Biomass-Powered Corn Ethanol: An Evolution towards Higher Performance Biofuels July 26, 2007 Little Falls, MN William A. Lee Chippewa Valley Ethanol Company Minnesota NextGen Board

Biomass Energy at CVEC: A Co- Development Partnership with Frontline BioEnergy, LLC Our goals are to: Integrate biomass gasification systems to displace >90% of our natural gas energy inputs Integrate biomass gasification systems to displace >90% of our natural gas energy inputs Work with other stakeholders to develop feedstock systems that are Reliable, Economical and Sustainable Work with other stakeholders to develop feedstock systems that are Reliable, Economical and Sustainable

CVEC Ethanol Plant – Benson, MN

Frontline BioEnergy, LLC – Ames, Iowa

Project Specifications Phase One Gasifier – 50 to 75 tpd (approx. 25% natural gas displacement) Phase One Gasifier – 50 to 75 tpd (approx. 25% natural gas displacement) Robust BFB configuration Robust BFB configuration Design for pressure operation – 0 to 50 psig Design for pressure operation – 0 to 50 psig Flexible Fuel Capabilities Flexible Fuel Capabilities Multi-fuel burner retro-fit for steam generation Multi-fuel burner retro-fit for steam generation Phase Two – additional gas cleaning unit Phase Two – additional gas cleaning unit Phase Three – upgrading the P1 system or installation of a second unit for full-plant capacity Phase Three – upgrading the P1 system or installation of a second unit for full-plant capacity

CATCH THE ENERGY release the potential Gasifier Construction Status Gasifier Construction Status Permit complete – June 11, 2007 Permit complete – June 11, 2007 Foundations 95% Foundations 95% Steel erection – 85% Steel erection – 85% Equipment installation 75% Equipment installation 75% Start-up: Dec 2007 Start-up: Dec 2007

Strategic Drivers for CVEC Natural Gas costs and future expectations Natural Gas costs and future expectations Probability of Carbon Monetization in US Probability of Carbon Monetization in US Integrate a robust new processing unit into our renewable energy operation Integrate a robust new processing unit into our renewable energy operation Participate in technology ownership Participate in technology ownership

Natural Gas Price Trends

Biomass Feedstocks: Developing “From-the-Ground-Up” Systems: In 2007, the Minnesota Biomass Stakeholder Group convened to begin addressing the issues of biomass harvesting and supply logistics This group includes the University of Minnesota, AURI, Great Plains Institute, ARS and NRCS Soils Laboratories, CVEC and CVEC farmer members, CMEC and other MN ethanol producers

Feedstock must be Reliable, Economic and Sustainable Until Biomass Markets develop, Reliability means Feedstock Diversity: Our Gasifier is designed to be Fuel Flexible - capable of utilizing: Wood chips, sawdust, clean wood wasteWood chips, sawdust, clean wood waste Corn stover, soybean stubble, wheat strawCorn stover, soybean stubble, wheat straw Prairie grassesPrairie grasses DDGS and other grain processing co-productsDDGS and other grain processing co-products

Feedstock must be Reliable, Economic and Sustainable To make Biomass more economically viable, we need more research and more market dynamics 2006 Field Trials – Hettenhaus + CVEC farmers 2006 Field Trials – Hettenhaus + CVEC farmers 2007 – MN Biomass Stakeholders Group - grant apps 2007 – MN Biomass Stakeholders Group - grant apps Research and analysis at U of MN and AURI Research and analysis at U of MN and AURI Densification, pyroloysis, torrefaction strategiesDensification, pyroloysis, torrefaction strategies The emerging “Minnesota Biomass Market” The emerging “Minnesota Biomass Market”

Feedstock must be Reliable, Economic and Sustainable Feedstock Sustainability: What is it and How can we Achieve it? No consensus at present on definition of “sustainable” No consensus at present on definition of “sustainable” To a Soil Scientists it’s about Soil Carbon Index, SOMTo a Soil Scientists it’s about Soil Carbon Index, SOM To a Conservationist it’s about Soil ErosionTo a Conservationist it’s about Soil Erosion To a Farmer it’s about maintaining crop yieldsTo a Farmer it’s about maintaining crop yields To an Ecologist it’s about bio-diversityTo an Ecologist it’s about bio-diversity To a Social Scientist it’s about protecting small farmersTo a Social Scientist it’s about protecting small farmers Tools in development – Rusle, CQESTR, COMET, SCI Tools in development – Rusle, CQESTR, COMET, SCI Impact of new hybrids and corn-on-corn Impact of new hybrids and corn-on-corn Need to develop a user-friendly decision making tool Need to develop a user-friendly decision making tool

Final Thoughts on Technology….. or why ThermoChem conversions will be at least competitive with Sugar/Enzymatic processes ThermoChem Lower profile Lower profile Contaminant-tolerant Contaminant-tolerant Diverse feedstocks Diverse feedstocks Multi-products Multi-products Fewer tech partners Fewer tech partners Scalable intermediates Scalable intermediatesSugar/Enzymatic Higher profile Higher profile Contaminant-liable Contaminant-liable Favors monoculture Favors monoculture Single products Single products Multi tech partners Multi tech partners Low scalability potential Low scalability potential