Corn Future Biofuels Feedstock 2.29.08

Corn’s Future as a Biofuels Feedstock March 3, 2008 Presented at the 44 th Annual Illinois Corn Breeders School

Topics To Be Covered: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

About Context: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Ethanol Demand Source: EIA-819 Monthly Oxygenate Report & Context Est. U.S. Ethanol Demand Reached 6.8 Billion Gallons in 2007. ,[object Object],[object Object],[object Object],[object Object]

% of Corn Harvest to Make Ethanol Source: Joseph Glauber, USDA, “2008 Agricultural Economic Outlook” 19% of Corn Consumption in 2007 Was to Make Ethanol ,[object Object],[object Object],[object Object],[object Object]

U.S. Corn Production Source: Dr. Michael R. Rahm, Mosaic, “The Market Outlook: Revving Up Production Agriculture” ; “Q3 Market Analysis Reports”, Potash Corp; Doane Forecast from “Our View from November 2007” by Dan Greenwell, Terra Industries, Inc.; Informa forecast from Corn Used for Ethanol Is Forecasted to Grow ~75% by 2009/10 8.7 billion gallons 11.5 billion gallons 12.5 billion gallons ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Can’t Talk About Corn’s Future Without Talking about EISA EISA Overview EISA is Congress’ script for the biofuels Industry

RFS Volumes per EISA Source: H.R. 6, Energy Independence & Security Act of 2007 ESIA Calls for a Transition from Corn to Cellulose to Make Ethanol ,[object Object],[object Object],[object Object],[object Object],Conventional Biofuels Cellulosic Ethanol Other Advanced Biofuels Biodiesel

[object Object],[object Object],[object Object],EISA Has Several “Themes” Corn is considered a first generation biofuel and its use will be limited ,[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],EISA’s Impact to Corn: Is this the end of the story? That depends on cellulosic ethanol… According to FAPRI*… * Food and Agricultural Policy Research Institute, “The Energy Independence and Security Act of 2007: Preliminary Evaluation of Selected Provisions”

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],At This Point Cellulosic Ethanol Still Faces Some Big Hurdles Many question whether it is ready for commercialization

Timing of New Capacity to Produce Cellulosic Ethanol (DOE Funded Projects) Cellulosic Ethanol Production Is Likely to Fall Short of EISA Targets Project development & plant start-up could push full-scale operation out further 2010 EISA Cellulosic Requirement ,[object Object],[object Object],[object Object]

[object Object],[object Object],Congress Left Several “Escape Hatches” in EISA Shortfalls in cellulosic ethanol production were considered a distinct possibility Waivers and Modification of Annual Volumes ,[object Object],[object Object]

U.S. Biofuels Supply – 2008 to 2022 Context is Predicting There Will Be A Shortfall in Cellulosic Ethanol Production will only reach 3 billion gallons by 2015 ,[object Object],[object Object],[object Object],[object Object],Shortfall Imports Cellulosic

U.S. Biofuels Supply – 2008 to 2022 A Shortfall Could Be an Opportunity for Corn Use of corn starch would depend on feed and food prices ,[object Object],[object Object],[object Object]

Growth In Cellulosic Ethanol Is Also an Opportunity for Corn A major concern is how much feedstock can be sustainably provided Cellulosic Feedstock Required to Produce 3 Billion Gallons

Multiple Types of Feedstock Are Being Considered Each has its pluses and minuses Forest Residues Energy Crops Municipal Solid Wastes Agricultural Residues

No Single Feedstock Is Most Preferred by Plant Developers Many different ideas on which is best DOE Commercial Biorefinery Grant Recipients Four Different Feedstock Strategies: 1. Multiple Ag residues 2. Single Ag residue 3. Multiple municipal and yard wastes 4. Forest residues

Will One Type of Feedstock Prove More Desirable/Economical? Process technology and location could be major determinants of what is used Feedstock Comparison: Note: Land required is for a single 25 million gallon plant

Corn Stover and Wheat Straw Are the Most Readily Available Ag Residues Corn stover has slightly higher carbohydrate content, greater availability and can be co-located at existing ethanol plants Feedstock Comparison: Note: Land required is for a single 25 million gallon plant

Utilizing Just Corn Cobs Has Advantages (vs. stalks, leaves, husks, etc.) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Corn cobs would be easier to collect, store and transport

Corn Fiber Is Another (Overlooked) Potential Cellulosic Feedstock ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Ethanol plants could increase their output 6-7% using corn fiber

We Project that Corn Will be the Most Common Cellulosic Feedstock Corn Stover 38% Energy Crops 5% Urban Wood Waste 15% Mill Residues 5.0% Logging Residues 10% Corn Fiber 5% Corn Cobs 16% Corn in total will provide 59% of the cellulosic feedstock required in 2022 Wheat Straw 6% ,[object Object],[object Object],[object Object],[object Object]

Cellulosic Ethanol Will Develop Where the Cheapest Feedstocks Are At. State incentives could play a large role ,[object Object],[object Object],[object Object]

Risks to Corn’s Future as a Biofuels Feedstock Economics are the primary risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Summary: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Summary: Corn will be the bridge between first and second generation fuels. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

For more information contact: Jim Murphy, The Context Network (515) 225-2204 (office) (515) 468-1956 (cell) [email_address] www.contextnet.com Thank you for your time

Corn Future Biofuels Feedstock 2.29.08

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Corn Future Biofuels Feedstock 2.29.08