the following key policy objectives set forth in the California Energy Commission’s 2014-2015 Investment Plan Update for the Alternative and Renewable Fuel and Vehicle Technology Program5:

Achieving near-term and long-term reductions in GHG emissions Reducing California’s use and dependence on petroleum transportation fuels Increasing the use of alternative and renewable fuels Producing alternative and renewable low-carbon fuels in California

Explanation of how Operational Goals and Objectives will be implemented through the tasks described in the Scope of Work:

Operational Goal #1 (Increasing the efficiency of biodiesel production from high-FFA feedstocks at NCB’s existing biorefinery) will be achieved through the installation and operation of the equipment associated with the proposed acid-catalyzed esterification system. The items in the Scope of Work relevant to achieving this goal include Task 1.7 (Identifying and Obtaining Required Permits), Task 2 (Design, Procurement and Construction), and Task 3 (Commissioning and Training). Upon completion of these tasks, the upper limit of feedstock

5 Smith, C. and J. McKinney, 2013. 2014‐2015 Investment Plan Update for the Alternative and Renewable Fuel and Vehicle Technology Program Revised Staff Draft. California Energy Commission, Fuels and Transportation Division. Publication Number: CEC‐600‐2013‐003‐RSD, pp 47.

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FFA levels that can be effectively processed by the biorefinery will have been extended, making it feasible to produce fuel from a wider range and greater volumes of waste greases, agricultural byproducts, and other lower-grade feedstocks with low carbon intensity values.

Operational Goal #2 (Lowering the carbon intensity of biodiesel produced at NCB’s existing biorefinery) will be achieved as a direct result of producing fuel from high-FFA feedstocks processed by the proposed esterification system. Upon completion of Tasks 2-3 in the Scope of Work, the biorefinery will have an increased ability to process corn oil and other low carbon intensity feedstocks. This will result in a significant reduction in the overall carbon intensity for the fuel produced by the biorefinery.

Operational Goal #3 (Contributing to petroleum displacement and GHG emission reduction is California) will be achieved by ongoing operations at NCB’s biorefinery after the construction and commissioning of the proposed esterification system has been completed. Upon completion of Tasks 2-3 in the Scope of Work, 6.25 million gallons of biodiesel per year (25% of the total production capacity of the biorefinery) is projected to be produced from corn oil and other high-FFA, low carbon intensity feedstocks processed by the esterification system. Supplying this biodiesel to California’s diesel fuel markets will achieve the targeted levels of petroleum displacement and GHG emission reduction.

Operational Goal #4 (Ensuring that all biodiesel produced at the expanded biorefinery meets fuel quality specifications) will be achieved through the ongoing fuel quality testing carried out as part of NCB’s standard operating procedures. All fuel produced at the biorefinery will be analyzed in the on-site laboratory to verify that it meets mandated fuel quality specifications before being released for sale. Particular attention will be paid to fuel produced from high-FFA feedstocks processed by the proposed esterification system after the construction and commissioning of the system has been completed. Meeting this objective will be integrated with performance of Task 4 (Data Collection and Analysis) in the Scope of Work.

Commercialization Plan

Commercialization activities for this project will include contracting higher volumes of low carbon intensity feedstock and modifying customer contracts to reflect the lower overall carbon intensity. Key suppliers of corn oil have been contacted to confirm that sufficient volumes will be available to NCB. NCB has longstanding and positive relationships with our customers, which include major oil companies, refiners, truck stop operators, and bulk fuel distributors. Many of our customers are requesting a higher percentage of low carbon intensity fuel including specific requests for corn oil biodiesel.

The project has the ability to contribute substantially to the build-out potential of the existing facility. A list of incremental expansion steps to achieve a production capacity of 60 to 80 million gallons per year is included in the table below.

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Summary of NCB’s Build-Out Potential

Year Production Capacity Comments

2014 25 million gallons per year

Complete production capacity expansion project and demonstrate an increase of flow rates from 10 million to 25 million gallons per year

2015 Bulk Fuel Terminal

Complete bulk fuel terminal which will allow high throughput and distribution of advanced biofuels for use within California.

