Towards Sustainable Production of Biofuels: the Eni s Way

Towards Sustainable Production of Biofuels: the Eni s Way Resource Efficiency e Sustainable Development Goals: il ruolo del Life Cycle Thinking Siena, 22-23 Giugno 2017 Alberto Delbianco (SVP DOW R&D), Eni SpA

Summary 1. The Emergence of Renewable Biofuels 2. European Refining Outlook: Facing the Challenges 3. Eni s strategy 4. Eni research and advanced biofuels 5. Life Cycle Analysis: Methodology, Well To Wheel, Case Studies 2

Biofuel Consumption In 2014 the biofuels worldwide consumption was 97 million metric tons (~ 2% of the demand for oil, 4% road transport energy consumption) mainly concentrated in the USA and Brazil for ethanol and in Europe for biodiesel 2030 consumption is expected to grow up to 140 million metric tons (3% of oil demand) Mton 120 100 80 60 40 20 Bio-diesel Ethanol 0 2014 2020 2025 2030 2014 2020 2025 2030 USA Brasile EU-28 Altri others 3 Source: Enerdata, Eni forecats, 2015

Greenhouse Gas Police: the Emergence of Renewable Biofuels Italian legislative decree Challenging targets 10% of Biofuels since 2020 Excluding the contribution of electricity Advanced Biofuels Algae Organic waste Straw, compost, pitch Raw glycerine Cellulosic material, lignocellulosic biomass and residual of forestry activities Low-starch-content crops Industrial waste including material from trade and food industry Legislative decree update (Nov 15) Maximum allowable content of 1 st generation biofuels equal to 7% (RED) Secondary target: constraint for 1.25% of advanced biofuels in fuel mix Draft RED II 4 *Biofuels produced starting from UCO, Tallow Oil, CO 2 reduction with bio-h 2,

Refining Scenario European refining industry is living a major economic crisis High energy cost Refining overcapacity and low operating margins Decrease of demand and umbalanced offer Environmental constraints Old and small size refining system 5

Eni s Strategy for Biofuels Eni was able to turn a critical situation into a great opportunity by investing in the innovative Green Refinery project for the conversion of a petroleum refinery into a Biorefenery The Green Refinery idea is focused on the application of Eni/Honeywell UOP Ecofining TM technology and results from the long term «Eni Green Strategy» That s «make option»: Eni entered the biofuels market, producing a new generation of very high quality biofuels starting from renewable feedstock 6

7 Eni Green Strategy Results

Ecofining TM Process From 18 January 2016, in over 3500 Station, Eni has launched the new fuel that replaces Eni bluediesel Eni Diesel+ is the only diesel fuel in the Italian market with a 15 % renewable component. This fuel ensures low fuel consumption, maximum engine power and engine care, with an extra focus on the environment 8

Eni Green Refinery in Venice The conversion of an oil refinery to a bio-refinery is not only of environmental and technological significance, but also of economic and social importance, since it allows us to give new life to the plant and guarantee continued employment through innovation Plant capacity around 350,000 tonnes/year Reusing an existing structure instead of building a new one offers considerable savings at the initial investment level 9

Eni Diesel +: Effects in Diesel Combustion 10 Higher cetane number: reduces gaseous emissions (HC and CO), improves ride comfort and engine efficiency at partial loads Lower aromatic content: lower PM and PAH emissions Lower sulphur content: reduces PM and sulphates Thanks to a more sustainable production process, Eni Diesel+ has a lower value of "Carbon Intensity" than commercial diesel fuel and it helps to reduce CO 2 emissions by an average of 5% A perfect cleaning of the engine injection system is assured thanks to the presence of a particular detergent additives

Eni research and advanced biofuels Alternative sources for advanced biofuels 1. Microbial oils obtained from the fermentation of sugars obtained from ligno-cellulosic biomass 2. Algal oils obtained from photosynthetic microalgae 3. Bio-oil obtained from organic waste, agro-food waste and sewage sludge 4. Oxygenated diesel components from raw glycerin 11

1. Oils from ligno-cellulosic biomass Alternative sources for advanced biofuels Worldwide fuel demand MBPD 50 40 30 20 10 Animal oils and fats, in addition to competition with the food industry, also suffer from limited availability over the size of the automotive fuel market. The most abundant renewable raw material on the planet is ligninocellulosic biomass 0 Current Potential 13 http://www.ars.usda.gov/sp2userfiles/program/307/biomasstodiesel/robertbrown&jenniferholmgrenpresentationslides.pdf

1. Oils from ligno-cellulosic biomass: the saccharification stage (1/2) Lignin Biomass Cellulose (%) Hemicellulose (%) Lignin (%) Soft wood 45-50 25-35 25-35 Wheat straw 30 50 15 Corn stover 45 35 15 Cellulose Hemicellulose Agricultural waste (energy crops) Pretreatment (steam explosion) Deconstructed Biomass Enzymatic hydrolysis Lignin C5 and C6 sugar Glucose Mannose Galactose Xylose Arabinose 14

