Betting on Science

Disruptive Technologies in Transport Fuels

Marzo, 2011

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Report objectives and scope

12 Technologies Evolution
Next generation internal combustion engine Next generation agriculture Waste to fuel Marine scrubbers

25 Companies

10 Markets

Revolution
Sugar to diesel Butanol Biocrude Algae Aviation biofuels

Game Changer
PHEV engines and batteries Charging Vehicle to Grid
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The Study Assessment methodology

For a technology to be considered disruptive, it needed to meet the following criteria:
Scaleable: Greater than 20 percent potential impact on hydrocarbon fuel demand by 2030. GHG impact: Savings greater than 30 percent relative to the hydrocarbon it is replacing. Cost: Competitive at an oil price of $45 to $90 per barrel, at commercial date. Time to market: Commercialization date in less than five years.

Technologies were divided into 3 groups

Evolutionary: Technologies that stretch todays assets and resources. Revolutionary: Technologies that support the creation of fungible fuels, enabling the use of the existing distribution infrastructure. The game changer: Electrification and the technologies that are needed for the scale-up of PHEVs and to enable the opportunities that PHEVs could bring in optimizing generation and transportation resources.

80% of the most important data/content is in the minds of the scientists in the companies and research centres (not in papers)
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9 Key Messages

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Key Message #1: The improvement potential of many existing technologies is underestimated
Key points: Corn Yield Trends
(Bushel Per Acre) 1990 World Average USA Argentina China Brazil India Sub-Saharan Africa 59 113 60 74 33 23 22 2000 70 137 93 78 47 29 24 2005 75 149 109 80 54 31 25 CAGR 13% 15% 35% 4% 28% 16% 7%

Increasing yields without significantly increasing land use Rewarding improvements in water and energy use Supporting the use of waste to create energy or fuel Continuing roll-out of higherefficiency standards

Source: Ceres, Monsanto/Doane Forecast

Already, farmers in Iowa are producing as many as 200 bushels an acre. Mr Grant (Monsantos COO) believes that 300 bushels are achievable by 2030 Source: The parable of the sower, Nov 19th 2009 ST LOUIS, From The Economist print edition I do think 300 is attainable as a national average. Using corn, cobs and a portion of the stover we should be able to yield over 1000 gallons of ethanol per acre - as opposed to 450 today Source: Accenture interview with farmer/ethanol producer
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Both sugarcane and corn will continue to improve significantly, in yield, water and energy use
POET: 80% reduction in water use in the last 20 years and 33% reduction in energy in the last 12 Brazil cane yields have increased 1.3% CAGR since 1992
Water use vs. Ethanol production (POET plants) Brazil sugarcane yields (MT/Ha)
100
N-E (1.0% CAGR)

90 80 70 60 50 40 30

S-C (1.3% CAGR) Weighted avg. Yields (1.3% CAGR)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Natural gas use in ethanol production

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Key Message #2: Biotechnology is transforming biofuel production

Examples (non-exhaustive): Genetically engineered feedstocks that increase the yield density and reduce the intensity of pre-treatment and required enzyme A diesel solution through synthetic biology that allows sugar cane to be converted into a clean diesel Bacteria and yeast are being selected and engineered to produce more selective, higher yields of butanol, and to have higher tolerance to inhibitors and the end-product Genetically modified algae that have higher yields and are lower cost to cultivate, harvest and extract
Wider Applications Of Genetic Engineering

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Key message #3: Algae could exponentially increase available feedstock

The addition of algae used as feedstock, with its incredibly high yields, changes the game on potential biofuel feedstock availability

Table 1. Comparison of algae and soybean resource requirements Soybean Gallons oil/year Gallons oil/acre Total acres 3 billion 48 62.5 million
4%

Algae* 3 billion 1,200 2.5 million

*Based on algae grown in open ponds with daily productivity of 10 grams/m2 with
15 percent triacyglycerol (TAG).

Algae is a diverse and complicated landscape and still 10+ years away

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Key message #4: There will be increased activity in the airline and marine industries on options to reduce GHG
Global industries with strong industry bodies and are difficult to regulate at a market level Aviation is moving much faster than expectedstreamlining of ASTM approval process, commitment of airbus, boeing and engine manufacturers, airlines Aviation biofuels and marine scrubbers are not commercially competitive to traditional fuels today, and will be additive to what is being done today For aviation, there is a question of whether there will be enough biofuel feedstock to meet both the road and air biofuel demand For marine, a further constraint is when improvements can be made to existing fleets and how often ships are replaced
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Examples that could accelerate the development of aviation biofuels

SkyEnergy
Neste Oil has started up the world's largest renewable diesel plant in Singapore November, 2010. Production of NExBTL renewable diesel will be ramped up on a phased basis. The 800,000 t/a plant was completed on-schedule and on-budget and marks a major step forward in Neste Oil's clean traffic fuel strategy

Camelina-Based Biofuel Breaks Sound Barrier on U.S. Air Force F-22 Raptor Test Flight
Manufactured almost 6,500 gallons) Started production of approximately 190,000 gallons for the US Navy and approximately 400,000 gallons for the US Air Force /US Defense Energy Support Center (DESC

Comments from Airline Interviews Volume we are hoping that some 5-10% of our aviation fuel portfolio will be biofuels. By 2020 we expect this percentage to have risen to substantial levels. Blend. ...focusing their efforts on Biofuels that can be blended into existing oil-derived aviation fuel or that are organic replications... Industry. This must be an industry change even big airlines at any one location form a small part of airport operations and cannot afford to have their own infrastructure of fuels delivery, storage, etc. Hubs. There is potential for some hubs to grow disproportionately, linked to their favourable access to Biofuels. It would make sense in certain countries for state-owned carriers, airports and national oil companies to link up to enable this to happen. Portfolio. Airlines will manage a portfolio of routes some flights may never use Biofuels, others that start or end at a Biofuels hub will use a large proportion of fuel derived from Biofuels
Source: Accenture research