2016 Pretreatment Complete installation of pretreatment system to increase efficiency for processing low carbon intensity biodiesel feedstocks (the project proposed in this application)

2017 30 million gallons per year

Further optimization of process equipment installed during 2014 and minor new equipment installations.

2018 40 million gallons per year

Build a second outdoor steel tower structure adjacent to current tower. Install additional reactors in the existing process room. Install additional chemical storage adjacent to the existing storage. Reroute driveway for glycerin loading and chemical unloading. Install rail containment and bulk flammable storage to allow receipt of methanol by rail.

2019-2020

60 - 80 million gallons per year

Construct a second process room within the existing building (the existing site was selected and laid out to specifically allow for the future addition of a second process room to support expansion). Install pipeline direct to the deepwater shipping channel to support barge and/or ship transportation for higher volumes of inbound feedstock and outbound biodiesel fuel.

Responses to Scoring Criteria

a. Qualifications of the Project Team

1. Personnel. The project team will include the following members, all of whom are located within California and are employed by NCB. This project team has been responsible for our successful completion of multiple grant and bond funded projects and each member has specialized exclusively in biodiesel since their year of hire at NCB.

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Project RoleTitle Key Project Functions

Project Manager

Co-Founder and Chief Executive Officer

Overall project coordination and tracking completion of project milestonesLead feedstock procurement and biodiesel and glycerin sales effortsManage public relations associated with the project

Operations Manager Director of Operations

On-site accountability for the project including supervision of all contractorsFinalize equipment specifications and construction designs

Financial Manager Corporate Controller

Manage budget and maintain final contractsDefine inventory control proceduresMonitor compliance with Low Carbon Fuel Standard and Renewable Fuel Standard reporting requirements

Procurement Manager

Procurement and Logistics Manager

Complete competitive bid process for contractsManage equipment procurementLead chemical procurement efforts

Grant Administrator

Accounting Manager

Prepare grant invoices and track budgetMaintain original receiptsCollect and prepare labor reportingIssue purchase orders

Environmental, Health and Safety Manager EH&S Manager

Secure and comply with all permits and plans needed for the projectDevelop standard operating procedures for the new installationsTrain employees on new operations

Laboratory Manager

Laboratory Manager

Complete all laboratory testing and simulations to support new installationsEvaluate inbound feedstock and develop new production formulationsTest finished fuel properties

Past Projects. NCB has successfully implemented multiple relevant projects which exceed $29 million in grant and bond funding. All projects are related to our NCB’s biorefinery in San Diego, CA. Our team’s completion of these projects demonstrates our ability to meet deadlines and milestones of biodiesel-related projects and to successfully manage multiple projects simultaneously.

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Grant through the California Air Resources Board (Grant Number xx-xxxx): NCB received funding through the Alternative Fuels Incentive Program to help cover the costs associated with the installation of key processing equipment at its production facility. The California Air Resources Board provided a letter congratulating our staff for fulfilling the objectives outlined in the grant agreement and for the outstanding services we performed.

Grant through the U.S. Department of Energy (DOE Grant 11-xxxx): NCB received a Phase I grant from the U.S. Department of Energy Small Business Technology Transfer (STTR) program to support preliminary investigation of algae as a biodiesel feedstock.

Grant through the California Employment Training Panel (ETx-xx): NCB received grant funding to support employee training programs applicable to renewable fuels production and quality control.

California Statewide Communities Development Authority Variable Rate Demand Industrial Development Revenue Bonds Series 2007B NCB secured tax-exempt bond financing to support the initial construction of our biorefinery in San Diego. Bond financing for new construction includes rigorous deadlines and reporting requirements.

Grant through the California Energy Commission (CEC Grant Number PIR-xx-xxx): Community Fuels received grant funding from the Public Interest Energy Research (PIER) program to support process efficiencies at its biodiesel facility.

Grants through the U.S. Department of Agriculture Advanced Biofuel Payment Program REAP Section 9005: NCB has received grant funding to support advanced biofuel production.

Grant through the California Energy Commission (CEC Grant Number ARV-xx-xxx): NCB received grant funding to support the installation of an advanced biofuel terminal adjacent to the existing bio-refinery (Alternative and Renewable Fuel and Vehicle Technology Program).

