BiofuelsMarket Biofuels Market Finland

November2009

ExecutiveSummary
TheenergymarketinFinlandisdominatedbyoilwhichisthemajorsourceofenergy Woodbasedbiofuelsaccountsfor20%ofthecountrysprimaryenergyconsumption p y gy p y gy 20%oftotalprimaryenergyconsumptioninFinlandismetbybioenergy LargeForestsProvidingRawMaterialsforBiofuels Usageofforestlandtodevelopenergycrops BiofuelsDominatedbyImports BiofuelstoAssistintheReductionofCO2Emissions ExpectedDirectBenefitstoGreenCarOwners MandatorySaleofBiofuels ReducingtheDependencyonOil ClimateandEnergyPolicy ExpectedIntroductionofFeedinTariffinBiogasGeneration TEKES VTT Technical Research Centre and Other Investments VTTTechnicalResearchCentreandOtherInvestments Themarketisinanascentstagewithonlyafewplayers Majorplayersinclude
NesteOil UPMKymmene ST1
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Market

Market Market Characteristics

Government Role

MajorPlayers

Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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TheEuropeanUnionbiofuelsmarkethasbeengrowing stronglywithGermanyandFrancebeingthemarketleaders
Overview
On23January2008,theEUproposedthatthe overallenergytargetwouldstandat
20%renewableenergyuseby2020 10%minimumtargetforthemarketshareof biofuelsby2020

Biodiesel
000MT
10,000 8,000 6,000 4,000 2,000 2 000 0 2006

Germanyis thelargest producer

Production

TheEUhassetatargetofincorporating5.75% g p g biofuelsintransportationby2010

Imports p Exports 2007e 2008e 2009f 2010f

SegmentationofUsageinTransportation
5% 20% Biodiesel Bioethanol VegetableOils V t bl Oil

Bioethanol
000MT
3,000 2,500 2,000 1,500

Franceisthe largest producer

Production

Imports

75%

1,000 500 0 2006

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Exports 2007e 2008e 2009f 2010f 4

NOTE:Biogasaccountsforanegligibleshare

MajorEuropeaninitiativestowardsdevelopingthebiofuels market
1992:CAP allowedfornonfoodcropsto begrownonsetasidelandwithout losingthesetasidepremium.The amountofoilseedsgrownonsetaside landiscontrolledbytheBlairHouse Agreement. 2003:BiofuelsDirective(indicativetargets2%by2005, 5.75%by2010) EnergyTaxationDirective RevisionofFuelQualityDirective(gasolinenorms) Revisionofdieselnorms&Biodieselqualitynorms CAPReforms(changeinenergycroppremium)

1990 1992: Introduction Introduction ofthe Common Agricultural Policy(CAP)

1995 1997: Whitepaper White paper onrenewable energies

2000 2000: Greenpaper Green paper onenergy supply security

2005 2006: EUsBiofuels EUs Biofuels Strategy

2008 2008:Drafted renewable renewable energy directive

2007:RenewablesRoadmapandRevisionofBiofuelsDirective RevisedFuelQualityDirective upto10%ethanolblending;reductioningreenhouse Revised Fuel Quality Directive up to 10% ethanol blending; reduction in greenhouse gasemissionfromtransportfuelby1%peryearbetween2010and2020
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Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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Theoverallenergydemandhasbeenfallingsince2004with oilbeingthemajorsourceofenergygeneration
Overview
EnergymarketinFinlandisdominatedbyoil whichisthemajorsourceofenergy Largeindustriessuchaspulpandpaperaswell asthemanufacturingsectoraremajor consumersofpower 64%ofenergygeneratedisgeneratedfrom 64% of energy generated is generated from oil,woodfuelsandnuclearsources

TotalEnergyConsumption
1% 000TJ 1,478 1,500 1 500
1,000 500 0 1,368 1 368 1,494 , 1,469 1,400 1 400

Energy demand hasfallen duetothe recession 2004 2005 2006 2007 2008

EnergyUse(BySource)
Oil 6%
10%

EnergyConsumption(BySector)
WoodFuels 13% Industry SpaceHeating 17% Transportation 49% Others

