European Biodiesel. Market conditions. Kevin McGeeney. Geneva Rotterdam London Chicago New York Lisbon Singapore San Francisco.

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1 European Biodiesel Market conditions Presented by Kevin McGeeney Geneva Rotterdam London Chicago New York Lisbon Singapore San Francisco Oct/2013

2 European Biodiesel Statistics Geneva Rotterdam London Chicago New York Lisbon Singapore San Francisco

3 European Biodiesel RME is the main market Consumption flat over five years 2012 biofuel percentage of transport fuel at 4.7% Capacity dropping as facilities go offline permanently RED compliance lagging legislation EU Biodiesel Statistics Consumption (gal) Capacity (gal) RED ,422,841,900 4,890,000,000 57% ,305,674,500 4,800,000,000 29% ,450,000,000 5,550,000, ,345,000,000 5,640,000,000 - Source Eurobarometer, EIA 3

4 European Biodiesel largest producers EU Biodiesel Largest Producers Diester France 900,000,000 2 Neste Finland 354,000,000 3 Glencore (Biopetrol) Switzerland 300,000,000 4 ADM Germany 292,500,000 5 Biocarburantes CLM (Natura) Spain 270,000,000 6 Entaban Spain 202,500,000 7 Marseglia Group Italy 168,000,000 8 Verbio Germany 135,000,000 9 Acciona Energia Spain 84,900, Cargill Germany 75,000,000 Total 2,781,900,000 Source Eurobarometer 4

5 Price (USD/mt) European Biodiesel RME is the main market Rapeseed Methyl Ester (RME) the main market Additionally FAME with a 0C CFPP TME and UCOME markets popular and growing RME Non-RED USD/MT RED vs. Non-RED premium declined quickly 0 nov..06 nov..07 nov..08 nov..09 nov..10 nov..11 nov..12 nov..13 Source: SCB 5

6 Price (USD/gal European Biodiesel RME production margins European RME production margins as good as they have ever been NON-RED RME - RSO Spike in margins late 2008 was on low volume amid a flood of imported PME, SME and CME Current spike in margins is real nov..06 nov..07 nov..08 nov..09 nov..10 nov..11 nov..12 nov Source: SCB 6

7 European Biodiesel UCOME production margins European Biodiesel Production USD/ Gal UCOME UCO Prod Margin Jan Feb Mar Apr May Jun Jul Aug Sep

8 Price (USD/gal) European Biodiesel RME vs SME prices Flow of US product into Europe from early 2007 pushed the spread between RME SME up NON RED RME - SME The spread decline in mid 2008 was mostly the CBOT Bean Oil bubble SCB was founded at the end of nov..06 nov..07 nov..08 nov..09 nov..10 nov..11 nov..12 nov Source: SCB 8

9 European Biodiesel Tariff Wall Geneva Rotterdam London Chicago New York Lisbon Singapore San Francisco

10 European Biodiesel Tariff Wall- Biodiesel Objectives Promotion of Domestic Agriculture Lower GHG emissions Energy Security 10

11 European Biodiesel Tariff Wall US Biodiesel excluded Q Argentinian Biodiesel excluded May 2013 Indonesian Biodiesel excluded May 2013 Some UCO feedstocks being excluded (inc. China) Further EU feedstock fights brewing 11

12 European Biodiesel Regulatory Change Geneva Rotterdam London Chicago New York Lisbon Singapore San Francisco

13 European Biodiesel Regulatory Change Biofuels Directive 2003/30/EC created a mandated market with a volume target of 5.75% by 2010 Renewable Energy Directive 2009/28/EC targets 10% biofuel use by 2020 EU Commission about turn Oct 12 to cap food volume at now 5.5% Fuel Quality Directive 2009/30/EC updated 98/30/EC targets GHG reduction of 6% by

14 European Biodiesel Regulatory Change Indirect Land Use Change (ILUC) Biodiesel Industry unable to deflect ILUC concept despite its flaws: Mathematically unsound Rejected by and not applied to other industries Ignores productivity gains, one sided Not applied to substitutes the scientific basis of ILUC is not robust enough to underpin law 14

15 European Biodiesel Regulatory Change - 15

16 European Biodiesel Regulatory Change EU Commission about turn Oct 12 to cap food volume at now 5.5% Double counting mandate biodiesel Specter of quadruple counting biodiesel Investor confidence damaged by both the change in policy and the new ability for the EU Commission to more easily amend policy in the future 16