California Statewide Communities Development Authority Industrial Development Revenue Bonds 2013 Series A-T NCB secured new fixed rate bond financing to repay the 2007 variable rate bonds.

California Statewide Communities Development Authority Refunding Revenue Bonds 2013 Series A. NCB secured new bond financing to support new projects and expansion plans.

Grant through the California Energy Commission (CEC Grant Number ARV-xx-xxx): NCB received grant funding to support the expansion of the production capacity of the existing bio-refinery.

2. Experience. NCB’s employees will be responsible for management and administration of the project. NCB has previously served as the project manager for the design, permitting, construction and commissioning of its existing biodiesel production facility in San Diego, CA, which is one of the largest continuously operating advanced biorefineries in the Western U.S. That project was substantially larger than the currently proposed installations and involved greater complexity associated with permitting, construction management and commissioning.

In addition to our experience in construction management, NCB is an established producer and marketer of biodiesel. We have been active in the biodiesel industry since 2005 and have produced and sold millions of gallons of high quality biodiesel. We are one

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of very few producers to have secured quality approval from multiple major oil companies as a result of comprehensive on-site audits. These major oil companies and refiners are current customers of NCB and are seeking substantially higher volumes of high quality biodiesel.

Our NCB team has combined experience of over 100 years in construction, design, commissioning, and operations of chemical manufacturing and bio-refinery facilities.

b. Business Plan

1. Technology Plan

a) Effectiveness of proposed technologies and processes. The project proposed will expand the feedstock that NCB can process and improve overall efficiencies and yields. This will lower overall costs of production while also improving the carbon intensity value of the fuel produced; both of these outcomes will improve our ability to compete in the commercial California marketplace, especially against out of state and international producers.

b) Role of Technology Partners. NCB’s biorefinery in San Diego, CA has been in continuous operation since 2008. Having designed the facility ourselves, NCB has deep institutional knowledge of the production process and can readily make changes to the system when necessary – this is a fundamental advantage over using off-the-shelf technology in a production process designed by an outside party. NCB staff has gained extensive experience operating and maintaining the specialized equipment at the facility and has learned to manage the overall system to achieve optimal performance.

NCB’s biorefinery design allows us to modify existing and/or new installations as needed to meet the current demands of the market. Equipment is laid out with space in between each system or sub-system to allow for easy maintenance and, importantly, future modifications. This is different than many ‘turn-key’ technologies for biodiesel production that involve a compressed design that does not allow for efficient modifications and can result in obsolete plant and equipment. Our design team recognized that new technologies, processes and feedstocks would be developed continuously and that fuel quality standards would continue to evolve. The design of the existing biorefinery allows for flexibility to adapt to changing conditions over the lifetime of the facility.

NCB hired a world-recognized engineering firm to complete an objective assessment study including detailed analysis on currently available pretreatment technologies, yields, energy usage, capital costs and operating costs. The results of this study were used to develop our own model for pretreatment which was then validated in our laboratory through production simulations. By designing and implementing systems ourselves we do not incur ongoing licensing fees and are able to modify our process as new raw materials are developed and fuel standard evolve. This improves our ability to compete in a dynamic marketplace and has proven to be a competitive advantage.

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2. Marketing Plan

a) Target market and market growth. The proposed project will expand the capabilities of NCB’s existing biorefinery, which will enable us to compete more favorably against out of state and international producers. Although the project does not involve increasing the production capacity of the facility, the new installations will enable us to lower the overall carbon intensity of the fuel we produce while improving efficiencies which will help us retain our existing customer base and gain new customers. The target markets will be obligated parties under the Federal Renewable Fuel Standard (i.e., petroleum oil refiners and importers) and regulated parties under the California Low Carbon Fuel Standard. As the carbon reduction requirements increase under LCFS in future years, lowering the carbon intensity of our fuel will become increasingly important to secure fuel sales contracts. NCB is well positioned to serve these markets since we have several years of experience directly supplying millions of gallons of our high quality fuel to obligated parties. It is common for other biodiesel producers to fail to meet the rigorous quality requirements necessary to directly supply obligated parties and, as such, are unable to sell high volumes of fuel. NCB has successfully completed the lengthy and comprehensive product quality audits required by major oil companies and in-state petroleum refiners necessary to be a direct supplier and is ideally positioned to supply commercial volumes of lower carbon intensity fuels.

