Biofuels and Bioenergy: Enablers for Reducing Oil Import Dependence - Advanced Biofuels & Technologies. Bas Melssen New Delhi, 11 th May 2016

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1 Biofuels and Bioenergy: Enablers for Reducing Oil Import Dependence - Advanced Biofuels & Technologies Bas Melssen New Delhi, 11 th May 2016

2 Global leader in industrial enzymes employees different industries granted patents and pending patents sales (million EUR) products countries reinvested in R&D production sites globally

3 The 2G journey 15 years of continuous development and one of our largest R&D investments Enzyme potency improvement 15X One of the largest R&D investments in our history Pilot plants worldwide testing our enzymes Launch of Cellic CTec for first demo plants World s first commercial 2G plant uses our Cellic enzymes Exclusive partnership with Brazil s largest ethanol producer 5 of 7 commercial 2G plants worldwide use Cellic enzymes Foundation Pilot stage Demo stage Initial commercial stage Optimization stage

4 2G advances More than $2 billion of steel in ground All commercial-scale Advanced Ethanol facilities are using enzymatic hydrolysis BETA RENEWABLES Crescentino, Italy 13 MGY GRANBIO Alagoas State, Brazil 21 MGY RAÍZEN São Paulo State, Brazil 10 MGY ST1 BIOFUELS Kajaani, Finland 3 MGY Oct Sep Sep Oct Dec Exp 2015 Exp 2016 POET-DSM Emmetsburg, Iowa 22 MGY ABENGOA Hugoton, Kansas 25 MGY DUPONT Nevada, Iowa 30 MGY Novozymes supply

5 Our global production & R&D set-up; local enzymes production will enable further cost improvements over time Novozymes sites in India Genesis Site, Whitefield Business Development Business Operations R&D Corporate Functions Hoody Circle, Whitefield Supply Chain Operations Hosur Road DPP (Production) Once volumes are established, NZ can produce locally In the short-term, enzymes duty exemption could reduce OPEX costs Currently Novozymes employs 546 people in India across 4 sites, (3 sites in Bangalore). Novozymes is the biggest supplier of industrial enzymes in India Novozymes works with several India based Cellulosic conversion technology developers We have dedicated Biomass Conversion Technical Services support (our TS experts work in the plant during start up / Commissioning) and in India we have NZIN SCM (planning, logistics and supply) for enzymes supply.

6 The world s oil reserves are in conflict regions, resulting in fluctuating oil prices, whereas biomass is evenly distributed

7 Fast-growing energy use in the Asia Pacific region has led to a sharp rise in the region s dependence on oil imports Source: IEA (2013) Southeast Asia Energy Outlook

8 The subsidy paradox Fossil fuel industry is heavily subsidised, even after 100 yrs GHG emissions per unit of energy, g CO 2 e/mj Energy subsidies (2013), USD billion Fossil fuels $550bn 0 (50) Gasoline 1G ethanol 2G ethanol Renewable Energy $130bn out of which $25bn account for biofuels Sources: IEA (2013), The Guardian (2015); EC (2009), ERA (2009), CARB (2015), US EPA (2010), and JEC (2011)

9 The birth of a new industry requires innovative first movers and, not less important, political support +

10 In Brazil, Novozymes has a proven track-record of accelerating the Advanced Biofuels industry through collaboration BRAZIL Novozymes is a Founding member of the Brazil Association of Industrial Biotechnology Successfully worked with government to waive enzymes import duties to reduce industry Operational Costs Novozymes is currently building a dedicated enzymes facility to support supply to local Cellulosic Ethanol producers The local enzymes supply will bring significant investment, R&D & technology transfer to the country and significant (operational) cost savings for local industry

11 The glaring absence of commercial 2G facilities in Asia Pacific is related to uncertain policy support for Advanced BioFuels Commercial-scale 2G ethanol plants in operation or under construction by region (2016) 2016 In operation Under construction NZ supply 2016

12 In the Asia Pacific region we collaborate with local industry and governments to help shape policy, to green our futures EXAMPLES Malaysia s Prime Minister announced the National Biomass Strategy in November 2011 Queensland, Australia announced a 10 year Bio Futures Roadmap in December 2015 Anticipated impact in Mln tonnes of oil palm biomass mobilized USD 10 Bln GDP impact 66,000 new jobs created 12% CO 2 e abatement Anticipated impact in 2025 USD 1 Bn Industrial Bio Technology sector Thousands of high-value and knowledge intensive jobs Biofuel blending mandate

13 Advanced Biofuels will create significant economic activity in India, direct jobs in the plants as well as biomass supply chain Facts about a typical Cellulosic Ethanol production Cellulosic Ethanol represents a GHG reduction of 85%-95% over gasoline. An average Cellulosic Ethanol plant produces up to 25 million gallons of cellulosic bio-ethanol annually An average plant employs more than 50 people Biomass harvesting and collection is creating another 200 indirect jobs in the community. 100s of people are involved in plant construction A Cellulosic Ethanol plant typically consumes 300,000 tons of biomass annually from a 45-mile radius of the plant. Farmers remove approximately 1 tonne of residue per acre An average plant will spend approximately $10-20 million annually purchasing biomass from area farmers, providing additional income to the farmers. Potential impact India 2018 Assuming part of the 10% Blending Mandate, 2.5% have to be Advanced BioFuels by % would represent 575mln Litres* 5-6 commercial scale Cellulosic Ethanol plants could produce 575mln litres by plants consume ~1.5mln tonnes biomass $50-120mln additional income for farmers More than 300 direct jobs Almost 1,000 people to construct plants More than 1,000 indirect jobs for biomass harvest/collection Source: Bloomberg New Energy Finance (2012) Source: *Source:

14 What s needed from policymakers in India to accelerate Advanced Biofuels development Secured supply of, and access to, affordable biomass is key to ensure investments into biomass conversion: Develop structures to organize biomass aggregation Develop logistical support and infrastructure Innovation funding is key to support new technologies: Investment de-risking for first (few) plants (loan guarantees, low interest debt) Import duty waiver for imported equipment/enzymes Innovation funding to promote local technology scale-up (grants/incentives, tax breaks) High level of policy uncertainty / off-take support around advanced biofuels deters private investment into advanced biofuels: Include (Partial) Advanced Biofuels blending in Fuel blend mandate Increase benefits/counting for Advanced Fuels

15 Bas Melssen Director, Asia Pacific Biomass Conversion Novozymes Malaysia Sdn Bhd Lot 5 Technology Park Malaysia Bukit Jalil Kuala Lumpur Malaysia Phone: basm@novozymes.com Krishnan G.S. Regional President, India Novozymes South Asia Pvt. Ltd. Plot No. 32, EPIP Area, Whitefield Bangalore India Phone: gskr@novozymes.com