Yara in a renewable energy world August 2017 Eystein Leren

Outline Yara at a glance Sustainability ambition Energy consumption/production in Yara How do we believe the energy transition will impact our business We have many questions still..

15,000 employees NOK 95.2 Billion In numbers Revenue Close to 15,000 employees Sales to about 160 countries Revenue NOK 95.2 Billion (USD 11.4 Billion) In 2016 Integrated world scale production, supply chain, distributed production and local blending #4 Crop nutrition products NPK Fertilizers Urea Specialty fertilizer Industrial products Emission control solutions Nitrogen chemicals (ammonia, nitric acid) Nitrate industry applications

We deliver a complete portfolio of offerings Crop Nutrition solutions Industrial solutions Environmental What We offer Basic products #10 Ammonia, urea and nitric acid form the starting point for our diverse portfolio of crop nutrition and industrial products and solutions. Our operations are based on efficient conversion of energy, natural minerals and nitrogen into essential products for agriculture and industry. As the leading global provider of nitrogen fertilizers and industrial applications, we leverage our experience and knowledge to tailor solutions to local needs. Crop Nutrition solutions: The industry’s most comprehensive product portfolio, ranging from standard nitrogen fertilizers to complete crop nutrition solutions. Industrial Solutions: Yara offers a wide range of nitrogen and specialty chemicals in addition to animal nutrition and civil explosive solutions. Environmental Solutions: Complete solutions for NOx and SOx emission abatement, odor control, water treatment and corrosion prevention in our growing environmental solutions portfolio. Ammonia Urea TAN Nitric Acid Nitrates SSP CN NPK

Sustainable Agriculture Responding to global challenges is an integral part of our business model and strategy Future energy systems will affect all parts of our business Resources Resource Efficiency Food Sustainable Agriculture Environment Reduced Emissions #8 By offering a consistently positive value proposition to customers, Yara can deliver attractive returns to shareholders while at the same time creating value for society. Yara’s business model is uniquely positioned to address major global challenges within food, environment and resources. Yara’s products, solutions and knowledge deliver increased yields while also improving sustainability by reducing CO2 emissions and water usage. In addition, Yara’s Industrial segment environmental product offering contributes to reduction of NOX and SOX emissions. Transforming global challenges into value-creating business opportunities is a key element in Yara’s long-term strategy. Our business is uniquely positioned to provide shared value for shareholders and society

Our ambition is high – help feeding a growing world population while protecting our environment GHG emission reduction, and improved resource utilization is driving our transition in energy and raw materials Renewable energy / electrification Circular economy / lower material intensity 2000 Yara Technology for nitrous oxide reduction Reduced GHG by 20-25 million tons/yr CO2 eq 2016 Agriculture and climate change are interlinked Increased focus on emission reduction Carbon capture from ammonia feasibility assessment 2020+ Carbon free ammonia and nitrates Low emission application of fertilizer (precision agriculture) Energy efficiency Recovery of materials

Yara consumes and produces energy Depending on site, Yara consume (and produce) energy in the form of: Natural gas (consumption only) Fuel oil (consumption only) Steam Electricity Production of AMMONIA key contributor to energy consumption and CO2 emissions Yara is producing 6 – 9 million tons of ammonia per year in 11 locations with one or more ammonia plants, 36 mmBTU as natural gas feed and fuel is consumed to produce one metric ton of ammonia Total CO2 emissions are about 5 – 8 million tons/yr (production of merchant liquid carbon dioxide and urea not included) All Yara plants with one exception produce hydrogen by Steam-Methane Reforming (SMR) followed by Haber-Bosch synthesis of ammonia Steam / Electricity Nitric acid by the Ostwald process, is exothermic and generates energy as steam. Yara also operates steam boilers on various sites, and, exceptionally produce electricity where electricity is scarce or not available (isolated systems) SMR Primary reformer (Thyssen-Krupp)

Zero emissions – Transition to carbon free feed and energy Production of ammonia by water electrolysis and H-B was “Hydro default” for many years.. Natural gas reforming with CCS might bring CO2 emissions down by +90%, but entirely CO2 free production is achieved only by changing to carbon-free feed and energy GHG emission free “Post Haber-Bosch” technologies are at low TRL, and with varying energy efficiency potential Electrolysis is less energy efficient than SMR, but GHG emission free. The practical application of energy intensive technology as electrolysis relies heavily on the availability of low cost renewable power DEMONSTRATED! Hydro Glomfjord full-scale hydrogen by water electrolysis and hydropower (Courtesy of NEL)

Potential value chain impact of a transition to variable renewable power Natural gas replacement in hydrogen production Electrification (e.g. electrical steam boilers) “GHG free” mineral fertilizer to compete with “brown” products? Urea phase-out? #20 Our business model is truly integrated—we create value through scale, flexibility, and presence across the value chain. Our significant production capacity and optimized distributions network help grow knowledge that feeds millions. Yara’s integrated business model delivers scale advantages, extensive flexibility and value chain presence to create a platform for business expansion and margin improvements within both crop nutrition and industrial products. The Industrial segment contributes to stabilizing margins through the commodity cycle, while Yara Crop Nutrition sees the value chain extending beyond the farmer, and sees partnerships with the food industry and responsiveness to consumer trends as increasingly important in the future. The value we create through this integrated business model sustains our global presence and differentiation, and strengthens our competitive edge. Renewable ammonia as energy carrier (fuel / power-to-power / storage)? Variable renewable energy intermittency effects in production?

The energy transition – when, what and how In a world where 50% or more of all energy is renewable, what can we expect? What will the drivers be for the various development trends? A non-exhaustive and partly interlinked list of questions..: Electrification of industry, on what scale and pace? To what extent will electricity replace (hydrocarbon) fuels, and how does that impact the energy market(s)? Intermittent renewable electricity, what will the intermittency effects mean for an industrial consumer? Can we expect the same security of supply as today? Will intermittency compensation measures be on the consumer or supplier side (production/transmission/distribution)? Price development, and price volatility, will average prices go up or down, and what can we expect in terms of volatility and price variations per day/week/month? Electricity production, transmission and storage? What will dominate production? Large and central (e.g. where there is a lot of sun/wind) or decentralized? Can we expect a broad scale development of electricity transmission capacity, e.g. in Europe/large European countries? Any global trends? Where “copperplate” and where large supply-demand imbalances? To what extent will short and long term storage of energy be required, what will the scale of storage requirements be? What will the market mechanisms be when supply comes from both production and stored energy?

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