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Philip W. Madson President

Philip W. Madson President. MAKING THE CASE. for. GENERATION 1.5. RFS 2 - USA. 2012 Plan – 500MM GPY (cellulose) 2012 Revised – <13MM GPY 2012 Reality – ????. 97% Shortfall!!. HEADLINES Generation 2 Bioethanol. API sues US Government

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Philip W. Madson President

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  1. Philip W. MadsonPresident

  2. MAKING THE CASE • for GENERATION 1.5

  3. RFS 2 - USA • 2012 Plan – 500MM GPY (cellulose) • 2012 Revised – <13MM GPY • 2012 Reality – ???? 97% Shortfall!!

  4. HEADLINESGeneration 2 Bioethanol • API sues US Government • “EPA’s standard is divorced from reality. There is a complete lack of commercial supply of the [cellulosic] fuel.” • USDA: 527 Biorefineries Needed Cost of $168 Billion (< $50 billion invested worldwide, Gen 1 - 30 years)

  5. WHY ?

  6. The Path From Science to Commercial Success is Tortuous

  7. Science Technology Commercial Success Commercial Demonstration

  8. Where were we in 1982? Science Technology Commercial Success Commercial Demonstration

  9. Where are we today? Science Technology Commercial Success Commercial Demonstration

  10. BIOETHANOL SUGAR STARCH CELLULOSE FEEDSTOCK COST TECHNICAL COMPLEXITY

  11. What is the cost of large-scale cellulose feedstock ?

  12. The Rational Farmer Model Under the RFS The farmer’s choice – allocate acres to maximize profit at acceptable risk among the three major crops: corn, soybeans, switchgrass Source: Iowa State University

  13. Results of Study (economic equilibrium at full RFS) Market Price Ethanol Subsidy Corn Soybeans Switchgrass $4.76/bu $13.01/bu $164/ton $0.51/gal --- $1.86/gal Note: 20% of crop acres required for switchgrass Source: Iowa State University

  14. HEADLINESGeneration 2 Bioethanol • Purdue U. – farmers need $100+/dry ton (cobs) • U. Illinois – biomass projected $140/ton • Iowa State U. – switchgrass > $113/ton • Kans. State U. – “Using crop residue for cellulosic ethanol hurts future yields.”

  15. What is the investment cost ?

  16. The dollar has lost half of its value since 1985.

  17. Cellulosic Ethanol Grain Ethanol

  18. Cellulosic Ethanol Grain Ethanol

  19. WHY ?

  20. Generation 1Bioethanol The Success • Grain/sugar ethanol technology has experienced extraordinary advances because of commercial operation (business profit motive) • 50% real investment reduction in less than 3 decades

  21. Generation 2Bioethanol The Reality • R&D alone do not foster investment reduction. Commercial experience creates the motives. • No real investment reduction for 3 decades

  22. GENERATION 1.5 New Paradigm?

  23. DEFININGGENERATION 1.5 • Gen 1: sugar, starch (conventional) • Commercial technology (financeable) • Gen 2: Lignocellulose • Technology not commercial

  24. DEFININGGENERATION 1.5 • Gen 1: sugar, starch (conventional) • Commercial technology (financeable) • Gen 1.5: sugar, starch (new sources) • Existing technology / integrations • Gen 2: Lignocellulose • Technology not commercial

  25. GENERATION 1.5 • SMALL GRAINS AS FEEDSTOCK • AGRICULTURAL INTEGRATION • ADVANCED FEEDSTOCKS

  26. DO MULTPLE FEEDSTOCKSWORKFOR ETHANOL?

  27. MULTIPLE FEEDSTOCKS • WHEAT • BARLEY • CORN • MILO • TRITICALE • SUGARS

  28. AbengoaBioenergyNetherlands

  29. Alco Bio Fuel

  30. Agrana

  31. TARKIM

  32. HUSKY ENERGY Minnedosa, Manitoba Lloydminster, Saskatchewan

  33. WHEAT, BARLEY, AND OTHER GRAINS YIELD PROPORTIONAL TO STARCH CONTENT

  34. LIVESTOCK THE PARTNER TO GRAIN ETHANOL

  35. INTEGRATED AGRICULTURE FOOD, FEED, FUEL

  36. Ethanol Plant Ethanol(Fuel Grade) DDG Export (Dried Distillers Grain) W D G (Wet Distillers Grain) Anaerobic Digester Nitrogen BioFertilizers as N-P-K Electricity and boiler Water Renewable "Green" Grid Electricity Dairy Facility Beef Facility Beef Milk Steam and Electricity Waste and solubles Internal Animal Feeds Waste Waste

  37. E3

  38. REEVE AGRI-ENERGY

  39. POUNDMAKER

  40. AGRICULTURAL INTEGRATION Superb Business Model

  41. TYPICAL BUSINESS MODEL TODAY

  42. Natural gas

  43. LET “MOTHER NATURE” HELP

  44. “High Cellulose” “High Starch” “Wild Maize” “Corn” “Energy Corn”

  45. Biomass Fuel ENERGY CORN

  46. “High Protein” “High Starch” “Wild Wheat” “Wheat” “Energy Wheat”

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