The market viability of the proposed project is dependent upon increased demand for renewable fuels driven in part by the California Low Carbon Fuel Standard and the Federal Renewable Fuel Standard and by favorable blend economics (i.e., the cost of biodiesel relative to petroleum diesel). NCB will continue to serve its target market by focusing primarily on supplying major oil companies, petroleum refiners, and bulk distributors who demand a product with a clear chain of custody and exceptional quality certifications. Demand for biodiesel is anticipated to grow since it may be used to comply with both the U.S. Renewable Fuel Standard and the California Low Carbon Fuel Standard. Both regulations are structured to increase requirements annually in order to achieve longer-term emission reduction goals. NCB anticipates demand for biodiesel in the greater San Diego area will exceed 100 million gallons per year by 2020. This demand will largely be driven by the installation of blending capabilities at the existing San Diego-area petroleum terminals. NCB is ideally positioned to supply biodiesel for these major oil company terminals since we meet the most rigid quality requirements and are located within a 5-mile radius of area terminals.

b) Competition. Competition is primarily expected to come from larger, out-of-state biodiesel producers and from international producers from Canada, South America and Indonesia. Competition also is anticipated from brokers who do not typically certify quality and may not have clear chain of custody procedures. NCB plans to differentiate its product on the basis of fuel quality, strategic location, in-state production, sustainability certifications and clear chain of custody including feedstock origination details. These areas, in which NCB excels, are proven to appeal to major oil companies and refiners who require more stringent compliance and quality assurances.

The introduction of increased volumes of renewable diesel could represent additional competition for biodiesel and may impact demand. Biodiesel has strong lubricity

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benefits and NCB markets the performance benefits associated with a strategy to use renewable diesel and biodiesel blended together. Also, the project does involve economic and policy risk. If the anticipated demand for renewable fuels does not materialize as a result of Federal and State policies, the outcomes for the project may not be attainable. Also, if a sustained period of poor blend economics is encountered, demand for biodiesel may soften and be replaced by other fuel sources such as natural gas or electrification.

c) Market barriers. Market barriers may develop as a result of the California Air Resources Board (ARB) Alternative Diesel Fuel (ADF) standard. This ADF standard is still under development and could result in prohibiting biodiesel use within California for blends above 5% (i.e., B5). NCB is closely monitoring the development of the ADF standard and anticipates complying with a potential ARB rulemaking through the use of additives, feedstock blending, and/or modifying our customer mix to reduce overall blend percentages. NCB has a proven track record of being able to modify production in order to meet evolving customer and regulatory standards.

Market barriers also may develop as a result of modified fuel standards or changes to warranties from original engine manufacturers (OEM). NCB participates in a number of technical work groups to understand and prepare for future potential changes. As an example, all NCB biodiesel met the voluntary 1-B ASTM biodiesel specification nearly one year prior to the higher standard being adopted by ASTM. As another example, OEMs are currently evaluating the impact of metals on new diesel engine technologies. In response, NCB has already reduced our metals content beyond the ASTM requirements and to the level considered optimal by OEMs. Quality specifications demanded by customers continue to tighten. Because of this, NCB stays in regular contact with the quality auditors at multiple major oil companies to prepare for future changes to their biodiesel specifications.

c. Project Implementation

1. Project Tasks. The project tasks include administration which is necessary to manage and comply with the grant agreements and required reporting. Administration efforts are also necessary to track project activities, budgets and to ensure that the project team reaches milestones and ultimately achieves the objectives of the project. The second task involves design, procurement and construction activities which are necessary to complete the new installations and modifications to the existing biorefinery. Commissioning and training is the third task and is critical to ensure safe and compliant operation of the new installations. The fourth task is data collection and analysis to capture actual operational data that will be integrated into the final report for the project.

