EMERALD BIOFUELS

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EMERALD BIOFUELS

• KANAWHA BIODIESEL COMPANY

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Emerald Biofuels Background

• Goals
• Operate ethically while producing quality
  products in an environmentally safe manner
• Develop renewable fuel and bio-chemical
  businesses with long term economic viability.
• Behave responsibly in communities in which it
  operates and serves.
• Mission
• Develop biodiesel production capabilities via
  existing chemical manufacturing infrastructure
• Produce biodiesel thru strategic partnering
  agreements
• Market biodiesel and co-products in North America
  and Europe
• Research and develop new feedstocks for biodiesel
  and co-products

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Emerald Biofuels Strategies

• Strategies
• Utilize existing infrastructure while maximizing
  production output
• Operate and maintain plants in a safe and
  efficient manner
• Accelerate time to market
• Utilize demonstrated production expertise from
  via strategic contractors
• Incorporate proven state of the art technology
• Locate facilities to competitively serve domestic
  and European markets
• Develop processing capabilities for multiple
  feedstocks
• Utilize long term feedstock and off-take
  contracts when and where possible

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Biodiesel Manufacturing Process

• Fats and oils are mixed with methanol and a small
  amount of catalyst to create a reaction.
• The catalytic reaction creates biodiesel,
  chemically known as alkyl esters.
• During the reaction, methanol replaces the
  glycerin found in the oil and/or fat.
• Glycerin is separated from the biodiesel and
  other co-products through several steps
  including settling washing and purification.
• Un-reacted methanol is recovered and recycled
  through an additional distillation process.
• The co-product glycerin can be further refined
  into higher purities, is a chemical building
  block for many processes, or can be used as a
  fuel source.

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Biodiesel Target Markets

• Domestic Markets
• Transportation Fleets
• Farming
• Home Heating
• Electricity Generation
• Mining
• Marine
• Transit
• Military and Government
• Export Markets
• Germany. One in ten pumps offer B100
• Germany and France are committing to blend all
  diesel B5
• EU Mandate of 5.75 renewable fuel by 2010

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Biodiesel Performance Characteristics

• Clean Air and the Environment. Neat Biodiesel is
  renewable and when blended with No. 2 Diesel
  reduces toxic emissions and greenhouse gases.
  Neat Biodiesel is safe to handle, biodegradable,
  non-toxic and essentially free of sulfur and
  aromatics According to the National Biodiesel
  Board, Neat Biodiesel is as biodegradable as
  sugar and less toxic than salt. At any blend
  some reduction of soot, carbon monoxide and
  sulfur is realized.
• Lubricity. Ultra Low Sulphur Diesel (ULSD) is
  mandated by the Federal Government ULSD and took
  affect in June 2006. Treatment necessary to
  achieve these low sulfur levels significantly
  reduces petroleum-based fuels lubricity.
  Biodiesel replenishes the loss of fuel lubricity
  in an environmentally friendly manner.
•  
• Engine Performance. Biodiesel is proven to
  provide excellent performance in diesel engines.
  Engines running on biodiesel blended with No. 2
  diesel run efficiently with virtually identical
  mileage to engines running on No. 2 diesel alone.
• Distribution. Biodiesel and biodiesel blended
  with No. 2 diesel can be distributed in the same
  manner as No. 2 diesel alone. Existing
  distribution infrastructure throughout the United
  States and Europe can be used without any
  modification or ill effects by transporting
  biodiesel or biodiesel blended fuel.
•   Energy Security. Biodiesel helps reduce
  dependence on foreign oil, enabling the U.S. to
  move closer to energy independence.
•  
• US Economy. Biodiesel provides a boost to the
  U.S. economy by increasing American jobs,
  reducing its trade deficit and increasing tax
  revenues.

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Biodiesel Tax Programs

• Current Federal Tax Incentives
• Federal Small Producers Tax Credit
• 10 cents on first 15 MGPY (1,500,000)
• In effect thru December 31, 208
• Federal Excise Blenders Tax Credit
• 1.00 per gallon of B100 made from virgin oils
  and fats
• 0.50 par gallon of B100 made from yellow
  grease
• In effect thru December 31, 2008
• Current Federal Legislation
• S701. To extend the Blender Excise Credit thru
  2015
• HR825. To extend the Blenders Excise Credit thru
  2024
• HR927. To increase the Blenders Excise Credit on
  yellow grease from 0.50 to 1.00 per gallon
• HR196. Make permanent the Small Producers Tax
  Credit.
• HR517. Make permanent both the Small Producers
  and Blenders Tax Credit.

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• Current Illinois Tax Programs
• 20 Sales Tax Exemption on blends from B1 thru
  B10
• 100 Sales Tax Exemption on blends B11 or higher
• B11 blends represent a tax savings of 0.56 per
  gallon of B100
• Not dependent on manufacturing origin of the B100

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Biodiesel Feedstock Risk

• Uncorrelated risk compared to diesel and glycerin
  market
• Feedstock types
• Soybean Oil (SBO)
• Primary feedstock used in USA
• Prices have risen to the 40 cent per pound range
• Most biodiesel plants require soybean oil to be
  refined-bleached-deodorized (RBD)
• Soybean oil suppliers have more crude degummed
  soybean oil available than RBD and at a lower
  price
• Produces B100 that can be blended in northern USA
  and Europe
• Palm Oil
• Primarily imported from SE Asia
• High FFA content
• Produces B100 that has a higher cloud point than
  SBO
• Canola Oil (Rapeseed Oil)
• Primary Feedstock in Europe and Canada
• Produces B100 suitable for northern USA and
  Europe
• Animal Fats
• Abundant availability in USA
• Primarily high FFA
• Produces B100 that can be blended with product
  from other feedstocks

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Kanawha Biodiesel - Summary

• Project Summary
• Located in Institute, WV in a chemical industrial
  park owned by Bayer Cropscience, a wholly owned
  subsidiary of Bayer AG (credit rating SP A,
  Moodys A3) (collectively, Bayer).
• 40 MGPY design capacity.
• Site leased from Bayer.
• Plant to be built and owned by Emerald Biofuels.
• Operations, quality control, and maintenance to
  be performed by Bayer under a long term contract.
• Builder is Robinson Construction Inc.

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Kanawha Biodiesel - Timeline

• Engineering Construction
• Phase 1 completed leading to the selection of the
  General Contractor, Robinson Construction.
• Detailed engineering completed and construction
  to begin January 2008
• Startup
• July 1, 2008
• Commercial shipments August 1, 2008
• Quality Assurance
• ASTM 6751 on Startup
• BQ9000 Certification by January 31, 2008

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Kanawha Biodiesel - Logistics

• Truck
• Plant will have a truck load out facility to
  serve the local market.
• Rail
• Plant is served by Norfolk Southern.
• Plant will have rail in and rail out
  capabilities.
• Barge
• Plant will have barge in and barge out
  capabilities.
• Storage
• 1.5 million gallons feedstock storage
• 1.5 million gallons B100 storage