4%

2% 3% 26%

NuclearPower NaturalGas Natural Gas Coal Peat HydroandWind NetImportof p Electricity Other
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11% 21% 17%

21%

BiofuelsmarketinFinlandisatanascentstageandis expectedtogrowinthefuture
Overview
Finlandhaslargeavailableresourcesofsolid p g q g biofuelsandisdevelopingliquidandgaseous biofuelreserves Woodisthemostimportantsourceof bioenergyinFinland
90%ofbioenergyoriginatesfromtheforestry sector

BioenergyGenerated
TJ
500 400 300 200 100 0 297 276 309

+2%
295 296 349

414

2004

2005

2006

2007

2008p

2010e

2025e

Biofuelproductionhasbeenincreasingin p p accordancewithvariousdevelopmentpolicies
Biodiesel 08:85,000tonnes;09e:330,000 tonnes Bioethanol 05:13mnlitres;08:50mnlitres

Note:p PreliminaryData e EstimatedData

ElectricityProductionMix
TWh
90 80 70 60 50 40 30 20 10 0

82 27% 18% 12% 19% 68 33% 20%

79 28% 14% 12%

78 29% 18%

74 30% 23%

Nuclearpower Hydropower Naturalgas Natural gas Coal Biofuel Peat Others

Finlandboastsofthehighestbioelectricity Fi l d b t f th hi h t bi l t i it shareintheEU 20%oftotalprimaryenergyconsumptionin y gy Finlandismetbybioenergy

13% 15% 13% 20% 17% 11% 10% 12% 13% 13% 7% 13% 12% 8% 4% 4% 8% 4% 8% 2% 8% 2% 2004 2005 2006 2007 2008

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Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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MarketCharacteristics
LargeForestsProvidingRawMaterialsforBiofuels

UsageofForestLandtoDevelopEnergyCrops f d l

BiofuelsDominatedbyImports y p Major ` Characteristics

BiofuelstoAssistintheReductionofCO2Emissions

ExpectedDirectBenefitstoGreenCarOwners

MandatorySaleofBiofuels

ReducingtheDependencyonOil
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Alargeresourcebasewilldevelopthebiofuelsmarket howeverresistancefromtheforestindustryisexpected
LargeForestsProvidingRawMaterialsforBiofuels
87%ofFinlandisforestcoverandprovidesforastrongresourceforthedevelopmentof biofuels Finlandhasextensivebiomassresourcesandareextremelyimportantforenergygeneration sincethecountryhasnoindigenousreservesoffossilfuels Theseresourcesincludeabundantforestresidues,fuelwood,andpeat Tappingintothislargeresourcewillallowthecountrytogeneratealltypesofbiofuels originatingdirectlyorindirectlyfromwoodybiomass i i ti di tl i di tl f d bi Woodbasedbiofuelsaccountsfor20%ofthecountrysprimaryenergyconsumption
Availableresources providemajor growthopportunity

UsageofForestLandtoDevelopEnergyCrops
Inordertogeneratebiofuels,agriculturallandisoftendivertedfromtheproductionoffood cropstotheproductionofenergycrops Thisisapointofcontentionasmoreextensivecultivationofenergycropsonarablelandmay leadtoadropinfoodproduction Furthermore,theforestindustrymayexperiencedifficultinobtainingforestrawmaterial Thisissuecanbeaddressedbydevelopingmoreefficientsecondgenerationbiofuels
Secondgenerationtechnologyreferstotheproductionofbiofuelsonalargescalefromwood,grasses,or nonediblepartsofplants Foodvs.fuel argumentis deterringgrowthof thebiofuelsmarket

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Largefractionofthebiofuelsmarketisdominatedby importswhichprovidesforstrongdomesticopportunity
BiofuelsDominatedbyImports
Nuclearenergyhasbeenseenasoneofthemostimportantsourcesofenergygeneration Thelackofcrudeoilresourceshasmadethecountryfocusonothermeansofenergy development Biomasshasbeenviewedasamajordomesticsourcetowardsmeetingtheenergydemands prevalentinFinland LargeamountsofbiofuelsareimportedinordertomeettheEUsenergydirectivesaswellasto bringaboutefficiencyinenergyuse bi b t ffi i i
Fuelwoodandethanolaccountforamajorshareoftheimports Majorimportswill leadtorenewed lead to renewed investmentinthis sector