2. Fuel Quality. NCB has both BQ9000 producer and BQ9000 laboratory certifications. Our quality assurance plan is tailored to meet or exceed the requirements of the BQ9000 Biodiesel Accreditation Program. This plan demonstrates our ability to provide product that conforms to ASTM D6751 (Standard Specification for Biodiesel (B100) Blend Stock for Middle Distillate Fuels) and to address quality assurance including processes for corrective action and the prevention of nonconformity. The quality assurance plan includes procedures for documentation control, testing and sampling requirements. In-process critical testing is performed daily throughout the production process to verify that the product meets specific quality parameters, and that the process works according to its design. In-

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process testing also allows for identification of any problems that arise during production so they can be corrected in a timely manner. Final production lots are tested and a Certificate of Analysis is generated before it is sold to customers.

To ensure that laboratory testing is accurate, measuring and monitoring devices are controlled according to established calibration procedures and a calibration schedule. Each such analytical device has a corresponding calibration record that maintains the device’s calibration data and history. The calibration of measuring equipment is verified daily with working standards that are appropriate for each test method to confirm the analytical system is in statistical control.

3. Safety. NCB employs a full time Environmental, Health and Safety Manager, who has over 15 years of experience in chemical plant operations. A daily safety inspection is completed during any times that new installations or modifications are being made at the biorefinery. The company has developed and maintains a comprehensive library of standard operational procedures (SOP) that describe all aspects of proper and safe plant operations. All new hires are trained to comply with the company’s SOPs.

NCB’s existing Injury and Illness Prevention Plan is updated annually to identify and mitigate potential hazards. NCB also maintains all plans necessary for safe and compliant operations including, but not limited to, Chemical Hygiene Plan, Emergency Response Procedures, Spill Prevention Control and Countermeasure Plan, Slug Discharge Control Plan, Storm Water Pollution and Prevention Plan, Storm Water Monitoring Plan, Respiratory Protection Program, Fire Prevention Plan, Management of Change Procedures, Confined Space Program, and Process Hazardous Waste Management Plan. Process Safety Management reviews also have been completed by qualified third parties.

An NCB Emergency Coordinator and Alternate Emergency Coordinator are on-call 24-hours per day. NCB’s biorefinery is located in San Diego and benefits from the City of San Diego police department, which is comprised of highly trained professional officers.

4. Maintenance. NCB’s in-house maintenance department has performed the majority of the required maintenance at the existing biorefinery since operations commenced in 2008, gaining extensive experience with the specific equipment and systems at the facility. NCB’s maintenance department will continue to perform the majority of the required maintenance at the biorefinery, including the newly installed feedstock pre-treatment system, upon completion of the proposed project. Outside contractors will be retained for any work that is beyond the expertise of NCB’s maintenance department or for work that may require specialized equipment.

NCB has instituted a comprehensive training program for the staff at its San Diego biorefinery. Personnel are trained in all aspects of operations, materials handling, and maintenance of the equipment at the plant. The existing training procedures will be amended to incorporate the new equipment that will be installed during the proposed project. Hands-on training with the new equipment will be carried out during the startup and commissioning of the feedstock pre-treatment system.

5. Feedstock. The specific types and amounts of feedstocks sourced by NCB for its biodiesel production operations will depend on a combination of market factors (pricing, quality, availability, customer preference) and sustainability criteria. While the new installations will be designed to allow feedstock flexibility, we will focus on high FFA corn oil

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derived from the distillers grains co-product of ethanol production. This feedstock has been selected because we have customers requesting this feedstock due to its low carbon intensity value. We also have corn oil feedstock supply arranged from highly reputable suppliers.

d. Project Readiness

1. Overall Readiness/Permitting. This project is immediately ready to be implemented and has a high likelihood of success because it constitutes an incremental installation and modification to an existing biorefinery that is proven to be commercially viable through actual, long term operations. The original construction and facility layout was designed to accommodate expansion and modifications and all installations are expected to occur within the existing infrastructure of the facility. Therefore, the project will not require a Phase I environmental site assessment, soils reports, soils preparation, grading, underground work, plumbing, paving, slabs, structural supports, civil planning, roadway/access points, etc. Because the proposed project is able to be installed within the existing infrastructure, the project is immediately ready to be implemented.

