1 Workshop “Energy from Renewables” Budapest, November 29 th, 2007 Chances and Challenges for the Development of Biofuels Francesca Ferrazza and Mario Marchionna Corporate Strategies & Development

2 General Scenario  Fossil fuels are expected to dominate the world’s energy supply portfolio for some decade to come.  However, satisfying future energy needs while meeting the challenge of energy security and mitigating the risk of climate change has brought energy conservation to the forefront of public discussion.  Among renewables, wind, solar and biofuels are growing rapidly, albeit from a small base.  Other technologies, such as hydrogen, are considered to hold promise, but face substantial challenges in terms of costs and large-scale implementation.

3 Eni Vision  In the short term, energy-saving-oriented technologies and behaviours are the most economical and practical measures.  Carbon Sequestration and Storage technologies will make use of fossil fuels more sustainable.  In the long term, it will be important to identify energy sources that could be alternative or complementary to fossil energy.  However, most of the current alternative energy sources (especially the renewable ones) are neither economical nor able to secure adequate supply.  R&D investment could generate technological and market discontinuity.

4  Eni has recently launched a major national communication and education project to stimulate energy saving at family level.  24 virtuous behaviours have been suggested that can enable a four member family to save up to 1,600 Euro at no or affordable cost.  These behaviours would permit an abatement of emissions of about 27 Million t of CO 2, i.e. 25% of the Italian gap to the Kyoto target.  Other initiatives are being evaluated within Eni industrial plants, such as energy recovery from low temperature streams through Organic Rankine Cycles Eni “Energy Saving” Program...consume less, consume better...

5 Eni Projects for Carbon Sequestration and Storage  Explore alternative technical solutions for the total elimination of gas flaring.  Improve energy efficiency in production operations  Assess the potential for safe CO 2 storage in aquifers and depleted reservoirs.  Participate in CO 2 Capture Project (CCP) together with most of the major O&G companies.  Promote CO 2 assimilation in greenhouse plant cultivation. Eni owns a specific inter-wells seismic technique able to appreciate any fluid movements within the reservoir. Ability to monitor CO 2 injection both at the surface and inside the reservoir is paramount.

6  Biofuels Production  Solar Energy Conversion Lipids for biodiesel Conversion Processes (BtL, hydrogenation) phytoplankton, micro-algae, bacteria Plants for energy CO 2 Sun light Biodiesel Sun light Solar energy concentration New photo-active material, nanotechnology Energy efficiency “Third Generation” PV Systems Hydrogen E. E. generation via Hybrid Cycles Eni R&D Program “Along with Petroleum”

7 Biofuels  Biofuels appear to be the only realistic short term solution to provide a renewable energy alternative to fossil fuels in the transportation sector.  Their liquid nature and compatibility with traditional fuels are their main strength points.  As a fuel product, biofuels offer a number of technical advantages: they are sulphur and aromatics free and have good combustion properties.  However, biofuels have a lower heat content than petroleum derived fuels due to their oxygen content. This means that they are less efficient in terms of fuel economy (km per liter).

8 Energy Carriers for Transportation Fuels Distribution Performance & Impact on Environment Final Use CarrierProductionProcessCarrierStorage EnergySource  Gasoline / Diesel  LPG (DME)  Natural Gas  Electric Power  Hydrogen Bio-Fuels  Existing infrastructure is a major barrier for any new fuel/energy carrier incompatible with it.

9 Biofuels : current scenario  The European Union requires biofuels (biodiesel + bioethanol) to reach 10% of total automotive fuel consumptions by the year  US President has announced a target of 15% of the national gasoline pool by the year  However, the current generation of biofuels cannot be an answer to market demand because of their scale limitations due to cost and large land requirements.  Land use impacts, fertilizer requirements and water use are other important factors to be taken into account when considering the potential of biofuels.  Competition “fuel versus food” is a major issue to be circumvented not to impact on the living of poorer mankind and on the prices of food staples.