Highlevelofimportsofbiofuelswillattractplayerstoenterthemarketandcapitalizeonthe profitincentives
ImportandExportBalanceofBiomassFuels PJ
80 61.4 60 40 20 0 2004 2005 2006
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63.1

67.6

62.5

Import Import

10.6

11.4

11.5

14.2

Export

2007

12

Emphasisonthereductionofcarbondioxideemissionsto meetenergytargetswillbeassistedbyattractivepolicies
BiofuelstoAssistintheReductionofCO2Emissions
FinlandwasoneofthefirstcountriesintheEUtointroduceacarbonbasedenvironmenttaxin 1990byintroducingaCO2taxonfossilfuels
Adirecttaxonfossilfuelisleviedbasedonthecarboncontentofthefuel Impetusonbiofuels towardsmeeting towards meeting thenationalCO2 emissiontargets

Thegovernmenthasforwardedthattheywillprovideupto40%subsidiestonewinvestments inthissector Thetaxstructurealsoencouragestheusageofbiofuels

Biogas sed as motor f el is e empt from e cise d t Biogasusedasmotorfuelisexemptfromexciseduty

Thesetargetswillleadtogrowthinthebiofuelsmarketduetohightaxesleviedonother conventionalfuels
CurrentScenario(CO2Emission) +6%
69 80 78 100 50 0

ExpectedScenario(CO2Emission) Mt
71

Mt
100 50 0

7%
57 48

3%
25 17

2005

2006

2007 Emissionleveltobe achievedunderthe KyotoProtocol l

2012

2015

2020

2030

2050

Majorpolicieswillbe requiredtoreducethe levelofCO2emissions l l f

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Initiativestowardsincreasingtheacceptabilityofgreencars hasbegunandwillleadtoadevelopingmarket
ExpectedDirectBenefitstoGreenCarOwners
Directbenefitsaccruingtobiofuelcarownersiscurrentlylocalizedwhichwillleadtoarisein thenumberofgreencarownersinthesespecificregions Helsinkiisplanningtoofferincentivestodriverswhoexchangetheiroldhighemissionvehicles fornewoneswhichpolluteless Driversofmoreecofriendlycarswillbeofferedaparkingbenefitallowingthemtoparkin centralHelsinkiforalowannualfee
Under the plan an initial payment of USD 44 6/yr is required for the permit which will release the owner Undertheplan,aninitialpaymentofUSD44.6/yrisrequiredforthepermitwhichwillreleasetheowner fromotherparkingexpenditures Itisexpectedtocomeintoeffectin2011 Leadtoarisein biofuelcars biofuel cars purchasedand manufactured

Issuesregardingacceptabilityofthepolicyisexpected
Thechoicesofgreenvehiclesisextremelylimitedandisexpectedtoactasadeterrent Furthermore,inthecurrentscenario,carswitholdtechnologyarecheaperthanthosewithnewandmore efficienttechnology.Thepricesoftheseecofriendlycarsisexpectedtoreduceinthefuture Anotherissueisthattheseincentivesarebasedoncertainemissioncriteriaratherthanaspecifictechnology

PanFinlandimplementationofthiswillleadtomajorenergysavings
ExpectedEnergySavingsinTransportation E dE S i i T i GWh
2,000 1,000 0 869 1,142

+5%
1,299 1,387

2007

2010

2013
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Risingaccessibilityofbiofuelswillbeinstrumentalinshifting consumerperceptiontowardsgreencars
MandatorySaleofBiofuels
In2007,anewlawonpromotingtheuseofbiofuelsintransportcameintoforceonJanuary1, 2008 Itrequiresdistributorsoftransportfuelstosupplyaminimumvolumeofbiofuelsannually Thisobligationappliestothetotalamountofbiofuelsthusgivingdistributorstheflexibilityto replacepetrolordieseloilinaratiotheychoosewithinthelimitsofthequalitystandards Thelawdoesnotregulatetheoriginofthebiofuel
Thisallowsthedistributorstosubcontracttheirobligationwhollyorpartiallytoanothercompany Growingaccessto biofuelswill biofuels will developthemarket inthefuture

