Iowa Biodiesel Board Sept. 9, 2011 Gary Haer, VP, Sales and Marketing, REG Chairman, National Biodiesel Board. 1
Agenda Biodiesel, America s Advanced Biofuel New Biorefining Manufacturing Sector Creating Green Collar Jobs Iowa Biodiesel Industry Status 2
Biodiesel, America s Advanced Biofuel 3
Advanced Biofuel: Good for America EPA-defined Advanced Biofuels include Imported sugar cane ethanol Domestically-produced cellulosic ethanol Renewable diesel Biodiesel Biodiesel reduces greenhouse gas emissions by up to 86% compared to petroleum diesel 4
Advanced Biofuel: Supporting Protein Production REG utilizes commercial-scale technology to produce biodiesel from a wide variety of protein production by-products. 5
Advanced Biofuel: Good for America EPA definition: 50% reduction in greenhouse gases compared to petroleum Advanced Biofuel is more Enhances independence from imported petroleum Reduces harmful greenhouse gas emissions Supports American agriculture Supports rural economies Creates and maintain green collar jobs Does not compete with food 6
America s New Biorefining Manufacturing Sector Creating Green Collar Jobs 7
Stable, Sound Federal Biodiesel Policy Creates Foundation for Economic Growth Economic Impacts of Meeting RFS2 Targets for Biomass Based Diesel Employment Jobs Income Mil (2009$) GDP Mil (2009$) 2009 21,284 $1,152.40 $2,085.30 2010 12,407 $667.40 $1,206.40 2011 31,227 $1,690.90 $3,059.80 2012 39,027 $2,113.40 $3,824.20 2013 50,725 $2,746.90 $4,970.60 2014 62,421 $3,380.40 $6,117.00 2015 74,118 $4,013.90 $7,263.30 Source: John M. Urbanchuk, Cardno ENTRIX. June 8, 2011 Revised http://bit.ly/oozr6r 8
Potential: 29 New Jobs Each Day for Four Years Across Biodiesel Value Chain Farmers Ranchers Rendering Facility Rural Coops Truck Drivers Restaurants Accountants Scientists Engineers Load Out Crew Biodiesel Operator Information Tech Bus Drivers Mechanics Diesel Operators 9
Example of Direct Employment Growth July 2006: ~30 Employees Ralston, Iowa July 2011: 220 Employees Six biodiesel plants nationwide Headquarters Field staff 10
Supporting Sound Advanced Biofuels Policy 11
Stable, Sound Federal Biodiesel Policy Creates Foundation for Economic Growth Renewable Fuels Standard (RFS2) Federal Biodiesel Tax Incentive State Level Incentives/Requirements 12
Industry Has Entered Important New Stage with Implementation of RFS2 First biodiesel Renewable Fuels Standard Requires petroleum refiners and importers to show compliance for biodiesel use Refiners/importers known as obligated parties Biodiesel accounts for 0.91% of obligated party s diesel fuel refining/importation Compliance shown using Renewable Identification Numbers RINs are the tracking mechanism for obligated party compliance Value associated with RINs determined by market s supply/demand of biodiesel 13
RFS2 is the Most Significant Biodiesel Industry Driver in Today s Marketplace EISA Renewable Fuel Volume Requirements (RFS2) (billion gallons) Year Biomass Based Diesel Advanced Biofuel requirement First Level of Compliance for Biodiesel Producers to Meet Additional Opportunity for Biodiesel to Meet AB Volume Goals as Other Technologies Develop 2011 0.8 0.90 2012 1 1.33 2013 1.28 1.83 2014 1+, TBD by EPA 2.50 2015 1+, TBD by EPA 3.67 2016 1+, TBD by EPA 4.83 2017 1+, TBD by EPA 6.00 2018 1+, TBD by EPA 7.33 2019 1+, TBD by EPA 8.67 2020 1+, TBD by EPA 10.00 2021 1+, TBD by EPA 12.00 2022 1+, TBD by EPA 14.00
RFS2 is the Most Significant Biodiesel Industry Driver in Today s Marketplace EISA Renewable Fuel Volume Requirements (RFS2) (billion gallons) Year Biomass Based Diesel Advanced Biofuel requirement First Level of Compliance for Biodiesel Producers to Meet Additional Opportunity for Biodiesel to Meet AB Volume Goals as Other Technologies Develop 2011 0.8 0.90 2012 1 1.33 2013 1.28 1.83 2014 1+, TBD by EPA 2.50 2015 1+, TBD by EPA 3.67 2016 1+, TBD by EPA 4.83 2017 1+, TBD by EPA 6.00 2018 1+, TBD by EPA 7.33 2019 1+, TBD by EPA 8.67 2020 1+, TBD by EPA 10.00 2021 1+, TBD by EPA 12.00 2022 1+, TBD by EPA 14.00
More Than 2 Billion Gallons of Production Capacity Registered with EPA to Meet RVO BQ 9000 Accredited Producers 146 Plants Source: National Biodiesel Board/EPA
U.S. Biodiesel Producers on Track to Meet 800 MMGY RFS2 Renewable Volume Obligations Actual Millions of Gallons 100 80 60 40 20 37.4 43 70.1 74 82.2 84.5 94.7 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Actual Source: EPA EMTS Data July 26, 2011 17
