Southern Ohio Renewable Energy Conference

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Southern Ohio Renewable Energy Conference

• Jim Zuber Advanced Energy ManagerOhio
  Department of DevelopmentOhio Energy
  OfficeNovember 14, 2007

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What are Biofuels

• Ethanol
• Corn, Barley, Sorghum, Cheese Whey, Sugars
• Cellulosic Wood Pulp, Corn Stover, etc.
• Biodiesel
• Vegetable Oils Soybean, Sunflower, Palm, etc.
• Post-Consumer Oils Yellow Grease
• Animal Fats and Wastes

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Federal Incentives for Biofuels

• Volumetric Ethanol Excise Tax Credit (VEETC) -
  .51/pure gallon of ethanol blended.
• Biodiesel Credit - 1/pure gallon of biodiesel or
  .01/percent of biodiesel if ag-based or
  .50/gallon if waste originated.

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Benefits of Biofuels

• Reduces our dependence on foreign oil
• Creates economic development in Ohios rural
  communities
• Superior performance
• Fights global warming
• Degrades in soil and water quickly

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Biofuels Impact in Ohio

• Increased Industrial Production in Rural Areas
• Most Production Facilities are Farmer-owned
• Dividends remain locally, further boosting rural
  economies.
• Increased amount of value-add from corn soybean
  processing remains in-state.
• Fuel price price volatility is lowered
• Lower transport costs
• Closer supplies

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Potential Impact on the US

• Increased rural development
• Decreased trade deficit
• 1/3 of US trade deficit is oil-related
• Reduced volatility of fuel prices
• Reduced GHG emissions

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Biofuels-Why the Increase?

• Higher fuel prices
• 90/barrel crude oil
• Desire to become energy independent
• Environmental benefits
• Performance
• Economic development
• Hurricane Katrina

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What is Soy Biodiesel?

• Renewable fuel made from soybeans
• Meets ASTM 6751 specs
• Useable in any diesel engine
• No engine modifications
• Made in Ohio and throughout the U.S. Renewable
  fuel made from soybeans

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What is Soy Biodiesel?

• Currently available from 150 distributors and 50
  retailers in Ohio
• In 2007 we anticipate 175 distributors and 75
  retailers in Ohio
• Multiple blends available
• B5 and B20 most common
• Mass Transit uses blends of B20 up to B90
• COTA
• Cincinnati Metro

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Biodiesel

• General DefinitionSoy Biodiesel, derived from
  soybean oil, is a domestic, renewable fuel for
  diesel engines. It meets the specifications of
  American Society of Testing Materials (ASTM)
  Standard D 6751.
• Additional InformationSoy Biodiesel can be used
  in any concentration with petroleum-based diesel
  fuel in existing diesel engines with little or no
  modification. Soy Biodiesel is NOT raw vegetable
  oil. It is produced by a chemical process that
  removes glycerin from the oil.

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BioDiesel

• If every farmer and rancher used B2, the
  equivalent of close to 40 million bushels of
  soybeans could be utilized each year.
• Farmers and ranchers are the third-largest users
  of diesel for use in engines in the United
  States.
• Agricultural use can set the stage for expansion
  of soy biodiesel use in other sectors.

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Ohio Soybean Production

• Area Planted (ac) 4,000,000
• Area Harvested 3,980,000
• Yield (bu/ac) 40.4
• Production 07-8 (mbu) 161
• Production 06-7 217
• Change -56

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Ohio Soy Biodiesel Production

• Three plants producing 35 million gallons
• Proposed plants will produce 116 million gallons
  in 2007
• Could bring Ohios total FY2008 production to
  over 185 million gallons of soy biodiesel
• 185 million gallons of soy biodiesel requires the
  oil from 132 million bushels of soybeans or 66
  of Ohios 2005 production

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Soy Biodiesel Economic Benefits

• Adds 24 billion to the US economy between
  2005-2015
• Creates a projected 39,102 new jobs in all
  sectors of the economy
• Keeps 13.6 billion in America that would
  otherwise be spent on foreign oil
• Demand increases average soybean prices .58 cents
  / bushel by 2015