10  Current liquid biofuels are mainly Bio-ethanol/ETBE and Biodiesel Bio-ethanol RapeseedBiodiesel Sugar can First Generation Biofuels  Low conversion efficiency  Only a small portion of the biomass is converted to fuel  Low yield per hectare (mainly for bio-diesel)  Low energy efficiency  High production cost

11 New Generation Biofuels  Current biofuel’s limitations are a technological challenge, stimulating intensive R&D efforts towards omnivorous, efficient conversion technologies able to: use massive low cost resource (e.g. agriculture/forest waste, wood, grass, cane, etc.) make the most of the biomass resource integrate with manufacturing infrastructure convert biomass to market compatible fuels (e. g. gasoline, diesel) be linked to distribution infrastructure be sustainable and economical

12 Eni position Direct involvement in biofuel production is planned by Eni in the next future Eni’s vision is that only 2 nd generation biofuels will have the possibility to gain significant shares of transportation fuel market Strong R&D actions are necessary to overcome current problems: high costs energy balance (often questionable) competition with food crops induced environmental damages (e.g. deforestation) low conversion efficiency unwanted side products

13 Eni R&D activity on biofuels Short term approach Ecofining TM process new technology, developed together with UOP, based on hydro-treating high performance product, better than conventional biodiesel no glycerol as side product full scale demonstration plant (250 kt/y) planned to be completed in an Italian refinery by 2010

14 Eni R&D activity on biofuels Medium to long term approach Biomass to Liquids biomass gasification followed by biofuel synthesis compatible with ligno-cellulosic biomass full use of input biomass strong technical background High yield biomass for energy use only database on biomass and relevant conversion routes Micro-organism based biofuels no competition with edible crops extremely high productivity demo plant currently under evaluation

15 2 nd Generation Biofuels Second generation biofuels are needed to close the gap:  Require massive low cost resource Ag./forest waste, wood, grass, cane, …  Want omnivorous, efficient conversion technology Makes the most of the resource Should integrate with manufacturing infrastructure Linked to distribution infrastructure  Need conversion to market compatible fuel Gasoline, Diesel  Other issues: sustainability, economics

16 2 nd Generation Biofuels Biomass conversion Routes BTL Fischer Tropsch Synthesis Gasification BIOMASS Vegetable Oil Hydro processing Green Diesel OIL SEEDS

17 Ecofining TM process Alternative to conventional esterification, without glycerol co-production High quality product (high heating value and cetane number, low density) Esterification (conventional) Hydroprocessing (Green Diesel) VegetableOil Methanol VegetableOil Hydrogen Biodiesel Glycerol Green diesel FEEDPROCESSPRODUCT Esterification (conventional) Hydroprocessing (Ecofining TM ) VegetableOil Methanol VegetableOil Hydrogen Biodiesel Glycerol FEEDPROCESSPRODUCT A joint effort of UOP and Eni to develop a processing route to convert vegetable oil to high quality diesel using conventional hydroprocessing technology that is already widely deployed in refineries and utilizes the existing refinery infrastructure and fuels distribution system.

18 Biomass to Liquids (BTL) Target: processes based on biomass gasification followed by liquid biofuel synthesis (in principle: FT diesel, DME and alcohols) Activity: feasibility studies (economic analyses, energy balances, LCA) based on literature data and internal know- how Eni’s background: Fischer-Tropsch synthesis proprietary technology development (20 bpd pilot plant scale operating) deep knowledge of refinery residue gasification technologies (Shell and Texaco) and of Methanol/DME production process, through engineering subsidiary Snamprogetti

19  Growing biomass by means of micro-organisms (such as phytoplankton, micro-algae, bacteria) to produce lipids suitable for conversion into diesel fuel.  CO 2 produced from power station and industrial plants can be used to feed the process (CO 2 recycling and biofixation). Biomass Collection Lipid Extraction Conversion to Green Diesel A promise of high productivity CO 2 Open ponds, fotobioreactors or hybrid systems 3 rd Generation Biofuels

20 High yield biomass for energy use only Eni’s Activity: data collection on high yield biomass for energy use only and relevant conversion routes performances and requirements (productivity, soil quality, etc.) production cost evaluations energy balances LCA These data will provide input data for feasibility studies on biomass exploitation, addressing production costs and energy and environmental performances (CO 2 recycle capability)

21 Micro-organism based biofuels Activity: development of a new generation of high performance, environmentally compatible biofuels based on micro-organisms such as phytoplankton, microalgae, yeasts and bacteria micro-organism study and selection process development Feasibility studyin progress on a demo plant for the production of high-yield microalgae, which in turn produce vegetable oils for the manufacture of biofuelsFeasibility study in progress on a demo plant for the production of high-yield microalgae, which in turn produce vegetable oils for the manufacture of biofuels

22  Potential breakthrough might come from development of plants fully dedicated to energy use:  jatropha curcas in India/Indonesia  switchgrass in the USA Further Developments