2005 OBP Biennial Peer Review Strategic Approach

1. 2005 OBP Biennial Peer Review Strategic Approach Larry Russo November 14, 2005

2. Strategic Approach Outline Objectives: • Describe the high level strategy to achieving the Program’s strategic goals • Provide context for meeting content Agenda: • Program Framework • Program Portfolio Level • Functional R&D Platforms • Biorefinery Deployment Pathways • Project Level • R&D • Deployment • Planning, Analysis and Decision Making

3. OBP Goal Hierarchy

4. New Domestic Bioindustry • PRODUCTS • Fuels: • Ethanol • Renewable Diesel • Renewable Gasoline • Hydrogen • Power: • Electricity • Heat (co-generation) • Chemicals • Plastics • Solvents • Chemical Intermediates • Phenolics • Adhesives • Furfural • Fatty acids • Acetic Acid • Carbon black • Paints • Dyes, Pigments, and Ink • Detergents • Etc. • Food and Feed Biomass Feedstock Conversion Processes • Trees • Grasses • Agricultural Crops • Agricultural Residues • Forest Residues • Animal Wastes • Municipal Solid Waste • - Enzymatic Fermentation • - Gas/liquid Fermentation • - Acid Hydrolysis/Fermentation • Gasification • Pyrolysis • - Combustion • - Co-firing

5. Market Level Barriers • Cost of production - compared to existing fossil energy based products • High risk of large capital investments (for demonstration and commercialization) • Agricultural sector paradigm shift needed for large biomass supply • Energy sector paradigm shift needed to drive biofuel demand • Lack of sufficient infrastructure throughout feedstock supply and product delivery chain • Lack of industry standards and regulations • Lack of consumer awareness and acceptance (may be changing)

6. Political Environment • National • “Price of gasoline” at top of list of consumer concerns • Energy Security / Homeland Security • Peak Oil debate gaining traction • EPACT of 2005 • State and Local • Numerous biomass policy incentives • States looking to capture entire value chain • Rural development and jobs creation are big issues • International • Kyoto, transportation energy demand and security are major drivers • EU adopted biofuels directive in 2003 (5.75 % of all trans. fuels by 2010.

7. EERE Role in Developing the Bioindustry 1) Facilitate Technology RD&D 2) Foster Markets/Outreach • Cost Shared RD&D • National Lab Core Research • Leverage Other Federal $ • Industrial Scale Demo • Loan Guarantees • Outreach & Education • Billion Ton Study • Energy Balance • Policy Development • Mandates • Incentives MARKET TECH PUSH PULL Commercial Success!!!

8. Program Framework National Level Outcomes: Petroleum Displacement, New Bioindustry Steering Committee Review Role Program Management Level (Pathway/Platform Matrix) Outputs: Demonstration and validation of technologies to use biomass feedstocks in integrated biorefineries. Platform Teams Review Role Project Management Level Milestones: Project specific technical performance goals

9. Portfolio Management Matrix P A T H W A Y S

10. Interaction Between Program WBS Elements Core R&D WBS Elements focus on technologies…. applicable to multiple types of Integrated Biorefineries

11. Pathway Link to Resource Base 6,7 1,2 3 4 5 DOE/USDA Billion Ton Vision Paper Potential: Million Tons/Yr Forest Biomass: 368 Ag. Residues: 446 Energy Crops: 377

12. New Products from Oils • New Products • from Glycerol Near Term Pathways Feedstock R&D Biochemical R&D Thermochemical R&D Products R&D Integrated Biorefineries Systems-level demonstration and validation of technologies to improve corn wet milling facilities using corn grain feedstock by 2008 • Residual Starch Conversion • Fiber Conversion • New Fractionation Process • New Products from • C5/C6 Sugars • Products from Oils Corn Wet Mill Improvements Systems-level demonstration and validation of technologies to improve corn dry milling facilities using corn grain feedstock by 2008 • Residual Starch Conversion • DDG Conversion • New Fractionation Process • New Products • from • C5/C6 Sugars Corn Dry Mill Improvements Systems-level demonstration and validation of technologies to improve natural oil milling facilities using natural oil feedstock by 2008 Natural Oils Improvements • New Oilseed • Crops