DistributorsareindividuallyaccountabletotheGovernment.Intheeventthattheyareunable tofulfilltheobligation,thecustomsauthoritiesareliabletoimposeapenaltyfee Thelawalsostatesthetargetstobemetwithrespectbiofuelconsumptionwhichwillbe achievedthroughmandatorybiofuelsales achieved through mandatory biofuel sales

PercentageOfBiofuelstobeSuppliedforConsumption %
10 5 0 2.00

+70%
4.00 5.75

2008

2009

2010

Growth in wide scale availability of biofuels in the market has had a positive impact on this Growthinwidescaleavailabilityofbiofuelsinthemarkethashadapositiveimpactonthis industry
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Feasibilityintheusageofbiofuelsoverordinaryfuelsis expectedtodrivethemarket
ReducingtheDependencyonOil
Finlanddoesnotproducecrudeoilandisthuscompletelydependentonimportsforits domesticpetroleumneeds
USD/barrel
300 200 100 0 1998

PetroleumConsumption
+0%

Expectedtoleadto strongdemandfor strong demand for renewablesources ofenergy

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Thepetroleumconsumptionlevelshasnotbeengrowingduetotherecentvolatilityinpricesof crudeoil d il Thus,amajorshifthastakenplacewithplayersbecomingmoreinclinedtowardsfocusingon developingalternativerenewablefuelsources

CrudeOilPrices
USD/barrel
150 100

71.69
50 0 Sep07 Nov07 Dec07 Jan08 Feb08 Jul08 Sep08 Nov08 Dec08 Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 Sep09

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Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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GovernmentPoliciesandInvestments

VTTTechnicalResearchCentre andOtherInvestments

ClimateandEnergyPolicy

Key Initiatives
TEKES Publicfunding organizationforresearch, developmentandinnovationin Finland ExpectedIntroductionofFeedin TariffinBiogasGeneration

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GovernmentPolicy(1/2)
ClimateandEnergyPolicy
IntroducedinNovember2008 The strategy includes climate and energy policy measures for 2020 extended up to 2050 Thestrategyincludesclimateandenergypolicymeasuresfor2020extendedupto2050 Thetargetstobeachievedby2020arebasedontheEUDirectives 38%oftotalenergyconsumptionwillbeviarenewableenergy Biofuelswillaccountfor10%oftotalfuelconsumptioninthetransportsector Inaddition,by2020,theEUistoachievethegoalofimprovingenergyefficiencyby20% I dditi b 2020 th EU i t hi th l fi i ffi i b 20% Reducing itsoverallemissionsofgreenhousegasestoatleast20%below1990levels Biofuelswillplayamajorroleas20%ofnationalemissionsisaccountedforbythetransportationsector

Overview

Targets T t

CurrentScenario

Presently,theactualemissionshaveexceededtheKyotocommitmentandthetrendofemissionsisonthe increase i In2007,theshareofrenewableenergyinthegrossfinalenergyconsumptionwasapproximately25%(360PJ) Withoutnewenergypolicymeasures,thefinalconsumptionofrenewableenergywouldincreaseto380PJ, whichwouldbeapproximatelyonly31%ofthefinalenergyconsumption.Inaddition,greenhousegasemissions wouldexceedthe1990levelsby30% GovernmentsplanstowardsmeetingEUtargetof38%by2020withthelargestcontributionfrombiofuels Requiresrenewableenergygenerationtoriseupto30TWh

Biomass16TWh,Windenergy6TWh,Heatpumps2,5TWh,Wastetoenergyandenergyefficiency5TWhandBiogas0,5TWh

Governments Role

ClimateandenergyfinancingisexpectedtoincreasefromUSD519mnin2007toUSD654mnin2008andto USD817mnin2009 USD 817 mn in 2009

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GovernmentPolicy(2/2)
ExpectedIntroductionofFeedinTariffinBiogasGeneration PolicyreporthasbeensubmittedtotheMinisterofEconomicAffairs,on29September2009forthe incorporationofafeedintariffforelectricityproducedusingbiogas incorporation of a feed in tariff for electricity produced using biogas

