The Next Generation of Ethanol

Wes Bolsen – CMO & VPThe Coskata Process – The Best of Both Worlds

Biofuels Journal WorkshopOctober 30th, 2008

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2002 2007 2012 2017 2022

Other advanced

Cellulosic

Conventional (corn)

Source: RFA; U.S. Congress

U.S. biofuel consumptionBillion gallons

Ethanol has grown into a large marketEthanol represents 6% of gasoline pool and > $20 billion market in 2008Volume growth of 25% per year since 2003Industry has added over 60 plants and 4.5 billion gallons of capacity in the last 5 years

Government support will stimulate continued growthEnergy Act of 2007 requires 36 billion gallons:

• Corn capped at 15 billion • At least 21 billion from “advanced

biofuels, of which 16 billion must be from cellulosic biofuels

Credits, tariff and R&D grants further support domestic industry growth

Biofuels are a large and growing industry in the U.S.

RFS mandate

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2nd generation ethanol expands the industry beyond corn

Cellulosic ethanol can take industry to the next level

Projected biomass sources

100%= 1.3 billion dry tons

Corn (6%)

Crop residues (31%)

Forest resources(27%)

Energy crops(28%)

Other(8%)

Second generation technology unlocks the potential of new feedstock sources

Using cellulosic materials could displace significant amounts of gasoline (Billion ton report estimates over 1/3rd)

Use of locally grown resources enhances energy security

Source: “Biomass as Feedstock for a Bioenergy and Bioproducts Industry: Technical Feasibility of a Billion Ton Annual Supply,” 2005, DOE and USDA

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Biomass

19% Reduction 28%

Reduction

52% Reduction

86% Reduction

78% Reduction

Gasoline

Natural Gas

BiomassCurrent Average

Cellulosic Ethanol

Corn Ethanol

Petroleum

Sugarcane EthanolBiomass

Cellulosic ethanol reduces GHGs even further

Up to 96%Reduction*

Biomass

* As independently estimated by Michael Wang and Argonne National Labs in a GREET study; Based on forest residuals

Source: Wang et al, Environ. Research Letters, May 2007; Wang et al, Life-Cycle Energy Use and GHG Implications of Brazilian Sugarcane Ethanol Simulated with GREET Model, Dec. 2007. As presented by DOE August 2008

DOE analysis targets GHG reduction from ethanol

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Production costsOperating costs, USD/gallon*

<1.00

1.33~1.00~1.50

~1.60

~2.60

Gasoline at $100/bbl**

Source: DOE; NREL; Coskata estimates

Cellulosic ethanol economics can be very competitive

Brazilian ethanol(Cane @ $120/ton)

DOE cellulosic ethanol 2012 target

Early commercial target

Corn ethanol (Corn @ $4/bu)

* Costs at plant gate, not including capital recovery. Gasoline cost assumes $7/bbl (16 c/gal) refining uplift. Corn ethanol assumes 2.9 gal/bu yield. Brazilian ethanol assumes 170 gal/ton yield; DOE target as reported in presentation of August 20, 2008.

** No adjustment for energy content made given no mileage loss assumed at an E10 blend level

Gasoline at $60/bbl**

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• Fuels• Power• Bio-products

Biochemical Conversion• Enzymatic

hydrolysis• Fermentation

Thermochemical Conversion• Gasification • Catalysis

Biomass

• Energy crops• Residue harvesting

2nd generation biofuels involve several technologies

DOE is targeting 2 major pathways for cellulosic biofuels

Coskata’s Hybrid Gasification + Fermentation (thermo/bio) technology combines the best of both routes

Source: DOE Biomass program presentation to Governor’s Ethanol Coalition, Aug. 20, 2008

Products

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Source: Press clippings

Gen 2 technologies are advancing to commercialization

* Includes announcements for all cellulosic biofuels facilities except algae biodiesel. May not be exhaustive

Over 40 demonstration or pilot scale cellulosic biofuel plants worldwide as of August 2008

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Cellulosic ethanol will represent large markets

A 16 billion gallon mandated cellulosic ethanol industry in the U.S. =

Feedstock (at $0.50/gal) $8 billion

Sales (at $2.50/gal) $40 billion

Capex (at $4.00/gal) $64 billion

Global pesticide industry

Markets of comparable size

10 large world class oil

refineries*

Brazilian sugarindustry**

Source: US Bureau of Economic Analysis; Phillips McDougall; FAPRI

* ~500,000 barrel/day in scale** Assumes 32 million metric tons @ $263/ton as per FAPRI 2007/08

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Coskata’s 3 step process is flexible and efficient

