When is 2nd generation coming ?

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When is 2nd generation coming ?

• 7th Inter-Parliamentary Meeting on Renewable
  Energy

05-10-2007
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AGENDA

• Biofuels now
• next, biomass to ethanol
• biomass challenges
• Beyond biofuels

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Biofuels now
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CONCEPT MOVING SPRAY ANIMATION EXPERIENCE RUNS
AUTOMATIC FROM BEGINING OF SLIDE ANIMATION
TIME 5 SEC. POSSIBLE TO CHANGE COLOURS OF THE
SPARY
Global bioethanol production growing strongly
Sources US Energy Information Administration,
F.O. Licht, Novozymes estimates
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USA Bioethanol boom
Estimated 2007 production 6.5bn gal.
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1 Gallon 3,785 liters
Source 1 U.S. Energy Information
Administration/ Renewable Fuels Association 2 -
SJH Company Inc. 3 Novozymes est.
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American ethanol plants
Jan 7, 2007 In operation 110
Construction 79 Proposed gt200
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Novozymes and biofuels

• 10 of total revenues in 2006, 12 of total H1
  2007 revenues
• 20-25 growth over next 3-4 years
• Largest supplier of enzymes to the fuel ethanol
  industry
• Mainly an US business but Europe Asia nice
  growth from lower levels
• Collaborations in Biomass with industry leaders
• Poet Energy in the US
• COFCO in China
• Abengoa in Europe
• CTC in Brazil

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next, biomass to ethanol
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Why biomass-based ethanol?

• - There is a limit as to how much ethanol you can
  produce from grain and sugar
• - You can produce much more ethanol from biomass
• - If the ambitious objectives are to be carried
  out, we need to base production on biomass in
  order to produce sufficient amounts of ethanol
• - Better utilization of agricultural production
• - Biomass has superior environmental advantages
  because a larger part of the plant is used

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BIOETHANOL AND CO2 REDUCTION
Gasoline
1st gen. wheat starch
2nd gen. wheat straw
g/MJ
30 saving
80
45 saving
70
70 saving
60
85 saving
Reduction of CO2 emission from producing and
combusting 1 MJ fuel
50
40
30
20
10
0
Energy from straw
2nd generation
Gasoline
Conv. boiler
CHP tech.
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Cellulosic ethanol is taking off
2030 global vision for biofuel
Hydrogen regenerative
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Natural Gas
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Latest quote from President Bush 35 billion by
2017
Oil Based lt 10 ppm sulfur
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Oil Based lt500 ppm sulfur
2nd generation of biofuel based on biomass
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1st generation grain-based bio-ethanol
biodiesel
30F
2005
10F
20F
Source McKinsey Analysis
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Cellulosic ethanol developing worldwide

• Three main regions have a head start in
  cellulosic ethanol
• the USA, China and Europe
• All on-going pilot/demonstration plant projects
  experience very basic feedstock / logistics
  issues (supply chain, grinding, conveying,
  mixing)
• USA
• New RFS of 35 bill. gal. by 2015 9-10 of total
  road transport fuel consumption
• 2030 target of 30 alternative fuels
• 6 to 8 final contenders for the DoE grant on the
  construction of 2 to 3 commercial bio-refineries
• Overall, corn stover / fibers and wheat straw are
  the two types of feedstock considered to hold the
  most potential
• Other companies are looking at woody substrates
  (sawdust, wood trimmings, soft wood (pine trees,
  poplars), hard wood) or rice straw, citrus peels
  and urban waste
• Energy crops are being considered
• POET-Novozymes partnership
• No pilot plan running yet but several will start
  up by the end of 2007

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Cellulosic ethanol in Europe

• EU Energy Strategy - 2020 targets
• 20 renewable energy
• 20 reduction in GHG emissions
• 20 energy savings compared to
  projections
• 10 binding min. target for biofuels
• EU Biofuel directive
• Encouarges member states to reach 5,75 biofuel
  before 2010
• Only 1,4 has been reached, but Member States
  show increasing commitment
• Some EU Members have a biofuel share of 1 AT,
  FR, SE, DE
• Cellulostic ethanol status
• A few pilot plants will run in 2007 and one
  larger scale demonstration plant
• Main feedstock wheat straw
• The drive is more technological and opportunistic