17 Price (USD/gal) European Biodiesel Regulatory Change - Quadruple EU Commission has changed its language on quadruple counting feedstock eligibility and has the right to change in the future European Energy prices USD/Gal Quadruple Graph shows historical theoretical value of quadruple counting biodiesel 6 RME 4 2 Gasoil 0 nov..06 nov..07 nov..08 nov..09 nov..10 nov..11 nov..12 nov..13 Source: SCB 17

18 European Biodiesel Regulatory Change EU Commission DG Energy has funded a new stakeholder forum. The EBB footprint is heavy. It allows for direct stakeholder access to DG Energy and DG Trade within the EU Commission. 18

19 European Biodiesel Swaps Overview Geneva Rotterdam London Chicago New York Lisbon Singapore San Francisco

20 European Biodiesel Swaps Launched in 2009 Negligible volume for the first 18 months Then it took less than 9 months to go from near 0 to 300m gallons per month Annual swaps volume equal to annual physical volume CME Clearport Total Volumes in gallons Total RED Open Int Vol OI (no RED) Vol (no RED) Sep '12 78,000,000 69,300, ,160, ,700,000 Oct 138,000, ,000, ,440,000 81,300,000 Nov 194,940, ,960, ,910,000 44,250,000 Dec 243,390, ,470, ,680,000 15,300,000 Jan '13 270,660, ,650,000 42,150,000 13,650,000 Feb 309,750, ,370,000 32,850,000 1,800,000 Mar 324,900, ,550,000 23,250,000 - Apr 366,600, ,080,000 15,300,000 10,800,000 May 382,800, ,000,000 11,400,000 1,200,000 Jun 431,550, ,700,000 13,500,000 4,800,000 Jul 397,500, ,400,000 11,100,000 - Aug 407,790, ,010,000 9,600,000 - Sep 382,170, ,550,000 3,300,000-20

21 European Biodiesel Swaps CME Clearport RME RED vs non RED in gallons RME RED Open Int Vol OI (non RED) Vol (non RED) Sep '12 60,000,000 63,900, ,510,000 82,800,000 Oct 78,600,000 49,200, ,460,000 41,700,000 Nov 90,450,000 78,150,000 76,740,000 18,450,000 Dec 93,450,000 58,020,000 50,520,000 7,500,000 Jan '13 96,150,000 77,400,000 22,200,000 11,400,000 Feb 107,100,000 98,910,000 18,600,000 - Mar 99,450,000 51,450,000 15,300,000 - Apr 119,400,000 91,830,000 11,700,000 - May 146,400, ,900,000 9,900,000 - Jun 184,500, ,500,000 7,500,000 - Jul 195,300, ,100,000 5,400,000 - Aug 200,430, ,370,000 4,200,000 - Sep 201,660, ,100,000 3,000,000-21

22 European Biodiesel Swaps CME Clearport FAME 0 RED vs non RED in gallons FAME RED Open Int Vol OI (no RED) Vol (no RED) Sep '12 18,000,000 5,400, ,650, ,900,000 Oct 59,400,000 91,800, ,980,000 39,600,000 Nov 104,490, ,810,000 97,170,000 25,800,000 Dec 149,940, ,450,000 59,160,000 7,800,000 Jan '13 174,510, ,250,000 19,950,000 2,250,000 Feb 202,650, ,460,000 14,250,000 1,800,000 Mar 225,450, ,100,000 7,950,000 - Apr 247,200, ,250,000 3,600,000 10,800,000 May 236,400, ,100,000 1,500,000 1,200,000 Jun 247,050, ,200,000 6,000,000 4,800,000 Jul 202,200, ,300,000 5,700,000 - Aug 207,360, ,640,000 5,400,000 - Sep 180,510, ,450, ,000-22

23 European Biodiesel Swaps Trades mostly on the European CME platform so not directly subject to US laws covering swaps Once laws on swaps tighten up likely market will futurise SCB market share 25-30% of total volume CME Clearport European vs American venue in gallons CMECE CMECE OI CMECE Vol OI (Other) Vol (Other) Sep '12 183,690, ,600, ,470, ,400,000 Oct 184,680,000 88,200, ,760, ,100,000 Nov 190,020, ,600, ,830,000 95,610,000 Dec 171,360,000 74,100, ,710, ,670,000 Jan '13 138,750,000 91,200, ,060, ,100,000 Feb 163,800, ,150, ,800, ,020,000 Mar 180,300, ,450, ,850,000 59,100,000 Apr 208,950, ,400, ,950,000 72,480,000 May 232,050, ,050, ,150,000 51,150,000 Jun 272,250, ,800, ,800,000 92,700,000 Jul 262,350, ,800, ,250,000 42,600,000 Aug 276,510, ,430, ,880,000 65,580,000 Sep 261,540, ,650, ,930,000 42,900,000 23

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