FlexibleWide variety of feedstocksScalable around syngas output

EfficientYields over 100 gal/dry ton biomassProduces only fuel grade ethanol

AffordableProduction costs under $1/gallon

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Step 1: Gasification has many advantages

Fully utilizes feedstock -chemical bonds from all components are ‘cracked’ to breakdown feedstock into synthesis gas (“syngas”, CO, H2 and CO2)

Provides feedstock flexibility –can use any carbonaceous feedstock

Multiple technologies proven at scale

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Step 2: Biofermentation uses proprietary microorganisms and bioreactor designs

Microorganisms utilize the chemical energy of the syngas to selectively produce ethanol

Proprietary microorganisms consume both CO and H2, allowing efficient conversion across the range of H2:CO ratios 6 CO + 3 H20 C2H5OH + 4 CO26 H2 + 2 CO2 C2H5OH + 3 H20

Proprietary bioreactor designs encourage maximum productivity

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Microorganisms and bioreactors are highly efficient

Exclusive license to many strains of anaerobic bacteriaAble to convert both CO and H2Selectively produce ethanolRequire typical impurities found in biomass derived syngasAble to operate at low or moderate pressures and low temperaturesVarious strains can selectively produce ethanol and/or other organics (butanol, butyric acid, propanol)

Microorganisms

Patents pending for several proprietary designsEncourage maximum mass transfer and productivityHighly scalable

Bioreactors

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Step 3: Options exist for separation

Ethanol is separated out of solution and converted to fuel-grade ethanol (99%+ concentration)

Recoverable heat is sufficient to complete traditional distillationMembrane separation has advantages• For co-location applications,

membrane separation offers energy integration benefits

• Coskata has proprietary co- developed membrane separation technology

• Provides significant energy savings (up to 50% vs. traditional distillation)

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Coskata process is ready for commercialization

Microorganism productivity has

surpassed best case economic threshold

Commercial productivity EtOH productivity, g/L/hr

Best case economics (<$1/gallon)

Base case economics ($1/gallon)

Minimum economic threshold (corn)

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Coskata has the leading technology pathway

Gasification +

Enzymatic Chemical

Feedstock Flexibility No Yes Yes

Ethanol Specificity Yes No Yes

Yield*(gal/dry ton) ~55-85 76-89** >100

Capital Cost (US$ Mil. for 100MMGY)* $450-$700 $400-$700 ~$400

Operating Cost (US$/gal)* $2.00-$5.00 $1.25-$2.50 <$1.00

* Best estimates from publicly available data** Chemical catalysis yield estimate from 2012 NREL targets (76 for ethanol, 89 for all alcohols)

Source: Press; DOE; Company reports

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Coskata has a two pronged commercialization strategy

License technology to development partners including• Feedstock suppliers• Chemical manufacturers• Petroleum companies• Ethanol distributors/blenders• Project developers

Enables rapid scale up of technologyEstablishes Coskata as the industry enabler

License

Own

Build, own and operate facilitiesEncourages continual process improvementsAllows Coskata to capture full economic benefits of its technology

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Coskata is proceeding to commercial scale

Lighthouse (Q1 2009)Commercial DemonstrationMadison, Pennsylvania

• Minimum engineering scale (linear scale-up to commercial commercial production)

• Front-end biomass gasifier• Will test multiple commercial-

commercial-scale bioreactor and and separations designs

Flagship (2011)Commercial ProductionLocation TBD

• 50-60 MM Gallons / yr• Multiple gasifiers that process

process ~1500 dry tons/day of of biomass

• ~ $1.00/gallon production cost cost

• $4-5/ gallon of capacity CAPEX CAPEX (plant 1 economics)

Horizon (Q1 2008)Integrated ProcessingWarrenville, IL

Integrated processing system system with methane thermal thermal reformer, multiple multiple bioreactor designs, designs, and distillation

Currently Operating Under Construction In Development

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StaffStaff

Coskata has assembled a capable team to execute

William Roe, CEO

Nearly 50 employees, over half with PhDsTechnical staff from leading science based companies, e.g. Dow, Abbott, Nalco, Eli Lilly

Senior executivesSenior executives

29 years at Nalco culminating as President & COO

30+ years experience; formerly CFO of Westmoreland CoalFormerly CFO of ICM

27 years with UOP

28 years with Dow

30+ years experience at Exxon, Michigan Biotech Institute and Corn Products

David Blair, CFO

Wes Bolsen, CMO

Jeff Burgard, VP-Eng.

Dick Tobey, VP-R&D

Rathin Datta, CSO

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Coskata has strong financial and technical partners

FinancialFinancial TechnicalTechnical

20The Next Generation of Ethanol

ContactEmail: wbolsen@coskata.comPhone: 630-657-5800