Discretionary Blending Supported by RIN Pricing for Positive Blending Economics 2 2011 Mid Range OPIS Biodiesel RINs Values 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 40547 40554 40561 40568 40575 40582 40589 40596 40603 40610 40617 40624 40631 40638 40645 40652 40659 40666 40673 40680 40687 40694 40701 40708 40715 40722 40729 40736 40743 40750 40757 40764 40771 40778 40785 OPIS Reported Mid Value RINs Price 18
REG Sales to Obligated Parties Increasing; Biodiesel Being Blended Upstream Vs. Mid-Stream as in the Past Biodiesel Producers Diesel Supply Stream Consumers REG 9000 Biodiesel Petroleum Refiner/ Importer Truckstop/ Fuel Retailer Retail Fueled Diesel Fleets Distillate Distributor Farmers Coop Farmers, Other Fleets Centrally Fueled Fleet
Anecdotes: On-Farm Demand for Biodiesel? Farmers aren t asking us to deliver blends to the farm. Midwest petroleum jobbers My coop isn t offering biodiesel blends for farm delivery. Midwest crop and livestock producers 20
Upstream Supply Movement is Increasing as U.S. Distribution Capabilities Grow Pipeline shipment development increasing Available through direct shipment from over 1,459 petroleum distributors nationwide Approximately 1,321 retail filling stations nationwide 200 locations are semi-truck accessible Some 1200 terminals cover the U.S. landscape, 158 handle biodiesel nationwide, 75 automated for distribution Numbers expected to grow
Major U.S. Petroleum Terminals with B100/B99 Availability for Blending 22
Federal Biodiesel Blenders Tax Credit Blenders Tax Credit Expired December 31, 2009 Passed retroactively for 2010 Expires December 31, 2011 Production Tax Incentive Bill introduced in House and Senate today Proposes $1.00/per gallon to biodiesel producer Would expire 2015 (three-year program) Waiting to determine bills next steps 23
Biodiesel State Policy Programs Drive RFS2 Blended Gallons, Infrastructure Legend Requirement Incentive Low Carb Fuels Washington Oregon Nevada California Idaho Utah Arizona Montana Wyoming Colorado New Mexico North Dakota South Dakota Nebraska Kansas Oklahoma Minnesota Iowa Wisconsin Missouri Arkansas Illinois Michigan Indiana Kentucky Tennessee Mississippi Alabama Ohio Georgia New Hampshire Vermont W. Virginia Virginia N. Carolina S. Carolina New York Pennsylvania Maine Massachusetts Rhode Island Connecticut New Jersey Delaware Maryland Texas Louisiana Alaska Florida Hawaii Source: REG 24
Biodiesel State Incentives 2011 Louisiana B2 Mandate once 15 mgy of production capacity Connecticut B2 Heating Oil mandate New York B2 Heating Oil mandate Ohio Tax credit to retailers: $ 0.15 in 2010 and $0.13 in 2011 Rhode Island Biodiesel is exempt from excise taxes South Dakota Reduced road tax rate for biodiesel blends Kentucky Income tax credit of $ 1.00/gall of biodiesel blends North Carolina Biodiesel is exempt form state sales and use tax North Dakota Fuel suppliers entitled to a $0.05/gal credit for every gallon of B5 sold Missouri $0.30/gallon production incentives for first 15m gallons, $0.10/gallon next 15m Source: REG analysis 25
Biodiesel State Incentives 2011 Minnesota B5 Mandate effective May 2009 Illinois Tax abatement on B11 biodiesel blends 6.25% Iowa $0.03/gallon tax income tax credit on gallons including B2 Oregon B5 Mandate effective April 1st 2011 Washington B2 Mandate effective December 2008 Pennsylvania B2 mandate effective January 2010 for transportation fuel South Carolina $0.25/gallon retailer incentive on B100 Texas $0.20/gallon tax abatement on B100 New Mexico B5 mandate for state fleets effective July 2010, all diesel July 2012 Hawaii Excise tax abatement of 25% on B100 gallons Source: REG analysis 26
2012 Iowa Biodiesel Program New legislation passed and enacted (5/26) modifying and extending biodiesel incentives Measure contains: Retail credit: 2012 B2 at $.02 and B5 at $.045; 2013-2017 B5 at $.045. Production credit: 2012 - $.03; 2013 - $.025; 2014 - $.02. $3 million per year for renewable fuel infrastructure. 27
Market Diversity Makes for Flexible RFS2 Compliance ON-HIGHWAY USERS Trucking Fleets Passenger Vehicles POWER GENERATION Municipalities Electric power gen HOME HEATING Bioheat as new opportunity vs. natural gas MINING Underground operations Meets MSHA specs MILITARY Jet fuel applications U.S. bases AG AND OFF-ROAD USERS Lubricity Enhancement Support local economy
Conclusion Stable, sound federal policy allows biodiesel industry to create new jobs RFS2 is working; industry is producing to meet renewable volume obligations Industry needs long-term plan for federal tax incentive 29
Thank You Gary Haer VP, Sales & Marketing, Chairman, National Biodiesel Board gary.haer@regfuel.com 515-239-8057 30