Tobacco Biomass

1. Tobacco Biomass A Potentially Valuable Component of Texas Bioenergy Projects Great Spirit Bioenergy Partners Bill Drake bdrake@ktc.com

2. Biomass Tobacco Profilefor more info: bdrake@ktc.com • 50-70 Tons/Acre – the most conservative case • NCSU range was low of 20 tons to high of 70 tons/acre • 100+ tons/acre – reasonable expectation for Texas • Given Texas growing season, hours of sunlight, etc • Use of higher yield tobacco varieties • 100 tons/acre yields 10 – 20+ tons dry weight** • 2.5 -5.0 tons sugars - nearly 100% are ideal sugars for biogas & ethanol • Standard biofuel conversion formulas apply • 1-2 tons starches • Conversion to biofuel same as corn • 4-8 tons cellulose with very favorable biofuel properties • 1-4 tons F1 & F2 proteins with complete amino acid profile • ** Tobacco variety, growing conditions, harvesting strategy • are all important factors

3. Basic Tobacco Biofuel Calculationsfor more info: bdrake@ktc.com • From 100 MT (one acre) of tobacco biomass 10-20% dry weight, or 10-20 tons total breaks out to: • @ 5.5 MT sugar, @ 2.5 MT starch, @ 8 MT cellulose • Yields are approximate because of variables like tobacco variety • Sugars an ideal profile for fermentation • 90% of total cellulose (7.2 MT) is hemicellulose – lignin is 1.5% • Sugar to ethanol – conventional conversion formula (DOE) • (11,000) X (.47) X (.97) / (6.6) = 760 gallons • Starch to ethanol – conventional conversion formula (DOE) • (5290) X (.90) X (1.11) X (.47) X (.97)/6.6 = 365 gallons ethanol • So we are at 1125 gallons before we also convert the cellulose to biofuel • Hemicellulose to ethanol (DOE estimates) • Estimate @100 gallons/ton (using reference data for cellulose from corn stalks) = 720 gallons/acre • Probably more because tobacco cellulose is 90% hemicellulose and Corn cellulose is only 28% hemicellulose • Also tobacco lignin is only 1.5% • Provisional total of @ 1845 gallons/acre for 100 tons/acre of tobacco biomass • Even at 50 tons/acre we get @920 gallons/acre

4. Compared With Cellulosic Crops For Biofuelfor more info: bdrake@ktc.com • High fermentable cellulose yields/acre • 100 tons fresh tobacco biomass per acre yields 4-8 tons of dry weight cellulose, characterized by: • The highest proportion of hemicellulose of any major cellulosic feedstock crop, and • The lowest % lignin of any major cellulosic feedstock crop • Corn Stover 35% Tot. Cellulose 28% hemicellulose 16-21% Lignin • Switchgrass 44-51% Tot. Cellulose 42-50% hemicellulose 13-20% Lignin • Sugar Cane 32-48% Tot. Cellulose 19-24% hemicellulose 23-32% Lignin • Tobacco 40% Tot. Cellulose 90% hemicellulose 1.5% Lignin

5. Biofuel Feedstock Potential for more info: bdrake@ktc.com • Tobacco has far greater environmental range • Tobacco has more economic byproducts • Tobacco has more flexible crop management requirements • Tobacco doesn’t displace food crops • Can be produced on marginal land • Uses far less land per million gallons of fuel output • Compare: 50,000,000 gallon/year ethanol plant • Requires 178,000 acres of corn @ 100 Bushels/Acre • At $4.50/bushel feedstock cost is $80 million • 50 Million Gallon plant would require 50,000 acres of biomass tobacco @ 100 tons/acre • At $10/ton for biomass tobacco feedstock cost is $50 million • Even at 50 Tons/acre biomass tobacco would only need 100,000 acres to supply a 50 million gallon plant • Processing and operating costs significantly less than corn, grain, cane etc • Perhaps possible to pay growers in fuel credits, not cash • Co-locate with tobacco-based biogas electricity, biodiesel, & co-products processing plants for added revenues & profit centers

6. Dairy Farm Biogas-Electricity Installationwww.biogas-nord.com

7. Tobacco Biogas Electricity Basics – First Look At This Data • 1 MW electricity generation • Requires 5681 m3 CH4 per day • Proven yield = 550M3/day of total biogas per ton of fresh tobacco • This from a Virginia/Burley mix; other varieties likely higher yield • 5681 m3 of methane = 550 m3 biogas/ton MOS tobacco * 55% (methane content) * 18% (solid matter) * 92 % (biodegradability) = 114 wet tons fresh tobacco/day • Requires @ 400 acres/year at @ 100 tons/acre • Ideal substrate composition = 70% tobacco/30% manure • 2 MW = 56,000 wet tons/year or 560 acres at 100 tons/acre • Less than 2X acreage of a 1MW plant due to engine efficiencies • Larger generator engine, more KW per M3 of biogas • 4 MW = 110,000 wet tons/year or 1100 acres at 100 tons/acre • Less than 4X acreage of a 1 MW plant due to engine efficiencies • Relatively small acreage requirement allows rotation from year to year even in very small communities

8. Biogas - Unlocking Value from Waste Tobacco Biomass xxxxxxxxxxxxxxxxxxxx 550 M3/Ton

9. Potential Model for Rural TexasBiogas Electric • Low cost decentralized uninterruptible electricity production • Existing Rural Electric & Agricultural Coops become electric power producers • For local consumption and as export energy product • Farmers provide biomass for electricity credits and/or cash • No new grid connections needed • Unlike wind-generated electricity • Sell excess into existing grid for urban users • Operate one plant for power, one plant for revenue? • Redundancy • If biomass tobacco supply is interrupted for any reason the biogas electricity plant can operate on 100% manure • Reduced capital & operating costs over conventional electric power generation • Utilize existing energy distribution infrastructure • Shortened pay-back period compared with conventional power generation options • Power generation independent from rising fuel costs

10. Complete Rural Energy Solution? Community Energy Cooperative • Community owned co-located cooperative biogas electric, small-scale ethanol, biodiesel, and co-product processing plants • 1100 acres biomass tobacco @ 100 tons/acre for single 4 MW biogas electricity plant • All capital and operating costs established • 8 months to turnkey electricity • Operates above breakeven selling power to coop members at $0.12/Kwh after paying growers with electricity credits • Not calculating tax credits, incentives, grants etc • 5000 acres biomass tobacco @ 100 tons/acre @ 1500 gallons/acre = 7.5 million gallons/year (7500 vehicles @ 20,000 miles/year) • Capital requirements & operating costs TBD • Ethanol output cost may be > $1/gallon • Also provides “insurance” for biogas electric facility • Role of biodiesel needs to be studied – synergies are clear. • Co-products would add to ‘community energy coop’ bottom line • Could pay for conversion of all vehicles to use E-85 • Can bioenergy revenues replace property taxes as a revenue source for government services in small communities?