1. Opportunities and Challenges in the Nebraska Ethanol Industry Governor’s Ethanol Coalition August 2007 Presentation by Todd Sneller Nebraska Ethanol Board

2. Historical Perspective “Induced Employment”: Lincoln, NE- 1933; Governor’s car being filled up with corn alcohol gasoline ( E-10)

3. Ethanol: An Economic Catalyst for Nebraska • “Unquestionably, the most important value-added product to the State’s economy is, and will continue to be, ethanol production.” • “Policy decisions at the federal level along with increased demand for ethanol could dramatically increase U.S. net farm income and create many jobs over the next few years.” • “Nebraska must communicate that it is eager to attract desirable businesses such as…bio-fuel plants…through a combination of tax breaks and innovative policies.”

4. Ethanol Production By Incentive 1985-2007 No Incentive 1985-1989; LB1124 1990-2000;LB605 2001-2005;Overlap of LB605 & LB536;LB536 2003-2012

7. Oil: Hidden Costs By including externalities, the true cost of oil may exceed $150 per barrel

8. Ethanol Plants in Nebraska 17 plants producing nearly 1.1 billion gallons per year

9. Plants under construction

10. Emerging Issues • Jobs/Training • Energy/Natural Gas/Coal • Transportation (Rail/truck) • Remediation • Safety Training • Water • Distillers feeds • Pipeline • E85 expansion/E10 Saturation

12. Annual NE Ethanol Production Capacity and Corn Use

13. Economic Benefits of Ethanol Production • Increased Economic Value for Cattle/Dairy Industry; Feed Manufacturing • Stimulates Transportation Sector; Rail/Truck • Quality Jobs; Retention of Skilled Workers • Plants Well Suited for Rural Communities • Expands Local Tax Base & Tax Revenues • Value-Added Industry; Promotes Export of Finished Products • Growth Industry that Attracts Capital to the State; Plant Expansion Potential Increases Capital Outlay and Related Economic Activity • Stimulates Allied Industries and Enhances Infrastructure

14. Ethanol Related Opportunities Ethanol development provides opportunities for expansion of Nebraska businesses and industries. The impact of an expanded ethanol industry extends well beyond the agricultural sector.

15. Opportunities – Related Industries Service Providers Parts Providers

16. Current and Projected Job Demand • July 2007 NE Ethanol Industry Jobs: • 885 Direct Jobs at 17 Plants • 1,500 Indirect (“induced”) Jobs • Six Plants w/ major expansion underway -Expansions to be completed by 1Q ’08 -100 new Direct Jobs from expansions (est.) -165 Induced Jobs from expansions (est.) • 9 Plants Under Construction -400 Direct Jobs in new plants by 1Q ’08 -630 Induced Jobs in new plants • 1,300 new Direct and Induced Jobs by 1Q ’08

17. Ethanol Sector Jobs and Wages • Ethanol jobs listed on Nebraska sites: General Manager Lab Supervisor Office Manager Administrative Assistant Plant Manager Accounts Payable Commodities Manager Commodities Administrator Controller Risk Management Assistant Process Supervisor Grain Merchandiser Maintenance Supervisor Sales and Contracting • Average annual salary at Nebraska ethanol plants in 2006 was $50,000. • Demand for transportation sector jobs is high. • Demand for skilled trade positions is high.

18. Future Challenges • Continued Development Will Require: • Expansion of engineering and construction services • Efficient permitting of new and expanding facilities • Continued development of livestock industry to provide new distillers feed markets and products • Supply trained workers for ethanol and related businesses • Support training and education programs at colleges • Foster competitive business environment • Increase supply of potential feedstocks for ethanol production • Maintain a public policy framework that encourages the • production and use of biofuels • Enhance transportation efficiency • Create awareness of quality and quantity of ethanol related jobs

19. Putting Water Use in Context • Virtually all types of manufacturing use water at some point in the production process. • Current ethanol processing technology uses approximately 3 gallons of water for each gallon of ethanol. • Ethanol process improvements indicate water use can be reduced to 1.5 to 1.

20. Water Conservation Opportunities • Reduce Energy Consumption (less cooling tower evaporation & blowdown) • Recycle waste and blowdown streams • Treat makeup water (less blowdown) • Use air or groundwater to reject heat (less evaporation and blowdown)

21. Water Conservation Opportunities Gallons Fresh Water/ Gallon Ethanol less than: • <3 – Current Best Practice • 1.5 – Achievable with proven technology at extra capital cost • 0 – Possible in future with new technologies

22. Putting Water Use in Context • 17 ethanol plants are currently operating in Nebraska; 9 plants are actively under construction; 37 additional plants have been proposed for Nebraska sites. If ALL current and proposed plants were operating, they would use about two-tenths of 1 percent of the water pumped in the state.* *Based on USGS estimates.

23. Putting Water Use in Context • A large (100 mgy) ethanol plant uses the same amount of water annually as it takes for four center-pivot irrigation systems to water a section of land. • In water-short area, ethanol plant developers buy land that has irrigation wells and convert the water use from irrigation to ethanol production.

24. Most Recent Studies Show Positive Net Energy Balance for Corn Ethanol Energy balance here is defined as Btu content a gallon of ethanol minus fossil energy used to produce a gallon of ethanol

25. Total Energy Conclusions • Corn-based fuel ethanol achieves moderate percent reductions in GHG emissions, large percent cuts in oil use. Its total production is limited relative to transport fuel use. • Cellulosic ethanol can achieve much greater percent GHG benefits than corn ethanol. Per mile oil use benefits are comparable to corn ethanol. Potential production is far greater.

26. Ethanol Production should remain a targeted industry in Nebraska • Ethanol production will continue to be an economic stimulus for many product and service sectors in Nebraska. • It is an industry ideally suited for rural communities. • Ethanol production will become an increasingly more important part of Nebraska’s economic base.

27. Slide Seven Nebraska’s Competitive Advantage for Ethanol Production Nebraska continues to provide some of the highest returns for ethanol investors.

28. Slide Four Nebraska’s Competitive Advantage for Ethanol Production Corn Supply • Nebraska had net exports of 459 million bushels of corn for the 2006-07 crop year. • Net exports for current (2008-09) crop year are projected to be 195 million bushels – which would be a quantity sufficient to produce an additional 550 million additional gallons of ethanol.

29. For more information, contact: Todd Sneller Nebraska Ethanol Board Lincoln, NE 402-471-2941 www.ne-ethanol.org