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Key message #5: PHEVs - Batteries are the feedstock of electrification and constrain its potential
Many Batteries, but pipeline beyond lithium for PHEV/EV is small
Battery/ Energy storage Vehicle Lead acid Nickel metal hydride EV HEV Examples of Players JCI (Johnson Controls) Panasonic (Prius) Sanyo Cobasys PowerGenix EnerDel

Many Performance Factors Energy density Power density Cost/kWh Life cycle Recharge time

Many (Lithium) Challenges Expensive Scarce (Bolivia, Chile, China) Production concentrated in 3 countries (Japan, South Korea, China) Combustible

Nickel zinc Lithium-ion (hard carbon - HC) Lithium-ion (lithium titanium oxide LTO)

HEV EV, small HV PHEV HEV

EnerDel Saft (joint venture with Johnson Controls) Toyota LG Chem AESC BYD A123 CSIRO, Australia

Lithium-ion (NCA EV, HEV, nickel-cobalt-aluminum) PHEV Lithium-ion (Mn Spinel, natural graphite) Lithium iron phosphate (LiFePO4) EV, HEV PHEV EV, HEV PHEV

Safety

Lithium nanophosphate EV, HEV (Li4Ti5O12) PHEV Ultrabattery (R&D) Ultracapacitors (small) EV

500/ kWh in 5 years Matt Rogers at the Baker Institute event on 26 January, 2010 Accenture estimated $500/kwh in 2025, now revised to 2020 but this is still 5 years behind that number
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EEStor (Zenn Moto Company) Copyright 2009 Accenture All Rights Reserved.

Key message #6: PHEVs - Electrification heralds two key players in transport fuelsutilities and battery manufacturers
Many Diverse Players across the Electrification Value Chain
Generation Battery storage A123 Systems LG Chem NEC
Utilities Municipalities Coming Jan 2011

Distribution Charging Infrastructure Coulomb Technologies GridPoint Nu Element ECOtality

Utilities

Retail Comms Infrastructure Plug-in Electric Vehicles Tesla Motors Th!nk G-Wiz Duracar Billing System Coulomb Technologies GridPoint Nu Element ECOtality
Utilities

Generation

Smart Grid

More than 15 pilots in 14 countries testing Capabilities Roles of different players Infrastructure requirements Technology Regulation and market models Different combination of players in each pilot Different elements of the electrification value chain Different operating models
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The Electrification of Transport Pilots

Key message #7: At least in the next five years, possibly even 10, PHEV scale up is not dependent on comprehensive smart grids
Years to integrated value chain <5 Years
PHEV PHEVs commercially available but consumer up-take limited given high battery costs undermining economics Build up of battery manufacturing capability and ramping down of costs

5-10 Years

10-15 Years
PHEVs with V2G capability increasingly piloted

15+ Years
PHEVs with V2G capability integrated into the Smart Grid tested

Battery

Lower battery costs means PHEVs become more economically attractive Battery chemistry improves enabling faster charging time

Impact of V2G on battery tested Economically competitive V2Gcapable PHEVs integrated into the grid

Charging

Smart charging units for PHEVs being deployed, Smart charging stations being charging PHEVs at levels I and piloted and tested II (i.e. between 4-10 hours depending on battery SOC) Vehicle-to-Grid technology being researched at universities and tested on a small scale AutoPort releases initial (limited) production line V2G integration to the Smart Grid increasingly tested

Limited smart charging stations deployed

V2G

Charging stations with V2G capability tested

Smart Grids being deployed

Battery Cost (no subsidies)

$1300/kWh

$500/kWh Combined steps

$500/kWh Cumulative/ ongoing

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Key message #8: Technologies and assets will be combined and will evolve because the lines between them are gray

Custom application of novel technologies (e.g. synthetic biology) for multiple, differing processes Maximising the opportunity to leverage existing assets (e.g. retrofit, co-production) Combining biochemical and thermochemical processes Recognising that technologies or practices can be leveraged across multiple pathways (e.g. pre-treatment)

1st and 2nd

POETs Project Liberty Emmetsburg, Iowa

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Key message # 9: The trajectory of supply, demand and GHG footprint of transport fuels is being reshaped now
Evolution is cumulative, new technologies are added but existing ones continue to be improved
<5 Years Internal Combustion Engine Biofuels OEM developments (e.g. VW Bluemotion 1st AND 2nd Waste to fuel Butanol Sugar to diesel 5-10 Years New gasoline technologies enter market New energy crops Biocrude Biorefineries Advanced enzymes and deconstruction 10-15 Years 100mpg test car Very efficient gasoline engines Algae Combined pretreatrment, deconstruction and possibly even conversion steps Scale-up starts V2G 15+ Years

Electrification

PHEVs become commercially available Trial flights and debate continues

Batteries improve Fast charging piloted and tested Slow and limited rollout of small blends Expansion of production

Aviation

Roll-out at one or more hubs

Volumes increase

Marine

Scrubbers commercially available but limited take up as regulation not enforced

Lighter, more efficient Economically Volumes increase scrubbers competitive scrubbers Start to integrate into Wider deployment ship design
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Muchas Gracias!

Copyright 2009 Accenture. All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.