Overview

TargetPrice

Benefits

Introductionofamarket basedguaranteedprice system The scheme is expected to Theschemeisexpectedto almostcompletelyremove producerspriceriskin accordancewithelectricity productionforaslongas thetariffschemeremains inforce Thisisnotexpectedto applytosmallpower plants

Theplannedtargetprice forthebiogasfeedintariff isexpectedtobeUSD124/ is expected to be USD 124/ MWhforpower productionand~USD44 59/MWhforheating Thepolicyprescription howeverdoesnotinclude biogasgenerationusedfor vehiclesinthe transportationindustry

Thiswillallowbiogas producersanassuredlong term(1520years) ( y ) guaranteedprice Thepaybacktimefora typicalbiogasplant investmentwillfallto810 years Createdanattractive modelforlargescale investmentallowingthem tomeettheenergytarget

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ProgrammesandInitiativesinR&DActivities(1/2)
TEKES Publicfundingorganizationforresearch,developmentandinnovationinFinland TekesistheprimaryorganizationinFinlandwhichpromotesthedevelopmentofbio energytechnology energy technology Tekesfundingforbioenergytechnologyprojectsamountedto~USD22mnin2006 Itsactivitieshavebeenrisingduetothegrowinginterestamongcompaniesintransport biofuels TekesorganizedanewtechnologyprogrammeBioRefine NewBiomassProducts Itisprimarilyintendedtopromotethedevelopmentofbiofuelsfortransport Thisisscheduledtobeexecutedbetween20072012 TheprogrammeisexpectedtorequireaninvestmentofUSD207mn Thisinitiativealsoplansondevelopingenergyproductionasabyproductofbiofuel productionandbioenergyproductionassociatedwithindustrialprocessesingeneral

Overview

Recent Programmes

Other Initiatives

Thegovernmentorganizationsviewsforestbasedbioenergyashavingthegreatest potentialforincreasingtheuseofrenewableenergy Inordertoachievetheseobjectives,R&Dworkontheuseofrenewableenergyis expectedtobeincreasedsignificantlyandforestenergytechnologywillalsobedeveloped

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ProgrammesandInitiativesinR&DActivities(2/2)
VTTTechnicalResearchCentre
In2009,itinitiatedprojectNEMO(Novelhighperformanceenzymesandmicroorganismsforconversionofligno cellulosicbiomasstobioethanol)throughcollaborationswithEuropeanresearchinstitutesandcompaniesforthe cellulosic biomass to bioethanol) through collaborations with European research institutes and companies for the developmentofnextgenerationofbiofuel Itisaimedatdevelopingmanufacturingmethodsforliquidbiofuelfromagriculturalandforestrywaste,suchas strawsandwoodchips Secondary objective is to tailor the metabolism of microbes so that they can produce large volumes of ethanol out Secondaryobjectiveistotailorthemetabolismofmicrobessothattheycanproducelargevolumesofethanolout ofthebiomasssugars,economicallyandefficiently Theprojectisexpectedtocontinuetill2012andisexpectedtorequireaninvestmentofUSD12mn
IthasalreadyreceivedfundingofUSD8.8mnfromtheEU

Initiative

Objectives

Investments

OtherInvestmentsbytheGovernment
Finnish government Ministryof Agricultureand Forestry Ministryfor f Industry Towardscreatingefficientenergytechnology,itplansonincreasingitsinvestmentsinR&Dintheenergysectorfrom USD89mncurrentlytoUSD178mnbytheyear2020 AllocatedUSD11.8mnasinvestmentgrantsforthedevelopmentofbiogasin2008 Intheperiod200006,atotalofUSD51mnwasgrantedfordifferentdevelopmentprojects ProvidedUSD13mnforpiloting2nd generationbiofuelsolutionsover200708andplansoncontinuingthefunding processbyaddingUSD7.5mn/year GrantedUSD10mntoNSEBiofuelsOy'sdemonstrationplant,thetotalcostofwhichhasrisentoUSD31mnfrom f l ' l h l f h hh f USD20mn