In addition to fulfilling CEQA requirements (discussed under Item 5c below), NCB will obtain the permits necessary for the proposed installations and modifications. Because permits are already in place for the existing facility, the permitting for the proposed expansion will be greatly simplified and we anticipate obtaining any permit modifications within 6 months from the time of application. NCB also will update the plans required by the Code of Federal Regulations (CFR) and the California Code of Regulations (CCR). These plans are already in place and will be updated to reflect any modifications necessary for the new installations.

2. Reasonableness of Proposed Schedule. The NCB project team has extensive experience managing improvements at the existing biorefinery in a time-efficient manner. The proposed project comprises the installation of new equipment and modifications to a portion of the existing equipment. We expect that the project will proceed quickly and that commercialization will be attained within 24 months of executing the project agreement. There will not be any need for grading, new foundations, or new structural supports, thereby avoiding extensive preparatory work (e.g., soils engineering, underground work, etc.) and delays associated with weather-related and/or seasonal construction constraints (e.g., storms, fluctuating water table levels, etc.) that can lead to lengthy construction timelines. The proposed expansion of the existing biorefinery involves installation of standard industrial processing equipment, and the project team anticipates that a portion of this equipment will be sourced as used items that simply require minor modifications (utilizing used equipment is one of the best methods of reducing the lead times associated with equipment procurement). If certain pieces of equipment need to be custom fabricated, NCB has longstanding and positive relationships with many firms who have a proven track record of completing these types of specialized jobs quickly and efficiently.

3. Existing Facility/Infrastructure. The existing biofuel facility, laboratory and infrastructure, which was designed to allow for cost effective expansion and modifications, will contribute to the success of the project. 4. Site Control. The project is located on land leased by NCB under a long-term lease that has renewal options through the year 2039.

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e. Project Budget

1. Reasonability of Proposed Costs. The project budget and costs are reasonable and limited to the core requirements necessary to achieve the objectives. No travel funds are proposed for the project. Equipment costs, direct labor and fringe are shared between the CEC and NCB. Property, laboratory supplies, indirect overhead and sales and general and administrative are applied to match funds and will be paid by NCB. Also, NCB will be paying for all raw materials, including feedstock and chemicals, necessary to complete commissioning and start-up.

Funding from the Energy Commission is limited to the categories of direct labor and fringe, equipment, contractor labor and contractor materials. All major subcontractors are listed as to be determined (TBD) and will be selected through a competitive bid process and subject to approval from the CEC Project Manager.

The proposed project will reduce the carbon intensity and improve production efficiencies for approximately 6,250,000 gallons of biodiesel per year. Dividing the requested CEC funding of $4,000,000 by the annual gallons provides a CEC grant dollar per gallon equivalent of $0.64. The new installations are expected to have at least a 20 year useful life which could result in 125,000,000 gallons of lower carbon intensity fuel, resulting in a CEC grant dollar per equivalent gallon of only $0.03.

2. Average Energy Commission Grant Cost per Metric Ton of GHG Reduction. The benefit-cost score for the proposed project, defined as the dollars of Energy Commission funding per metric ton of carbon reduced, is calculated as follows:

Cost-benefit score = $4,183,421 / 1,482,500 MT = $2.82 / MT

3. Need for State Funds. As a result of inconsistent federal policies for biofuels, biodiesel demand has fluctuated significantly from 2004 to 2014. This inconsistent demand is the primary cause of the industry volatility illustrated in the chart below of total U.S. biodiesel production. Funding sources typically look at the historical performance of an industry and of a particular business when making financing decisions. Unfortunately, the historical performance of biodiesel has been unstable and does not illustrate the steady demand and profitability that traditional funding sources (e.g., banks) require for financing.

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The market challenges resulted in many bankruptcies within the biodiesel industry in 2009, 2010, and 2011. These bankruptcies resulted in some companies purchasing distressed biodiesel facilities at extremely low valuations. These low valuations unfortunately serve as ‘comparable values’ when investors are evaluating debt or equity structures. Low business valuations for an industry (for biodiesel often falling lower than the value of fixed assets) greatly limits the financing options available. Because of the broader challenges that the market encountered in recent year, well performing companies, such as NCB, continue to have challenges securing traditional financing.

