ILUC ETHANOL ILUC-FREE ETHANOL FROM EUROPE. Proud member of. JAMES COGAN 7th ISCC Global Sustainability Conference Brussels, February 15, 2017

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1 ILUC ETHANOL ILUC-FREE ETHANOL FROM EUROPE JAMES COGAN 7th ISCC Global Sustainability Conference Brussels, February 15, 2017

2 About Ethanol Europe Renewables Ltd Producer of ethanol and feed Thank you ISCC for bringing us here today EERL a family & management owned company founded 2010 Pannonia in Dunaföldvár near Budapest is flagship investment Ethanol renewable energy for demand resulting from 2009 EU climate law Build phase completed in record 2 years and opened for business 2012 Now biggest and most resource efficient ethanol plant in Europe Purchases 1.1 million tons corn per year from local farmers 450 million liters ethanol, 300 thousand tons quality protein feed and 12 thousand tons of corn oil animal feed ingredient

3 Believe in iluc Present in all things iluc is about displacement The idea that growth in demand in one area can displace demand in others, causing system to arrive at new equilibrium by other sources, for example by deforestation to create new farm land Exists for food and materials too iluc may be poorly understood but it is widely recognised Best strategy is work with it EU ethanol sector passes any iluc test

4 ILUC fear Policy and climate progress halted since 2012 EU biofuels policy thinking conditioned by iluc fear 2012 & iluc cause-and-effect relationships not established Policy makers downed tools & progress halted since But iluc cause-and-effect relationships easily established, by examining biomass supply chain for displacement In EU growth in demand for starch and sugar in recent decades is without displacement and hence without iluc and this will continue for decades more

5 ILUC by two measuring sticks 1. GLOBIOM Modeling and 2. Farming fundamentals 1. GLOBIOM quantification o Modeling iluc emissions and quantifying in terms of gco2eq/mj o Best available science undertaken 2015 for European Commission o Highly authoritative and requiring diligent student to grasp essentials 2. Layman s analysis o Fundamentals and agriculture statistics o Direct route to understanding land use impacts of European ethanol o Highly authoritative and accessible to all Either way European ethanol comes out iluc free

6 About GLOBIOM Most EU ethanol iluc free by 2030 State of the art modeling technique Provides iluc values or equivalent carbon emissions of additional biofuel demand iluc depends on biomass type, land used, process and age iluc values tend to zero over time (20 year timeframe) Much ethanol never had iluc ever.. marginal land, setaside land, yield increases.. Nearly all today s ethanol iluc free by 2030

7 ILUC value 2030 Look at max imaginable ethanol volumes in million tons of oil equivalent ethanol or 3 times today s volume Half additional volume is conventional and half is cellulosic Half the 2030 total has ILUC Apply GLOBIOM ILUC factors Weighted average ILUC factor 6.3 Reduce ILUC factors as no form reaches 1Mtoe shock demand scenario of GLOBIOM Weighted average drops to 2.9 Zero if 2030 volumes/sources static 2.9 gco2eq/mj

8 Is that a lot? 2.9 is very small 6.3 is very small too Close to margin of error For 2030 volumes same as today s iluc is zero Foregone sequestration can be debated, as the extent to which the effect occurs in reality is not well documented (GLOBIOM) Fossil oil comparator does not account for any form of foregone carbon capture Foregone sequestration adds about 50%, so iluc numbers very low nonetheless Palm oil biodiesel exc sequestration Marginal fossil fuels Fossil fuel - RED II Comparator Ethanol today excl ILUC

9 Starch & sugar fundamentals EU starch & sugar superpower By 2030 likely be producing 350 million tons of cereals per year 15% or 50 million tons more than today Increase alone is 5 times bigger than the total used for ethanol Ethanol accounts for a tiny portion of a huge and growing starch/sugar capacity Source: DG AGRI EU Agricultural Output 6 Dec 2016

10 Ethanol resource efficiency Ethanol grains stay in food chain and value-add stays in Europe Ethanol cereals not lost from food/feed sector Become high quality protein livestock feed after starch converted to ethanol Reducing EU dependency on soy protein (20Mtpa / 70% needs) from Americas by 4Mpta High quality EU antibiotic free and GMO free feed Climate friendly transport energy

11 No extra land needed EU doing more with less EU farmland area decreasing in period to 2030 By normal innovation and yield increases Land area down 3% between now and 2030 EU doing more with less Plenty of room for more more with less Poland* yields 30% less than Germany Ukraine* yields 50% less than Germany 2030 Romania* yields 60% less than Germany Easy to see no iluc risk in EU ethanol * Source: DG AGRI EU Agricultural Output 6 Dec 2016

12 Contrast with palm oil diesel High iluc by both measuring sticks GLOBIOM iluc value >300 Land use change big, visible & measurable Europe s biodiesel now about 45% palm oil and accounting for.. o 5% of total world palm oil demand and 15% of palm growth New EU biodiesel plant expected 2017 may use 500,000 tons palm oil per year.. only major new EU biofuels project in sight o Would increase world palm oil demand by 1% overnight o Requiring 125,000 hectares of extra palm oil plantation o Top end of iluc scale as only a small part of palm oil expansion is low iluc

13 In summary EU climate and energy policy failing EU ethanol and palm oil diesel treated same way under RED Ethanol to be cut further under proposed RED II 3.8% food-based cap Palm oil diesel growth continues No investment will happen in advanced projects Fossil fuel still king in no drop in fossil use Climate efforts of all in this room over last five years in vain Ethanol not the problem

14 Fix RED II and marketing for ethanol So what next? 2017 the year to fix things High GHG saving and low iluc ethanol should not be under cap.. EU needs climate progress Apply high GHG savings criteria for 2030 (>70%) Limit palm oil and derivatives in biodiesel until palm LUC under control Aim for 10%-20% ethanol blend volumes (E10 / E20) Proper marketing for safe effective iluc free bioethanol

15 Thank you for your attention James Cogan Learn more? Check out videos on