HOW BRAZIL CAN CAPITALIZE ON CELLULOSIC ETHANOLCynthia BryantDirector, Global Biomass Business Development, NovozymesSugar and Ethanol Conference, Monday March 28, 2011
NOVOZYMES IN BRIEF 2010 Novozymes sales by industry 4% 2%GLOBAL PRESENCE 8% 32%• World leader in industrial enzymes 22% and microorganisms• Products for > 30 different industries 32%• >700 products sold in 130 countries Detergents Technical Food• > 5,400 employees worldwide Feed Microorganisms Biopharmaceuticals 2010 market share of enzymes (industrial use)R&D• Market leader in all main industries• 47% global market share within 26% 47% industrial enzymes 6%• ~ 14% of sales invested in R&D• > 6,500 patents granted or 21% pending Novozymes Danisco DSM Other 2
OUR DEVELOPING WORLDFACES CHALLENGES Novozymes uses science to reduce carbon emissions for many of our everyday needs; helping to create a cleaner and safer world today and in the future.
BIOFUEL IS ONE STEP TO A FUTUREOF CLEANER AND RENEWABLE ENERGY • World leader in biofuel enzymes • Global R&D focus on cellulosic ethanol • Broad partnership strategy – we are working on many feedstocks and technologies • More than 150 people dedicated to cellulosic ethanol Inbicon Lignol GreenField POET M&G ICM Ceres Fiberight COFCO-Sinopec Praj Petrobras CTC4 Some of Novozymes cellulosic ethanol partners across the globe
WORLD DEMAND FOR TRANSPORT FUEL IS GROWING Global transport energy consumption by fuel 3,000 (450 ppm stabilization scenario) 2,000 1,000 0 2007 2020 2030 Oil Gas Electricity Biofuels OtherSource: OECD/IEA World Energy Outlook 2009, USDA, EU Commission/Refuel, McKinsey
GLOBAL DEMAND FOR FUELS WITH LOWER GHG EMISSIONS IS GROWING 100% WEIGHTED AVERAGE OF %GHG SAVINGS BY YEAR FOR US RFS2 VOLUMES 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2011 2012 2013 2015 2016 2017 2019 2020 2010 2014 2018 2021 2022The EU is also placing ahigher value on cellulosicethanol by double countingits use to reach RED goals.
BRAZILIAN CELLULOSIC ETHANOL IS AN IMPORTANT GLOBAL FUEL SOURCE POTENTIAL PRODUCTION OF ETHANOL FROM AGRICULTURAL RESIDUES AND FOREST PRODUCTS China India Brazil Argentina Mexico USA Canada European Union Europe Million Liters 0 20 40 60 80 100 EtOH based on current wood fuel production EtOH based on estimated residue potential The world has the ability to produce close to half a trillion liters of cellulosicSource: ethanol using agricultural Niclas Scott Bentsen and Claus Felby, Technical potentials of biomass for energy services from current agriculture and forestry in selected residues and forest products.countries in Europe, The Americas and Asia , 2010
BRAZIL HAS MANY CELLULOSIC ETHANOL ADVANTAGES Challenge Valued SolutionsFeedstock • Bagasse is collected and at the plants today • ~10-17B Ltr/yr availability after adjusting for bioelectricity useCapital • Co-location offers shared equipmentCosts and facility useOperating • Co-location offers shared resourceCosts advantages • Low cost feedstock significantly improves economicsBusiness • Additional revenue stream for millsModel • Opportunity to maximize value of the bagasseIndustry • Approximately 2-3 years behind theFocus US and Europe in up-scaling 8
CO-LOCATING CELLULOSIC ETHANOLPROVIDES A PROJECT NPV BENEFIT R$ 160,00 At an annual crush greaterNPV (Million BRL) than 2.5 MMTY, co-locating a R$ 140,00 cellulosic ethanol facility has a greater payout than R$ 120,00 building a standard sugar based ethanol plant. R$ 100,00 R$ 80,00 NPV 1G NPV 1G+2G (no C5) R$ 60,00 NPV 1G+2G (with C5) NPV 1G+2G (Co-fermentation) R$ 40,00 R$ 20,00 R$ - 1,00 2,00 3,00 4,00 MMTCY (Million Metric Tons Crush per Year)
CO-LOCATING CELLULOSIC ETHANOLREDUCES LAND USE NEEDS FORETHANOL PRODUCTION Co-locating cellulosic Brazilian ethanol Approximately 103 ethanol reduces landdemand is expected additional plants will use by up to 20% to reach 60 BLY by need to go online to The equivalent of 20 2015 meet this demand plants
CELLULOSIC ETHANOL ISREADY FOR COMMERCIALIZATION• The uncertainty of petroleum supply is renewing energy security concerns• Ground breaking this year on 3 plants around the world Novozymes area of focus 1
NOVOZYMES CELLIC® CTEC2THE FIRST COMMERCIALLY VIABLE ENZYME Average 1.8X performance improvement Cellic CTec2 provides many benefits that are helping to enable our partners’ processes to become commercially viablePerformance improvement at higher TS Commercially relevant dosage100 Cellic CTec Cellic CTec2 Hydrolysis of unwashed NREL PCS, 20% TS, 8-days 90 100,0% 80 Cellulose conversion 80,0% 70 60,0% 60 40,0% CTec2 CTec (%) 50 20,0% Enzyme Dose 1 Enzyme Dose 1 Enzyme Dose 2 0,0% 0,01 0,02 0,03 0,04 0,05 12% Total Solids 16% Total Solids Enzyme dosage (ml/g cellulose)
THE NOVOZYMES CELLIC®PRODUCT FAMILY IS ENABLINGCOMMERCIAL VIABILITYEnzyme costs are becoming a smaller Production costs are coming in lineand smaller percentage of the total with corn-based ethanol costsprocess costs
NOVOZYMES AND OUR PARTNERSARE PROGRESSING IN BRAZIL• Implementation • Leading energy of technology company• Leading sugar • Full value chain cane and • Ethanol distribution bagasse and logistics• Technical and (domestic and export) agronomical expertise • Best performing enzymes in the industry • Process technology expertise in pretreatment, hydrolysis and fermentation • In depth modeling capabilities
NOVOZYMES PARTNERS IN BRAZIL ARE ONA PATH TO COMMERCIAL VIABILITY Cellulosic ethanol costs are also coming into alignment with sugar based ethanol.
NOVOZYMES ENZYMES POTENTIAL TO REDUCE THE DOSE REQUIREDAbout CTC: • The largest technology center for sugarcane in Brazil • Process development pilot plant running for more than 1 year • Focus on sugarcane bagasse 4X reduction in the enzyme usage in two years Initial Process enzyme CTEC 2 Improvement (CTEC 1) with CTEC 2 16
WE WILL DELIVER THE PROMISEOF CELLULOISC ETHANOL TO BRAZIL Cellulosic ethanol provides many advantages for Brazil Novozymes Partnership Advantages• Improved plant economics• Increased ethanol production • Insight into the latest enzyme capacity developments• More efficient land and crop • Process optimization for use pretreatment, hydrolysis and• Ability to compete at higher fermentation GHG savings standards • Sophisticated modeling capabilities to enable the right process decisions • World class R&D resources throughout the globe