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Cellulosic ethanol in China

• E-10 required in nine provinces
• Current production 0.25 billion gallons per
  year (2.3 of total Chinese consumption)
• Goal of 7.5 ethanol in 2010
• An enormous sense of urgency!
• A number of companies are going ahead in the
  cellulosic ethanol field (organisms,
  pre-treatment)only four companies have
  officially been granted a license to produce
  ethanol (subsidies for cellulosic ethanol are
  pending)
• COFCO NZ partnership

Provinces Heilongjiang Jilin Liaoning
Province Henan Hebei
Provinces Hubei Shandong Jiangsu Anhui
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Cellulosic ethanol in the remaining world

• Latin America
• 85 of all cars sold in Brazil are FFVs
• Strong industry growth
• Legislation on burning creating significant
  additional biomass increasing awareness of
  bagasse as an important biofuel resource
• Brazil focussing on export opportunities, target
  is 10 of the global demand
• International recognition of Brazil as key
  supplier and example of a sustainable fuel
  economy
• Major agricultural land expansion potential
• NZ partnership with CTC

• Japan Korea
• Japan will be a net importer of ethanol from
  Brazil
• Biofuel target of 500 mill l. in place by 2010
• Limited feedstock availability due to limited
  agriculture. Wood is the primary possibility

• Africa Middle
• East
• Potential major region for growing crops, incl.
  sugar cane
• No biofuels effort so far

• South East Asia Indian Sub.
• Political drive for ethanol production from local
  feedstocks
• Political instability limiting implementation of
  long term biofuel policy
• Biodiesel dominates the landscape due to
  feedstock availability
• Food for fuel debate will foster alternative
  feedstocks incl. lignocellulosic bionmass

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biomass challenges
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What about the cost structure?
Enzymatic hydrolysis
Fermentation
Pre-treatment
Corn stover
Pre-treated corn stover
Glucose
Ethanol
Showstopper?
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Enzyme cost no longer dominates the picture
- Cost comparison after the BioEnergy Project
grain vs. biomass in USD/gallon ethanol, April,
2005
Estimate for Nth-plant production, current cost
based on lab-scale is 2-3/gal
Major cost reduction In enzyme price
Modified from Determining the Cost of Producing
Ethanol from Corn Starch and Lignocellulosic
Feedstocks, NREL/TP-580-28893 joint USDA, NREL
study released in October 2000.
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Proteomic analysis of a cellulase producer
GH74
CDH
CBH I
CBH I
CBH II
EG II
EG I
GH61G
EG III
GH61B
EG V
GH61F
EG IV
GH61D
GH61C
SOD
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Understanding GH61 ?
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From starch to sugar -gt biomass based fuel ethanol
Enzymes are one of the keys to the process, but
are no longer the major barrier for biomass
conversion
Fuel Ethanol
Pre-treatment
Enzyme Hydrolysis
Fermen-tation
Recovery/ distillation
Biomass
Collection
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Novozymes and cellulosic ethanol

• Ethanol from cellulosic feedstock - market and
  technical leadership in the development of
  processes for the conversion of cellulosic
  biomass to economically viable ethanol.
  Pre-treatment, hydrolysis and fermentation
  expertise
• Extensive leverage from our manufacturing, RD
  and marketing capabilities in Europe, North
  America, Latin America, India and China
• Cellulase Cost Reduction for Bioethanol with
  the DoE as a subcontractor funded at 17.8 million
  USD
• Current further cellulase performance
  improvement through an unprecedented RD effort
• Development of several hemicellulases
• Most importantly putting our enzymes to work
  through partnerships

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How far to go before 2nd generation ethanol will
be commercial?

• The process need be up scaled from lab to factory
• Further reduction in overall process costs
  required
• First pilot plants are starting
• Larger scale demonstration plants on-line within
  2-3 years
• Commercial plants on-line within 4-5 years

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Beyond Biofuels
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The future potential for sustainable solutions
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Loudon Facility- DuPont Tate Lyle BioProducts
October 2006
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Conclusion

• Novozymes is committed to actively participate in
  the commercial development of a viable
  biomass-to-ethanol process
• Enzyme costs have been viewed as the major
  barrier for biomass conversion - this is no
  longer the case even though improvements still
  need to be achieved to make it an economically
  viable process
• Continued enzyme research has delivered improved
  performance which translates into lower costs
• Enzymes need to be integrated into the process
  developments in order to truly optimize the costs
  in conjunction with other parameters. We are
  teaming up with strong partners with
  complementary technologies and with whom we can
  develop the best solutions to achieve commercial
  success

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