Experience with Certification Neste Oil presentation April 2014

Content

1.  Neste Oil in Brief

2.  Range of Renewable Raw Materials

3.  Sustainability, market requirement certification

4.  Certification Experience

5.  Feedback

23.4.2014 Sustainability and HSEQ/Adrian Suharto 2

3 3

Refining capacity: 15 million t/a of

petroleum products and 2 million t/a of renewable diesel

Net sales: €17.5 billion (2013)

Listed on the Helsinki Stock

Exchange

Largest owner: the Finnish State

(50.1%)

A refining and marketing company

focused on premium-quality

traffic fuels

Operations in 15 countries; employs

approx. 5,000 people

Neste Oil in a brief

March 2014

Waste animal fat from the food processing

industry

Range of Renewable Raw Materials

Crude palm oil

Waste fat from the fish processing

industry

Camelina oil Jatropha oil Soy oil Rapeseed oil

4

Technical corn oil Palm fatty acid distillate (PFAD) and

stearin

March 2014

•  Neste Oil ensures the sustainability of all the renewable raw materials it uses •  GHG emission reduction 40-90% •  Waste and residues accounted for 52% of renewable feedstocks used in 2013 http://2013.nesteoil.com/business/renewable-fuels/Renewable-raw-material-procurement/

Sludge Palm Oil and Spent

Bleaching Earth Oil

Tall Pitch oil

23.4.2014 Sustainability and HSEQ/Adrian Suharto 5

Range of Renewable Raw Materials

Feedstock Amount used in 2013, million tons

Amount used in 2012, million tons

Crude palm oil 47.4%

(1.1 Mt) 64.5%

(1.36 Mt) Waste and residues (waste animal fat, waste fish fat, vegetable oil fatty acid distillates e.g. PFAD, technical corn oil, stearin, spent bleaching earth oil)

52.6% (1.22 Mt)

35.1% (0.74 Mt)

Other vegetable oil (rapeseed, soy bean, and camelina oil)

0.0% (0.0002 Mt)

0.3% (0.007 Mt)

Total 100% (2.32 Mt) 100% (2.11 Mt))\

Other (Rapeseed, Camelina, Jatropha Oil) Waste and Residues (PFAD, tallow, Fish fat) Crude Palm Oil

Source: http://2013.nesteoil.com/

Sustainability of Renewable Raw Materials

Number 2013 Fact

100% Traceable Feedstock to the point of origin

100% Palm Oil are certified

54,000 ISCC-EU certified smallholders supplying to Neste Oil

6

Feedstock Supplier numbers so far

Crude Palm Oil Constant

PFAD*, Palm waste Increasing

Animal/Fish Fats Increasing

Others (e.g. TCO**) Increasing *Palm Fatty Acid Distillate, ** Technical Corn Oil

100% certified

CPO

Market requirements are different. Our compliance system is designed to meet all requirements.

Market What is required Verification system

European Union Ø  Direct Audit on the supply chain from farm to the biofuel refinery

Ø  Reporting

CERTIFICATION Third party certified systems, e.g. EU approved systems like ISCC (International Sustainability and Carbon Certification)

United States Ø  Submission of direct proof of establishment of the estates

Ø  Limited segregation Ø  Declaration to authorities

PRIMARY DATA COLLECTION Ø  Direct data collection: EPA only

requires collection of data to be submitted.

Ø  Supply chain auditable by EPA when required

Canada Ø  Proof of establishment of the estates

Ø  Reporting

CERTIFICATION RSPO or ISCC certificates or proof of establishment date

The requirements of all these markets are different, however we have managed to develop a flexible and adaptable system in our supply chain to meet them all.

02.05.14 8

Neste Oil Certification Experience

•  In 2013, Neste Oil refineries, storages and relevant supply chains are certified with ISCC, RSPO-RED and DDC

•  We have experience in previous years assisting our suppliers for gap assessment against ISCC standards

• All Neste Oil palm oil suppliers are certified with ISCC, mostly RSPO and some are segregated

•  Certification audits are done by the suppliers •  Certification includes smallholders and their supply chain •  We increased smallholder certified palm oil volume from 9,000

families to 54,000 families •  More suppliers are certified with ISCC compared to the first

time we started buying

02.05.14 9

Impediments and Feedback 1.  Flexibility on ISCC Plus

•  No current legal requirement opens the opportunity for flexibility; for example on multisite certification (sampling)

•  Maybe as well to involve other stakeholders •  How about more active involvement of the food industry?

2.  Challenges on National Interpretation of the RED •  Could ISCC play a role in prevention of the use of certain

feedstocks? •  Harmonisation on fragmentation (eg. DDC?)

3.  Smallholders •  Various auditor sampling method and definition? •  Neste is interested to increase smallholder supply especially

from independents 4.  GHG emission reduction

•  Its beneficial to acknowledge or endorse or have a pilot project on methane avoidance

02.05.14 10

Impediments and Feedback

5.  Other regulatory instruments in the area of biofuels •  Animal by-product regulations: limitations based on

categories •  Waste directive: efficient way of recycling not as energy

recovery or incineration

6.  Other waste materials •  New type waste materials might be increasing •  How to include them in and have them certified? •  Do we promote the use of these waste materials?

02.05.14 11

Summary

• Neste Oil supply chain is 100% traceable by regulation

• 100% of our palm oil bought is ISCC certified • We are interested to supply more from smallholders

• We believe there are opportunities to improve the ISCC system and influence the whole industry/ market as well

Thank you. Adrian Suharto www.nesteoil.com