Grant funding accelerates the pace at which NCB expands its capabilities and positions the business to compete more favorably against out of state and international producers. Investors understand that because our biorefinery is in California we are at a competitive disadvantage since it is more expensive to build and operate than some facilities located in other states and countries. When NCB secures new grant funding we are able to reduce the overall cost of installing equipment at our California facility.

Without grant funding we would need to develop our business at a slower pace relying on incremental cash flow and/or smaller project financing. The grant funding enables NCB to put our own assets to work faster and to pursue larger and more impactful projects. These larger projects will help NCB compete more favorably against out of state and international producers.

f. Economic Benefits

1. Business Opportunities. NCB provides preference to contractors, suppliers, customers and employees located within the state of California. Through our new equipment installations, employees, raw materials purchases, and biodiesel and glycerin sales, NCB contributed over $50 million of economic activity to the state of California during 2013. The

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project proposed will expand our capabilities and result in additional opportunities for California-based businesses including our suppliers, customers, employees and contractors.

2. Jobs Creation. The proposed project will expand the capabilities of NCB’s facility which will create opportunities for new employee positions. We anticipate the project will result in new jobs at the biorefinery including 1 laboratory technician, 3 operators, and 1 maintenance support. We also anticipate that an administrative position will be added in our corporate office. Additional jobs will be created during construction through our contractors and suppliers.

3. Tax. Assuming the new installations allow us to cost effectively produce and sell more low carbon fuel than we would have without the installations, our tax base for the project would represent 6.25 million gallons of fuel per year. Assuming an average sales price of $4.50 per gallon (before taxes), the project would generate annual revenue of over $28 million. At that volume, the project also is expected to generate over $2.4 million of tax revenue per year, including:

California Excise Tax ($0.10 per gallon): $625,000 per year, State Prepaid Fuel Sales Tax ($0.280 per gallon): $1,750,000 per year Property taxes: Estimated at $50,000 per year

4. Distressed and/or High Unemployment Areas. Although data from the U.S. Bureau of Labor Statistics shows that San Diego, California has a lower unemployment rate of 5.5% compared to the US and California unemployment rates of 6.6% and 8.1%, respectively, the project at our existing biorefinery in San Diego, CA will still bring much-needed economic benefits and opportunities to this area.

g. Sustainability

1. Preservation of Natural Resources. The proposed project will make it feasible to process a wider range and greater volumes of inedible greases, agricultural byproducts, and other waste materials as feedstock for biodiesel production at NCB’s existing biorefinery. The acid-catalyzed esterification system will make efficient use of feedstock resources by converting FFA to FAME (thereby increasing product yields) as opposed to just removing FFA from the feedstock material. This will conserve natural resources and reduce the volume of waste streams requiring disposal.

In addition to reducing GHG emissions, the displacement of petroleum by biodiesel produced at the facility will be consistent with ongoing efforts to achieve and maintain federal and state ambient air quality standards and reduce emissions of toxic air contaminants. Several life-cycle analysis (LCA) studies have demonstrated that biodiesel results in lower emissions of several criteria air pollutants and air toxics (including sulfates, particulate matter, hydrocarbons, carbon monoxide, PAH and nPAH) relative to petroleum diesel.

When considering the full life-cycle effects associated with the manufacturing of new vehicles prior to the end of their useful life, it is clear that using cleaner fuels in existing equipment is among the best strategies to achieve superior environmental performance. Unlike electric, hydrogen, or natural gas vehicles, biodiesel can be used in existing engines and take advantage of existing vehicle fueling infrastructure. This offers an immediate and

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efficient means of reducing the emissions associated with continued use and operation of existing diesel fleets.

2. Carbon Intensity. NCB’s biodiesel production facility in San Diego, CA is registered under the Biofuel Producer Registration program of the Air Resources Board with an ARB-approved physical pathway. While the system design will emphasize feedstock flexibility and the ability to process a range of fats and oils, we will focus on corn oil derived from the distillers grains co-product of ethanol production (prior to the drying process). A carbon intensity value of 4.00 gCO2e/MJ is specified in the LCFS lookup tables for FAME biodiesel produced from this feedstock.