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Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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PlayersintheMarket(1/8)
CompanySnapshot:Biovakka
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople Espoo 2002 Thermalandelectricenergyproductionand manufacturingbiofuels JyrkiHeila Chairman J ki H il Ch i HarriHagman CEO

FinancialPerformance
Revenue R USDmn
3.0 2.5 2.0 1.5 15 1.0 0.5 0.0 0.5 1.8

Revenue Profit/Loss 3.0

Profit P fi USD000
1,000 0 1.7 1,000 2,000 3,000 4,000

2005

2006

2007

2008

BusinessHighlights Business Highlights

Planningonthedevelopmentofabiogasfacility ThetransportfuelwillbedistributedthroughitsnetworkviaitsassociatedcompanyincooperationwithGasum Itsstrategyistodevelopbioenergyinarapidreproduciblemanner Focusingonthedomesticmarketpresentlywithplansofforayingintotheinternationalmarket Biovakkaisdrivenbyanumberofbiogasenergyrecoveryprojectacrossthenation

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PlayersintheMarket(2/8)
CompanySnapshot:Chempolis
CorporateInformation
Headquarters Founded AreaofExpertise Oulu 1995 Createstechnologyfortheproductionof pulp,biofuelsandbiochemicalsfromnon woodandnonfoodrawmaterials MattiSundberg Chairman JuhaniRousu MD

FinancialPerformance
Revenue USDmn
8 6 4 2 0 0.2 0.1 5.5

Revenue Profit/Loss
6.8

Profit fi USD000
4,000 3,000 2,000 1,000 0 1,000

KeyPeople

2005

2006

2007

2008

BusinessHighlights Business Highlights

Chempolishasbeenstronglyfocusedondevelopingproprietaryproductiontechnologies ThecompaniescoretechnologiesincludeFormicoFib,FormicoBioandFormicoChemprocesses,whicharedesigned forenvironmentallyfriendlyproductionofpulp,biofuelsandbiochemicalsfromnonwoodandnonfoodraw materials t i l InOulu,itdevelopedtheworldsfirstthirdgenerationbiorefineryasademonstrationplant
Thebiorefineryprocessesnonwoodandnonfoodbiomassmaterialstoproducebiofuel,biochemicalsandfibersforpaperproduction Aninvestmentof~USD22mnisexpectedinordertoreachfullproduction

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PlayersintheMarket(3/8)
CompanySnapshot:Metso
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople y p Helsinki 1999 Pulpandpapertechnology JukkaViinanen Chairman JormaEloranta P id J El PresidentandCEO d CEO

FinancialPerformance
Revenue USDbn
10 8 6 4 2 0 5.3 6.2

Revenue Profit/Loss
8.6 9.5

Profit fi USDmn
1,000 800 600 400 200 0

2005

2006

2007

2008

BusinessHighlights Business Highlights

Itisaglobalsupplierofsustainabletechnologyandservicesformining,construction,energy,metalrecyclingandthe pulpandpaperindustries Itisaglobalplayerwithengineering,production,procurements,servicesbusiness,salesandotheroperationsinmore than50countries th 50 ti AcquiredanewSwedishtechnologythatrecoversabyproductgeneratedduringwoodpulpingforreuseasbiofuels EnteredintoajointventurewithUPMtowardstheproductionofbiooilfromwoodbiomassforpowerandheat generation

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PlayersintheMarket(4/8)
CompanySnapshot:NesteOil
CorporateInformation
Headquarters H d t Founded AreaofExpertise KeyPeople

FinancialPerformance
Revenue USDbn
25 20 15 10 5 0 12.4 16.1 16.7

Keilaranta Keilaranta
1948 Manufacturingrenewablefuelsandoil retail TimoPeltola Chairman MattiLievonen PresidentandCEO

Revenue Profit/Loss
22.1

Profit fi USDmn
1,000 800 600 400 200 0

2005

2006

2007

2008

BusinessHighlights Business Highlights

DevelopingasecondgenerationbiodieselplantinPorvoo
Totalcapacityispeggedat170,000tonnes/yrandtotalinvestmentisexpectedtobeUSD148mn ItisusingNExBTL(NextGenerationBiomasstoLiquid)technology
This will allow them to produce high quality diesel from vegetable oils and animal fats that avoids criticisms leveled at early biodiesel because it is sulphur Thiswillallowthemtoproducehighqualitydieselfromvegetableoilsandanimalfatsthatavoidscriticismsleveledatearlybiodieselbecauseitissulphur free,offersgoodfrostresistanceandhasahighcetanenumbertoensurefastignition