13. Intermediate to Long Term Pathways Feedstock R&D Biochemical R&D Thermochemical R&D Products R&D Integrated Biorefineries Systems-level demonstration and validation of technologies to utilize agricultural residue feedstocks in existing or new facilities by 2009 • Products from C5/C6 Sugars, Lignin, Synthesis Gas, New Process Intermediates • Sustainable • Farming/Harvest • Transport/Storage • Preprocessing • Blending • Biomass Sugar • Production • New Fractionation • Process • Biomass • Gasification • Lignin • Gasification Agricultural Residue Processing Systems-level demonstration and validation of technologies to utilize perennial crops in existing or new facilities by 2012 • Products from C5/C6 Sugars, Lignin, Synthesis Gas, New Process Intermediates • Sustainable • Farming/Harvest • Transport/Storage • Preprocessing • Blending • Biomass Sugar • Production • New Fractionation • Process • Biomass • Gasification • Lignin • Gasification Energy Crops Systems-level demonstration and validation of technologies to improve pulp and paper mill facilities and/or produce additional products from wood by 2012 • Black Liquor • Gasification • Biomass • Gasification • Products from C5/C6 Sugars • Products from BL Syngas Pulp and Paper Mill Improvements • New Fractionation • Process for • hemicellulose removal • Products from Synthesis Gas • Products from Bio-oil Forest Products Mill Improvements • Biomass Gasification • Biomass Pyrolysis Systems-level demonstration and validation of technologies to improve forest products mill facilities and/or produce additional products by 2012

14. OBP Strategy Further Integrated by Pathways • Core pre-competitive research to “enable” biorefinery deployment pathways and expanded bioindustry • Development, Demonstration & Deployment of integrated biorefineries through Public-Private Partnerships

15. Key Expectations of New Program Framework Program Pathway/Platform matrix framework: • Enables balance between: • near term deployment, • intermediate term development ,and • long term research • Directly leverages existing industry knowledge and infrastructure • Better integrates core R&D with biorefinery development • Enables better prioritization and decision making • Is more adaptable to emerging or changing technologies, markets and environment • Should provide benefits to the Nation faster and with higher probability of success

16. Total FY05 Funding by Pathway (Total Discretionary Projects=$41.2 Million; Total Earmarks=$34.8 Million)

17. FY05 Discretionary Project Funding:By Pathway with Platform Breakdown

18. FY05 Earmark Funding: By Pathway with Platform Breakdown

19. Stage Gate Management Stage gate management approach extended to entire portfolio in FY05. • Peer review criteria included stage gate review criteria for all project reviews • Pathway plans follow the technology development stages and include gate go/no go decisions, but at the overall program level.

20. OBP High Level Strategy • Core pre-competitive research to “enable” expanded bioindustry (projects on the orange line) • D, D & D through Public-Private Partnerships (projects on the blue line to commercialization)

21. Independent Commercial Developments “A” Milestone Met Developmental Solicitations Platform R&D CRADA’S & Projects Pilot Scale Solicitation Demonstration Solicitation Core Research And Development Permitting Engineering Construction Operation Technology Development (Bench Scale) Proof of Concept (Pilot Scale) Commercially Viable Demo (Demonstration Scale Plant) Loan Guarantee and/or Risk Mitigation 100% / 0% 80% / 20% 50% / 50% TBD Pathway—Investment—Stage Gate Pathway Development and Realization Delays in attainment of performance criteria Concept Development Concept Proof Technical Viability Commercial Viability Commercial Sustainability

22. Private Cost-Share: OBP Cost-Share: Project Timeline: Development Stages: Unexpected Cost: Risk Mitigation: First Commercial Plant Deployment Barriers Potential Future OBP/EERE Deployment Efforts (to overcome financial barriers) Attainment of performance criteria Mechanical completion Commissioning Delays in attainment of performance criteria “A” Milestone Achieved Technical Risk Minimized Development Costs Current Biorefinery Projects Procurement Technology Development Proof of Concept Permitting & Engineering Basic R&D Commercially Viable Demo Construction Operation Operation 80% / 20% 50% / 50% TBD Loan Guarantee Program/Risk Mitigation Pool 100% / 0%

23. Potential Gasoline Displacement by Pathway Total ~ 70 Billion GGE (gasoline gallon equivalents)

24. Future Challenges • Maintaining a Balanced Portfolio with Budget Constraints • Feeding the Development Pipeline • Emphasis on Maintaining Core R&D Capabilities • Energize Long Term Pathways • Develop Mid Term Pathways • Support Industry in Near Term Pathways • Output from the Developmental Pipeline • Emphasis on Enabling Competitively Solicited Industry Led Cost-Shared Projects • Demonstrate and Validate Near Term Pathways • Prove Technical Viability Along Mid Term Pathways • Determine Feasibility and Guide R&D on Long Term Pathways • Preventing Potential Failure Associated with a Premature Attempt at Commercialization