3. Greenhouse Gas Emission Reductions. The total production capacity of NCB’s facility is 25 million gallons of biodiesel per year. We assume that 25% of the biodiesel produced at the facility will be derived from corn oil processed by the proposed acid-catalyzed esterification system. The proposed project will therefore result in the production of 6.25 million gallons of biodiesel per year with a carbon intensity value of 4.00 gCO2e/MJ .

The relevant fossil fuels reference baseline is ultra-low sulfur diesel (ULSD). The LCFS lookup tables specify a carbon intensity value of 98.03 gCO2e/MJ for ULSD based on the average crude oil supplied to California refineries and average California refinery efficiencies (Fuel Pathway Identifier ULSD001). The proposed project will therefore result in a 95.9% reduction in GHG emissions relative to the relevant fossil fuels baseline in terms of grams of CO2-equivalent per megajoule (gCO2e/MJ) on a lifecycle basis.

4. Total Carbon Displacement. The GHG emission reduction resulting from the use of 6.25 million gallons per year of biodiesel with a carbon intensity value of 4.00 gCO2e/MJ is 74,125 metric tons of CO2 equivalents per year. This value was calculated according to the LCFS regulations, as shown below:

GHG reduction (MT CO2e) = ( CIstandard – CIreported ) x Edisplaced x (1.0 x 10-6 MT/ g)

where CIstandard is the carbon intensity (in gCO2e/MJ) for the petroleum baseline (ULSD)

CIstandard = 98.03 gCO2e/MJ

CIreported is the adjusted carbon intensity value (in gCO2e/MJ) of the biodiesel

CIreported = CIi / EER = 4.00 gCO2e/MJ / 1.0 = 4.00 gCO2e/MJ

where CIi is the carbon intensity of the biodiesel derived from a California-modified GREET pathway (4.00 gCO2e/MJ for biodiesel produced from corn oil)

EER is the Energy Economy Ratio relative to petroleum diesel (1.0 for biodiesel)

Edisplaced = Ei x EER = 788,312,500 MJ x 1.0 = 788,312,500 MJ

where Ei is the energy content of the biodiesel (in MJ), obtained by multiplying the gallons of biodiesel used by the energy density of biodiesel (126.13 MJ/gal)

Ei = 6,250,000 gal x 126.13 MJ/gal = 788,312,500 MJ

GHG reduction = (98.03 gCO2e/MJ – 4.00 gCO2e/MJ) x 788,312,500 MJ x (1.0 x 10-6 MT/g)

GHG reduction = 74,125 MT CO2e (per year)

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Over the projected 20-yr lifetime of the proposed feedstock pre-treatment system, the total carbon displacement for the project will be 1,482,500 MT CO2e.

5. Petroleum Displacement. The amount of petroleum displaced as a result of introducing an additional 6.25 million gallons of biodiesel per year into California’s diesel fuel supply is calculated as follows:

Volume of biodiesel x Energy density of biodiesel = Energy content of biodiesel

6,250,000 gal x 126.13 MJ/gal = 788,312,500 MJ

Energy content of biodiesel x Energy economy ratio = Energy content of diesel fuel displaced

788,312,500 MJ x 1.0 = 788,312,500 MJ

Energy content of diesel fuel displaced / Energy density of diesel fuel = Volume of diesel fuel displaced

788,312,500 MJ / 134.47 MJ/gal = 5,862,367 diesel gallon equivalents displaced per year

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New and Clean Biofuels CompanySTATEMENT OF PROFIT AND LOSS

(in $000’s)

For the Years Ended 2014 2013

Gross Revenue 17,326 8683

Cost of Goods Sold 14,227 6215Gross Profit 3099 2468

Plant Expenses and Indirect Costs 919Selling, General, and Administrative Expenses 1094 548Income from Operations 1086 1485

Other Income/(Expense)

Interest Income 525Interest Expense (987) (923)

(462) (143)

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