Dedicated Hybrid Poplar Plantations as a Critical Component of the Supply Chain of Pacific Northwest Refineries

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1 Dedicated Hybrid Poplar Plantations as a Critical Component of the Supply Chain of Pacific Northwest Refineries The impact of multi-sourced feedstock on price Poplar Willow Forum April 11 13, 2016 Richard Shuren GreenWood Resources, Inc.

2 Biorefineries Need Feedstock Assume: 25 million gallons per year production capacity 80 gallons of ethanol produced per bone dry ton (BDT) of cellulosic biomass Then: 312,500 BDT s biomass per year 856 BDT s per day for yeararound operation Where will feedstock come from?

3 Biorefinery Feedstock Sources Unlikely that a refinery will rely on a single source of raw material; supply from several sources is necessitated. This complicates the supply chain in terms of logistics and price forecasting. Sources include residual products from spot markets and dedicated purpose-grown biomass feedstock

4 1. Agricultural Residuals Wheat straw $90 / BDT Rice straw $40 / BDT Orchard removals and prunings $30 - $50 / BDT Almond shells (California) $15 / BDT Source: Personal communication with Tim Lynch, Agra Trading, Chico, California. Other regions my vary.

5 2. Forest Residuals Forest woody biomass $44 / BDT Sawmill residuals (shavings, sawdust) $42 - $46 / BDT Mill woody biomass (hog fuel) $20 - $24 / BDT Source: North American Wood Fiber Review, December, 2015

6 3. Urban and Municipal Solid Waste Tree removal and trimmings Yard and garden waste Construction wood waste Recycled wood-based materials (packaging, paper, linerboard) Costs average $27 - $32 / BDT Source: website

7 4. Dedicated Hybrid Poplar Plantations Purpose-grown plantations dedicated to the refinery s supply portfolio Managed as: A succession of threeyear coppice harvest cycles 1,450 trees per acre Up to 20 year rotations between plantings Proven and well established production and harvesting systems

8 Why Dedicated Hybrid Poplar? Residual markets unpredictable in supply and pricing For refinery financing, construction and operation, a biorefinery must have 30% to 50% of its feedstock source secured as multi-year supply agreements Secure and stable source of feedstock Committed to long-term supply Significant advantage in pretreatment cost compared to ag residuals and higher ethanol yield compared to forest residuals.

9 Inputs to the Production of Hybrid Poplar Feedstock Land cost Site prep and planting Crop care, one harvest cycle Administration, Taxes, Management Fees Single-pass harvesting Transport cost to mill (40 miles) Harvest volume at three years from coppice growth 1,930 USD / acre 374 USD / acre 294 USD / acre 94 USD / acre / year 29 USD / BDT 11 USD / BDT 28 BDT / acre Source: Internal GWR Biomass Production Model

10 Price of Hybrid Poplar Feedstock $97 / BDT is the required price to achieve an 8% internal rate of return (IRR) Actual production cost (0% IRR) is $71 / BDT Source: Internal GWR Biomass Production Model

11 Biomass Price Comparisons Prices are USD$ / BDT delivered to the biorefinery California Agricultural 31 Mill Residuals 27 Forest Residuals 46 Municipal and Urban Waste Dedicated Hybrid Poplar Oregon / Washington

12 Feedstock Supply: Impact on the Supply Chain Integrating Poplar and Ag Residues Weighted-average delivered cost of feedstock (USD/BDT) $80 $70 $60 $50 $40 $30 Feedstock from hybrid poplar Feedstock from residual sources $97 USD/BDT $32 USD/BDT At 30% hybrid poplar, weighted average feedstock price is $52 / BDT $20 0% 10% 20% 30% 40% 50% 60% Portion of total feedstock supply from hybrid poplar

13 Hybrid Poplar Bioenergy Plantations Returning to the assumptions: 25 million gallons / year 312,500 BDTs / year 28 BDT/acre from three-year coppice 30% hybrid poplar / 70% residuals sources 3,350 acres harvested annually Total land base is 10,050 acres in dedicated poplar bioenergy plantings on three-year cutting cycles

14 In Conclusion Biorefineries will require a portion of their feedstock from a stable and secure source: Financing & Construction Day-to-day Operations Even with current economics, hybrid poplar can supply a significant portion of the needed feedstock, while keeping weighted average BDT costs manageable at the refinery. (Hidden advantages also accrue from lower pretreatment costs and favorable ethanol yields.) The dedicated hybrid poplar bioenergy production strategy is ready to be deployed Proven establishment, crop care and harvesting systems. Improved plant material to achieve high yields with low risk.

15 Thank you! Jefferson, Oregon AFRI-CAP Hybrid Poplar Bioenergy Planting Photo courtesy Mike Halbleib, Oregon State University