EnteredintoapartnershipwithforestindustrygiantStoraEnsotowardsproducingliquidbiofuelsfromwoodresidues atatotalinvestmentofUSD20.8mn PlansonsettingupabiodieselplantatRotterdamwithacapacityof800,000tonnes/yearataninvestmentofUSD 995mnwhichisexpectedtostartoperationsfrom2010 Recentinternationaloperations BiodieselrefineryfacilityinSingapore,tobeginproductionby2010atUSD817mn

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PlayersintheMarket(5/8)
CompanySnapshot:ST1
CorporateInformation
Headquarters Founded AreaofExpertise Helsinki 2006 Energyconsultancytoheatproductionas wellaswindpowertobioethanol p production MikaAnttonen Chairman KimWiio MD

FinancialPerformance
Revenue USDmn
1,000 800 600 400 200 0 576.0 722.0

Revenue Profit/Loss
963.0

Profit fi USDmn
30 20 10 0 10

KeyPeople

2005

2006

2007

BusinessHighlights Business Highlights

Theonlybioethanolproducerintheworldmakingbiofuelfromfoodwaste(RE85/Refuel)
ThisreducesCO2emissionsbyupto80%andischeaperthantheregular95octaneunleadedgasoline

ItisFinlandsonlyproducerofethanoltrafficfuel,usingthecompanysproprietaryEtanolixtechnology IthasthreeEtanolixplantsinoperation,andtwomoreareexpectedtobedevelopedbytheendof2009 St1isusingitsEtanolixconcepttoproduceandmarketsustainablebiofuelsfromindustrysidestreamsandwaste togetherwithlocalpartners

EnteredintoaJVwithMitsuiEngineeringandShipbuildingCO.Ltd.inJapanandMarquard&BahlinGermany

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PlayersintheMarket(6/8)
CompanySnapshot:UPMKymmene
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople Helsinki 1996 Developingrenewableenergyusing resourcesfromtheforestindustry BjornWahlroos Ch i Bj W hl Chairman JussiPesonen PresidentandCEO

FinancialPerformance
Revenue USDbn
15 11.6 10 5 0 12.6

Revenue Profit/Loss
13.8 13.9

Profit fi USDmn
600 400 200 0 200 400

2005

2006

2007

2008

BusinessHighlights Business Highlights

In2009,plannedoninvestinginbiodieselproductionplants
TheirbiodieseltechnologywillbebasedonFinnishsyngastechnology,wherewoodbiomassisgasifiedandthensyngasisconvertedto biodiesel The basis of this technology is being developed by VTT Technical Research Center of Finland and the project is financed by Tekes ThebasisofthistechnologyisbeingdevelopedbyVTT,TechnicalResearchCenterofFinlandandtheprojectisfinancedbyTekes Capacityoftheseplantsisexpectedtobe~100,000tonnes/year

PartneredwithLassila&Tikanojatowardsdevelopinganewethanolandenergyproductionplantutilizingcommercial andindustrialwaste g p p g g Strongimpetusonthedevelopmentofefficientsecondgenerationfuelstowardsreducingemissionlevelsin accordancewiththegovernmentsenergytargets

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PlayersintheMarket(7/8)
CompanySnapshot:Vapo
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople Jyvaskyla 1940 Supplieroflocalandrenewablefuels, bioelectricityandbioheat,and environmentalbusinesssolutions AarnioEsa ProductionDirector