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Soy Biodiesel Blends

• B100 100 Soy Biodiesel
• B20 20 Soy Biodiesel 80 petroleum diesel
• B10 10 Soy Biodiesel 90 petroleum diesel
• B5 5 Soy Biodiesel 95 petroleum diesel
• B2 2 Soy Biodiesel 98 petroleum diesel

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Energy Yield Life Cycle Basis
Soy Biodiesel has a very favorable Energy
Yield, that is, the amount of energy gained
versus the amount of energy required to produce a
gallon of Soy Biodiesel
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US Soy Biodiesel Production 88 Plants
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Ohio Soy Biodiesel Usage
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Distributors Retailers of Soy Biodiesel
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Biodiesel Distribution Locations
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What is Ethanol

• Produced in Ohio and nationwide
• Two blends available
• E10 (10 ethanol and 90 gasoline)
• All gasoline powered automobiles are able to use
  E10
• 60 of Ohios gasoline is blended E10
• Pumps are no longer labeled so you may have it in
  your car right now.

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What is Ethanol

• Two blends available (contd)
• E85 (85 ethanol and 15 gasoline)
• Made to power Flex Fuel Vehicles (FFVs) over 4
  million in the US today and 200,000 in Ohio.
  (Source - Ohio BMV)
• Ohio currently has over 40 publicly accessible
  E85 pumps. 24 more stations have been awarded
  from HB245 funds so the total is expected to
  reach 70 pumps by the end of the year.

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Net Energy Balance Debate
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Ohio 2007 Corn Production

• Area Planted (ac) 4,000,000
• Area harvested 3,780,000
• Yield (bu/ac) 143
• Production 07-8 (mbu) 540
• Production 06-7 471
• Change 70

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Estimated 2009 Bushels Used in Biofuels Production
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Dependence Disadvantages
The true costs of petroleum (direct military,
lost investment) would add 3.67 per gallon of
gas.
In 1973 the U.S. imported about 25 of oil
consumed. In 2003, we imported 63.
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Ohio Ethanol Production

• Expect to have six ethanol plants producing
  approximately 390 million gallons in the next 18
  months
• Seven more plants are in the permitting or
  planning process
• could bring Ohios total production to over 800
  million gallons
• Ohio currently uses 328 million gallons of
  ethanol per year (Source - Taxation)
• There is plenty of corn for ethanol production

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Ohio Ethanol Production

• Expect to have six ethanol plants producing
  approximately 390 million gallons in the next 18
  months
• Seven more plants are in the permitting or
  planning process
• could bring Ohios total production to over 800
  million gallons
• Ohio currently uses 328 million gallons of
  ethanol per year (Source - Taxation)
• There is plenty of corn for ethanol production
• If production equals 800 million gallons of
  ethanol, we will be processing 55 of Ohios
  current corn crop in the state. Today we ship
  this much out of state for value to be added out
  of the state. The economic benefit of that value
  is also kept out of the state.
• Ethanol is made of Field Corn and not Sweet
  Corn
• fed to livestock not consumed by humans
• Co-product of production is Distillers Grain
• high-value, low-cost feed source for livestock
• high in protein, vitamins, minerals and fiber
• low cost replacement of corn in livestock diets.

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Ethanol Economics

• 50 MGY ethanol plant will annually generate the
  following economic benefits to the community in
  which it is located
• Expand economic base by 189 million
• Generate additional 37.5 million of household
  income
• Support creation of as many as 1,106 permanent
  new jobs
• Generate at least 2.2 million in new tax revenue
  for state and local government
• Generate additional revenue estimated 8 to 10
  cents / bushel

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Ohio Biofuels Production
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Ohio 2007 Maximum Ethanol Production

• Corn Production 2007 540 Million Bushels
• Feed (Cattle/Residential) 169 (23)
• Export 178 (33 )
• Result 193 million Bushels
• X 3.0 gallon/bushel 579MGY

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US Ethanol Production
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Retailers of E-85
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Will There Be Enough Corn?

• Yield increase of 3 bu./acre/year
• 5 increase in acres 07/08
• 5 increase in acres 08/09
• CRP (?) 4.3-7.5 million acres
• Corn-Ethanol Increase
• US Corn Exports
• Increase Distillers Grain Use