1. Oils from ligno-cellulosic biomass: the fermentation stage (2/2) C5 and C6 sugar Glucose Mannose Galactose Xylose arabinose Fermentation Downstream Centrifugation Cell disruption Solvent extraction Microbial oil (triglycerides) Oleaginous yeasts High productivity in lipids (up to 70% on the cell dry weight) and biomass (>100 g/l) Ability to grow on all the sugars (C5 and C6) without metabolic engineering The obtained lipids are equivalent to vegetable oils (palm-like) Endocellular lipids Accumulated as energy storage material into the lipid bodies 15

1. Oils from ligno-cellulosic biomass: process scale up Target: 1.000 m 3 Pilot plant located at the Renewable Energy and Environmental R&D Center (Novara) 16

2. Oils from aquatic biomass: microalgae Microalgae are photosynthetic aquatic organisms capable of accumulating up to 70% by weight of oils (triglycerides) inside the cell Microalgae Oil content (dry wt %) Botryococcus braunii 25 75 Chlorella sp. 28 32 Crypthecodinium cohnii 20 Cylindrotheca sp. 16 37 Nitzschia sp. 45 47 Schizochytrium sp. 50 77 Tetraselmis suecia 15 23 19 Fonte: Y. Chisti / Biotechnology Advances 25 (2007) 294 306

2. Oils from aquatic biomass: microalgae CO 2 emissions CO 2 Solar light Emission source: Industry Power plants Natural gas wells with high CO 2 co-production water nutrients inoculum Raceway ponds cultivation Biomass concentration Water recycle Algal biomass Greendiesel Ecofining TM Algal oil Oil extraction 19

2. Oils from aquatic biomass: microalgae cultivation technology Ponds vs Photobioreactors 21 PROS Low capital cost Low operational and maintainance cost CONS Highly sensitive to contamination Affected by seasonal variability Land intensive Low cell concentration (<1 g/l) PROS Prevent or minimize contamination Lower carbon dioxide losses due to out gassing Higher cell concentrations (up to 5 g/l) Better control (T, ph, salinity) CONS Fouling at the inner surfaces of the bioreactors block sunlight High capital cost Scalability

3. Oils from organic wastes (1/2) Wet biomass (~65-80% H 2 O) Liquefaction Low heating value (MJ/Kg) Org.waste: 18 Bio-oil: 35 Heavy Oil: 40 Residue: 12 Upgrading 240-310 C 40-100Bar 1-2 h BIO-FUELS Separation BIO-OIL 23

3. Oils from organic wastes (2/2) 24 Raw material advantages There is already a collection chain without water and soil consumption, as it does not derive from agricultural cultivation and does not compete with food It has a negative cost (contribution cost of 70-100 / t) No drying is required It produces a bio-oil with high calorific power and easy to store It retrieves the waste by returning the amount of water it contains to re-enter the environment Bio-fuel waste products are recognized as Advanced Biofuels by European Energy Regulatory in the Transport Sector Social impact in areas where waste disposal is more critical Feed: 2-7 kg/h Reactors: CSTR ~ 9 l PFR ~ 3 l Max: 320 C / 150 bar Waste to Fuel pilot plant located at Renewable Energy and Environmental R&D Center (Novara)

4. Oxygenated bio-components pro Diesel Glycerin is the by-product of the production of traditional biofuels (FAME) It is considered a waste in the new RED/FDQ standard on advanced fuel Re-use of glycerin, through a new Eni process (patented), allows to obtain a new bio-component pro Diesel component with good performance characteristics and the "advanced" connotation in terms of sustainability From raw glycerine + alcholos (ethanol, methanol) HO OH OH HO (HO ) Chemical process Hydrogenation/esterification; condensation Oxygenated compounds 26

Conclusions (1) The European directive promotes the spread of biofuels, favoring "advanced" products obtained from raw materials not in competition with the food cycle The only commercial alternative to biodiesel (FAME) is HVO (Hydrotreated Vegetable Oil), which can also be obtained from non-edible oils (used oils, animal fats, ), awaiting new processes for waste biomass or algal biomass. In this sense Ecofining TM technology is the bridge between the first generation and "advanced" biofuels Eni research is active with several projects aimed at the development of "advanced" biofuels by selecting waste raw materials or those not competing with the food cycle, with low use of "water" and "land" resource Eni research is also active in the field of lubricants with high environmental compatibility and high performance. Biofuels, bio-lubricants and innovative additives are Eni's response to sustainable mobility Finally, in the environmental sector, new "bio" technologies can contribute sustainably to the reclamation of hydrocarbon and/or metal contaminated sites 26