FinancialPerformance
Revenue USDbn
1,000 800 600 400 200 0 679.0 822.0

Revenue Profit/Loss
904.0 941.0

Profit fi USDmn
50 40 30 20 10 0

2005

2006

2007

2008

BusinessHighlights Business Highlights

Itisaleadingsupplierandproducerofwoodfuels,pelletsandenergycropsallowingthemtoprovidecustomersa widerangeofbiofuelsbasedontheirneeds EUsdecidedallowingtheuseofpeatinbiofuelswhenitiscombinedwithwoodfuelswillallowthecompanyto developitsbiodieselplant d l it bi di l l t
Itisexpectedtobeoperationalby2010 Thecapacityoftheplantispeggedat170,000180,000tonnes TheprojecthasbeenestimatedtorequireatotalinvestmentofUSD735882mn Itislookingforacooperationpartnertosupplywood g p p pp y

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PlayersintheMarket(8/8)
CompanySnapshot:Biower
CorporateInformation
Headquarters Founded AreaofExpertise Financials KeyPeople Helsinki NA Supplieroftotalsolutionsforbiogasand wastewatertreatmentplants NA KariVanhalakka MD

BusinessHighlights
Focusesonbioenergyplantdevelopmentfrominitial studiesofplantsitetofinaldeliveryofthefunctional plant Worksonamodelwhereitnetworkswithinnovative partners,enablingtheexploitationandcombiningof latestandmostefficientenvironmentaltechnologies latest and most efficient environmental technologies Itspartnersinclude Clewer,HogforsSahala,Kompogas,SSGSahalaand Wiser

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Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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KeyDevelopments
Date Aug2009 Jun2009 Development ABBsExtendedAutomationSystemhasallowedsmallbioethanolplantsinFinlandtouselocalfood wastetomakealowcarbongasolineandhelpreducegreenhousegasemissionsfromcarsandtrucks. NesteOildevelopedanewNextGenerationBiomasstoLiquidtechnologywhichwillallowitsplantsto generatebiodieselbyutilizingbothwastevegetableoilandanimalfatfeedstock'sindividuallyor together. FinnishpapermakerMetsaliittoGroupandutilitycompanyVapobeganacombinedprojecttowards exploringthepossibilitiesforthesetupofawoodbasedbiofuelsfactoryintheBalticSearegion. PotentiallocationsunderinvestigationincludeKemiandAanekoskiinnorthwesternandcentralFinland, respectively,JonkopinginsouthernSwedenandKundainnorthernEstonia. Chempolisestablishedathirdgenerationbiorefineryasademonstrationplanttowardsproducingbiofuel, biochemicalsandfibresforpaperproduction. biochemicals and fibres for paper production HoneywellhasdeclaredthatitwillsupplyprocesscontrolandsafetysystemsforanewNSEBiofuels,a partnershipbetweenStoraEnsoandNesteOil,researchfacility.Inthedemonstrationplant,processes willbedevelopedinordertoproducerenewablebiofuelsfromwoodresidues. FortumplansoninvestingUSD16.6mninabiofuelplantinJoensuu.Ithasforwardedthatthe30MW Fortum plans on investing USD 16 6 mn in a biofuel plant in Joensuu It has forwarded that the 30 MW plantwillbegoingonlinebytheendof2009.

May2009

Feb2009 Jan2009

Nov2008 Nov 2008

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Introduction Introduction MarketOverview MarketCharacteristics M k Ch i i GovernmentPoliciesandInvestments MajorPlayers Key Developments KeyDevelopments Appendix
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GovernmentandGovernmentFundedOrganizationsinthe BiofuelsSpace
GovernmentalOrganizations MinistryofTradeandIndustry Itisresponsibleforenergypolicy Fundsthefirstfullscaleapplications (demonstrations)resultingfromtheresearchand developmentactivities MinistriesofAgricultureandForestry Participatesinbiomass,technology,transportation, financialaidandadvisoryservices

OtherMajorOrganizations

AgrarianParty A i P Supports agricultural diversification effortsandthe developmentof biofuels

MOTIVA Financedbythe Ministryof Industryand y Tradefor disseminating informationon energysavings

FINBIO Nonprofit organization thatpromotes p anddevelops harvesting, transporting, andprocessing ofbiofuelsand of biofuels and otherbiomass
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VTTENERGY VTT ENERGY Agovernment controlled organization g thatcarriesout technicaland techno economicR&D work work

TEKES Dealswith promotionand financial supportfor technological R&D

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Thankyouforyourtime
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