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Waste-Based Biodiesel Market in 2016

September 2016

Agenda

GREENEA | 2

What are the key trends shaping the

market in 2016?

How does the waste-based

feedstock and biofuel market

perform?

What do we expect in the next years?

What are the key trends shaping the market in 2016?

GREENEA | 4

Oil prices remain low

In Europe, increaseddemand for waste-

based biodiesel comes from Italy due

to no cap on DC product

Low margin for single-counting biodiesel producers

Fierce competition to source UCO from

overseas due to increased local

demand

Booming veg-oil prices in the last

month MainMarket Trends

2015 - 2016

Low crude oil and high vegetable oil prices as the main drivers of the market in the last months

How does the waste-based feedstock and biofuel market

perform?

European biodiesel market is estimated at 14 million tons

GREENEA | 7

Germany, Italy and the UK are key players on the waste-based biodiesel market

147

199

237

634

484

412

Spain

UK

Germany

France

Italy

Holland

150

385

580

640

649 Italy

UK

France

Germany

Holland

WASTE-BASED BIODIESEL PRODUCTION IN 2016 (EST.) WASTE-BASED BIODIESEL CONSUMPTION IN 2016 (EST.)

• Spain is the second biggestproducer, however, due to noDC there, there is no localdemand

• No cap on DC in Italy boostedlocal demand by nearly 50%compared to last year

GREENEA | 8

The supply of waste-based biodiesel in Europe does not cover the local demand

285

2,724

1,470

471

498

Acids oils / PFAD / POME

EU demandImportsCat 1/2UCO

WASTE-BASED BIODIESEL CONSUMPTION IN EUROPE

• Europe is the main export destination ofAsian waste-based biodiesel producers.

• New investments aimed at supplying theEU market keep appearing in Asia.

• In Asia, there will be a shift fromexporting UCO to using the oil locally forbiodiesel production and exporting theready-made UCOME to Europe.

• Nevertheless, the 6,5% import taxremains a significant barrier.In kT

Source: GREENEA analysis

10%

Percentage of waste-based biodiesel demand in

Europe that has to be covered by import

GREENEA | 9

European UCO market is already mature with limited growth possibilities

Source: GREENEA analysis

GREENEA | 10

TOTAL and ENI plants will significantly increase the HVO production capacity in Europe

Source: GREENEA analysis

Co-processingPure HVO plant New projects

PURE HVO AND CO-PROCESSING PLANTS IN EUROPE

420 420

2016 2020

2,720

2,300

3,870

+42%

3,450

Pure HVO

Co-processing

23%

The share of European biodiesel market that HVO

might get by 2020

GREENEA | 11

The margins for UCOME producers have been increasing since the beginning of the year

Source: GREENEA analysis

EUR

per

to

n

The price of UCOME grew by 5% since the beginning of the year while the price of UCO increased only by 4%. This resulted in the improvement of margins for the producers.

2015-2016: UCO AND UCOME PRICE DEVELOPMENT 2015-2016: SPREAD BETWEEN UCO AND UCOME

1.9.161.9.141.5.141.1.14 1.1.15 1.5.161.1.16

1 000

650

1.9.151.5.15

950

900

850

800

700

0

750

600

1.1.17

+4%

+5%

UCO DDP

UCOME FOB

EUR

per

to

n

245

220

240

225

215

235

230

210

200

190

205

195

185

1.1.161.1.15

180

1.1.17

0

1.5.15 1.9.161.5.14 1.5.161.9.151.9.141.1.14

Spread UCOME / UCO

GREENEA | 12

In 2016, UCO and UCOME show again an upward price trend

Source: GREENEA analysis

105

0

75

115

100

95

110

85

80

90

May Sept DecMar JuneJan Feb Apr NovJul OctAug

UCO 2014

UCO 2016

UCO 2015

Bas

e 1

00

100

95

0

85

90

105

110

Feb Jul OctAugApr JuneMay DecNovMar SeptJan

UCOME 2016

UCOME 2015

UCOME 2014

Bas

e 1

00

2014-2016: YEARLY UCO PRICE TREND 2014-2016: YEARLY UCOME PRICE TREND

2016 is the second year in a row when we see a price increase of both UCO and UCOME after adisastrous 2014. This gives some support to the European UCO collectors and helps importation.

What do we expect in the next years?

GREENEA | 14

Main trends to watch in the next years

• New investments in Europe and overseas• Conversion of non-profitable plants to HVO

units (TOTAL, ENI)• Growing demand for HVO diesel due to its

superior parameters and possibility to blend with out of spec diesel to improve its quality

HV

O

• The demand for UCO is growing locally in Asia due to new investments in waste-based biodiesel plants there

• Instead of UCO, Asian producers start to export more UCOME to the European market

ASI

A

• Use of new feedstock in the biodiesel industry, e.g. crude tallow oil

• Use of acid UCO, acid oils and POME• Opening up to lower quality high acidity

feedstockFEED

STO

CK

• Adding pre-treatment units to already existing refineries to increase feedstock flexibility

• Adding distillation columns to improve the quality of the final product

TEC

HN

OLO

GY

• Implementation of DC in new countries: Spain, Poland

• Changes in the regulation in the Netherlands• Changes in DC feedstock rules in Italy

REG

ULA

TIO

N

GREENEA | 15

Opportunities to capture and challenges to face in the waste-based sector in the next years

• New technology investments to process high acidity feedstock and thus increase thesourcing potential and decrease the costs.

• Continuous demand for renewable fuels due to obligation from the EU.

• Increasing interest in renewable fuel mandates also overseas (e.g. Peru, Colombia,Argentina, Brazil, Indonesia, Malaysia, Philippines).

OPPORTUNITIES

• Fierce competition to source UCO both in Europe and in Asia due to increasing localdemand. This is caused by the switch to local UCOME production and export ofready-made product to Europe.

• Higher demand for feedstock coming from new HVO players.

• High volatility of veg oil prices and low crude oil prices.

• Possibility of an increase in freight rates due to bankruptcy of Hanjin Shipping, aKorean shipping line.

CHALLENGES

Why Greenea?

WIDE INTERNATIONAL PRESENCE

We speak:

English, Spanish, Portuguese, Polish, German

French and Italian

Paris, France

Prague, Czech Republic

GREENEA OFFICES IN EUROPE

From our two offices in Paris and Prague we communicate with

clients from all around the world thanks to our

international and multilingual team.

Why Greenea?

Since 2011 our average annual growth is 18%

Founded in 2007

MARKET EXPERIENCE

GREENEA is an independent brokerage and consulting companyfounded in 2007. It specialises in waste-based raw materials andbiofuels.

GREENEA offers its services to companies using raw materials intheir production as well as to various other players from theoleo-chemical, animal feed, bioenergy and biofuels markets.

It was our conscious and strategic choice to position ourselves onthe market of raw materials that do not compete with the foodsector.

GREENEA | 17

www.greenea.com

GREENEA5 chemin des Perrières 17330 Coivert, France

GREENEARumunská 29 120 00 Prague, Czech Republic

Fabien HillairetCEO & Biofuels Broker+33 5 79 97 97 51fabien.hillairet@greenea.com

Victor AllemandouBiofuels Broker+33 5 79 97 97 52victor.allemandou@greenea.com

Katarzyna GołąbFeedstock Broker +33 5 79 97 97 53katarzyna.golab@greenea.com Member: