Cellulosic Ethanol Strategic Partnering in Advanced Biofuels Brian Foody Iogen Corporation ABLCNext San Francisco Oct 10, 2013
Overview Strategic Partnering in Advanced Biofuels Who is Iogen? The Technology Demonstration Challenge The Commercialization Challenge New Opportunities in the Market Outlook 2
Who is Iogen? Making Cellulosic Ethanol Since 2004 2009 2010 2004 2009 2005 2010 2007 2011 3
Who is Iogen? Team Assets - Relationships Team: One of the world s largest and most experienced teams in cellulosic biofuels Over 30 years in second gen biofuels, with $500 million invested 9 years developing, designing, de-bugging and scaling-up cellulosic ethanol technology in our integrated demo plant Strong focus on technology including integration of biotech, process tech and engineering Projects developed in Canada, US, Germany and Brazil Extensive feedstock supply chain experience, with contracts totaling 2.8 million tonnes per year. Very active in legislative and regulatory advocacy 4
Who is Iogen? Team Assets - Relationships Assets: Developed extensive physical assets and intellectual property assets $500 million technology investments $100 million demonstration plant in Ottawa, Canada World class enzyme production facility in Ottawa, Canada (enzyme business sold to Novozymes in 2013 transaction) Over 300 issued and pending patents 5
Who is Iogen? Team Assets - Relationships Relationships: History of developing relationships with blue-chip partners: Second Generation Biofuels: Current and historical relationships include: Enzyme Business: Historical relationships include: 6
Overview Strategic Partnering in Advanced Biofuels Who is Iogen? The Technology Demonstration Challenge The Commercialization Challenge New Opportunities in the Market Outlook 7
The Technology Demonstration Challenge Starting with new Process Technology Incorporate numerous novel or different components Chemical engineering scale-up principles How rigorously should one test at sub commercial scale vs just doing it Rigorous scale-up is extremely capital intensive $10 to $100 million to build and run a demonstration plant the last stage before commercial operation How can a firm put the money together? Do you need to fund the cost of large scale demonstration? What source: partners, investors or even internal capital? 8
What could possibly go wrong? Problem: Straw bridging
What could possibly go wrong? Problem: Lines plugging
What could possibly go wrong? Problem: Severe deposits leading to system shut-downs
What could possibly go wrong? Problem: Severe erosion problems in pumps
What could possibly go wrong? Problem: Distillation tray plugging
At Iogen: Emphasize Design Cycles & Integrated Demo Cycle of Process Design Improvement R1 to R8 Develop Implement Operate 14
De-risking through integrated 24/7 operation 15
Demonstration Plant 24/7 Integrated Operation Operated like a regular production facility Four crews of operators; 12 hour shifts Dedicated maintenance & instrumentation staff Team of full time process engineers Extensive sampling, analysis, and continuous improvement 1100 samples per week Demo plant data feeds our technology program and leads to design decisions and improvements Experience at this scale matters! Key to reliability on scale-up 16
Progress in Sequential Technology Releases R6 R7 R8 Upgrade Upgrade 17
R8: Double the Process Concentration to Hydrolysis 18
R8: Potential ethanol titer Sustained cost reduction 19
The Technology Demonstration Challenge Iogen approach focused on extensive validation and testing 24/7 integrated operations This does not come cheap Iogen s demonstration facility cost $100 million All in costs of demonstration probably exceed $250 million We had supportive partners who believed strongly in high quality demonstration 20
Overview Strategic Partnering in Advanced Biofuels Who is Iogen? The Technology Demonstration Challenge The Commercialization Challenge New Opportunities in the Market Outlook 21
The Commercialization Challenge Cellulosic ethanol is a very large commercial opportunity with great margin potential 16-24 billion gallons per year But, it is extremely capital intensive $5 to $25 per annual gallon of production capacity How does a firm find partners / investors willing to take a first plant risk DuPont Beta-Renewables (M&G, TPG, Novozymes) Poet / DSM Abengoa 22
Iogen s Key Partner 50:50 JV between Cosan and Shell Raízen assumed Shell s position in the Iogen Energy JV when Shell abandoned pursuit of its Canada project in 2012 Raízen has rights to Iogen technology in Brazil and sugar cane worldwide Brazil s largest cane processor 24 mills, crushing capacity ~ 65 million tonnes per year ~ US$ 30 billion sales ~40,000 employees Strategic commitment to cellulosic ethanol Previously said they plan to invest $2 billion in the construction of cellulosic ethanol facilities in Brazil 23
Why Brazil? Cellulosic ethanol is a natural fit for Brazil Offers a solid, practical path to grow the industry Increases yield per acre by 50% or more Takes the pressure off opening (expensive) new cane plantations Uses materials that now go to waste or are burned Enables mills to extend their operating season Sugar cane mills are already producing bagasse Sugar mill add-ons offer capital cost savings through site infrastructure and use of existing equipment Bagasse is available at low cost, prepared for use, in steady supply Operating costs can be lower, shared across an existing site 24
Extensive validation program with Bagasse Conducted demo plant operations with bagasse over 6 months Initial lab & pilot screening Compared operating data with multi-year baseline experience Baseline primarily wheat straw Additional experience on corn stover 25
The Costa Pinto Cellulosic Ethanol Project Brazilian Sugar Mills and Distilleries Raízen Costa Pinto Mill, Piracicaba, Brazil Picture of Mill Raízen Costa Pinto Mill, Piracicaba 24,000 MT/day crushing capacity 82 million litres ethanol/ yr 26
The Costa Pinto Cellulosic Ethanol Project Capacity: 40 million litres/yr cellulosic ethanol Site and Process Strategy: Existing bagasse stream as feedstock Maximum utilization of existing assets Lignin feeding to boiler (replacing bagasse) Capital cost: US ~$100 million Schedule: Operational by the end of 2014 27
Overview Strategic Partnering in Advanced Biofuels Who is Iogen? The Technology Demonstration Challenge The Commercialization Challenge New Opportunities in the Market Outlook 28
The Renewable Fuel Standard targets energy security and CO 2 emissions Total renewable fuel mandate Components of the Renewable Fuel Mandate 29
Rising fuel economy standards target energy security and CO 2 emissions 30
Fuel and Vehicle Technologies: Are they competitive, complimentary or unrelated? How can we tackle Energy Security and CO 2 emissions? Hybrid Technology VW Jetta Hybrid Running Gasoline 170 HP 125 g CO2/km Fuel Technology 31 GM VW Yukon Passat Jetta Hybrid Denali MultiFuel MultiFuel Running Cellulosic E-85 320 160 170 HP 75 50 25 g CO2/km
If they deliver the same benefits, how do their costs compare? North American RPE Austin et al, Sierra Research 32
If they deliver the same benefits, how do their costs compare? 2G Biofuels are very competitive. Total Cost of 2G Biofuel supply 10 year NPV of Opex Capex (net of term value) 33
Can we structure a proposal to EPA to: Provide Auto sector with additional compliance options/flexibility Enable the lowest cost to society for achieving the government s GHG/petroleum reduction goals Pass the test of being: Accountable e.g. relying on a robust RIN system Additional e.g. increasing 2G deployment Achievable e.g. relying on existing regulatory authority no legislation needed 34
Overview Strategic Partnering in Advanced Biofuels Who is Iogen? The Technology Demonstration Challenge The Commercialization Challenge New Opportunities in the Market Outlook 35
Iogen s 2014 Goals 1. Successful start-up of first cellulosic ethanol facility at Raízen s Costa Pinto sugar cane mill Piracicaba, Brazil 2. Release Iogen s next generation of processing technology: New drop-in cellulosic biofuel Cellulosic biofuel yield of 150+ gal/ton Capital cost of less than $5/gallon/yr. 36
Outlook for Iogen We expect cellulosic biofuel production to be a strongly profitable business for the long term Iogen plans to catalyze project investment with alliances & partnerships Targeting strategic alliances to drive US & EU implementation 37
Strategic Partnering in Advanced Biofuels Thank You 38