Life Cycle Analysis Methodology Environmental Life Cycle Assessment - LCA is an ISO standardized methodology a comprehensive overview of the system (life cycle), in which all the processes, from raw material extraction to disposal at the end of life (from cradle to grave), are taken into account for the development of the analogical model Governed by ISO 14040 - ISO 14044, the methodology has been widely applied in various sectors LCA gives environmental impacts/effects on natural resource use, natural environment and/or human health for a process Of particular interest: GHG emission 27

Life Cycle Analysis: Well To Wheel (WTW) Well-to-wheel is the specific LCA used for transport fuels It does not consider energy and emissions involved in building facilities and the vehicles, or end of life aspects The WTW analysis focuses on: fuel production (Well-to-Tank - WTT) vehicle use (Tank-to-Wheel - TTW)...that is the major contributors to lifetime energy use and greenhouse gas (GHG) emissions Feedstock Transport Refining Fueling Vehicle operation 29 Well-to-Tank Tank-to-Wheel

Life Cycle Analysis: 2009/28/EC Directive Methodology (2009/28/EC, Annex V, C 1-2) GHG emissions from the production and use of transport fuels, biofuels and bioliquids shall be calculated as: E = e ec + e l + e p + e td + e u e sca e ccs e ccr e ee (gco 2 eq/mj) Emissions from the manufacture of machinery and equipment shall not be taken into account 60% Fossil fuel comparator: the latest available actual average emissions from the fossil part of petrol and diesel consumed in the Community (as reported under Directive 98/70/EC) If no such data are available 83,8 gco2eq/mj 30 before 2015

Case Study 1: LCA of H2 production at Venice Biorefinery Existing LCA developed previously for UOP Hydrogen production impact not available in a database calculated Evaluation of GHG impact for the hydrogen production with the actual data of the refinery (average on 2 months), for different semester (2 nd 2014 / 1 st 2015 / 2 nd 2015 / ) collaboration still ongoing The result is used for certification, database used: Ecoinvent3 ~ 1/3 31

Case Study 2: LCA of HVO production at Gela Biorefinery (1/2) Combustion phase GHG emissions for biofuels are zero, as reported in RED Use Case study: Hydrotreated vegetable oil From palm oil to HVO, with the data for the Gela case (ECOFINING ) Processing 2 Cultivation Palm fruit cultivation This step considers the cultivation and the use of raw materials. The impact is reported on Proof of Sustainability (PoS) certificates Transport Processing 1 Palm oil production The impact is lower if the methane is captured Transport of raw materials and intermediate (palm oil) 32

Case Study 2: LCA of HVO production at Gela Biorefinery (2/2) New plant > 60% CO 2 reduction (RED) < 33.52 gco 2 eq/mj The new Green Refinery respect the reduction 1. The biggest impact is due to palm oil it is crucial to have PO with low emission certificate 2. Hydrogen 3. E.E. the use of green electricity can be an alternative The LCA during a design phase has the capability to underline the prevalent source of impact and to give some tips to reduce it! 33

Life Cycle Analysis Conclusions LCA is useful for all Eni processes (Upstream, Downstream, Renewables) In particular for biofuels LCA is compulsory for certification and it is important in the design phase too LCA methodology can be applied to processes, products and services 34

34 Back-up

LCA: Greenhouse Gases In a LCA study the Greenhouse gases considered are: Global warming potential (GWP) is different for the 3 species. http://www.wri.org/blog/2014/05/everything-you-need-know-about-agricultural-emissions

LCA Tool & Databases GaBi is the modeling, reporting and diagnostic software tool for LCA analysis developed by the company ThinkStep GaBi version 6.0 LCA high-quality databases available in GaBi: - GaBi Databases Created by ThinkStep, GaBi Databases are the largest internally consistent LCA databases on the market today and contain over 7000 ready-to-use Life Cycle Inventory profiles. GaBi Databases feature the most accurate Life Cycle Inventory profiles based on primary industry data. - ecoinvent Created by the ecoinvent centre - U.S. LCI Created by NREL and its partners -Data on Demand ThinkStep is able to create also a database to suit their needs with the data-on-demand service.

Life Cycle Analysis 2009/28/EC Directive Methodology (2009/28/EC, Annex V, C 1-2) Greenhouse gas (GHG) emissions from the production and use of transport fuels, biofuels and bioliquids shall be calculated as: E = e ec + e l + e p + e td + e u e sca e ccs e ccr e ee, where E e ec e l e p e td e u e sca e ccs e ccr e ee =total emissions from the use of the fuel; =emissions from the extraction or cultivation of raw materials; =annualised emissions from carbon stock changes caused by land-use change; =emissions from processing; =emissions from transport and distribution; =emissions from the fuel in use; =emission saving from soil carbon accumulation via improved agricultural management; =emission saving from carbon capture and geological storage; =emission saving from carbon capture and replacement; and =emission saving from excess electricity from cogeneration. Note: -Emissions from the manufacture of machinery and equipment shall not be taken into account