When is 2nd generation coming ? 7th Inter-Parliamentary Meeting on Renewable Energy

 Biofuels now …  … next, biomass to ethanol …  … biomass challenges …  … Beyond biofuels Agenda slide Use: Help the audience to a better understanding of the presentation progression by visualizing the agenda when changing topic. Agenda slide Use: Help the audience to a better understanding of the presentation progression by visualizing the agenda when changing topic. guide AGENDA

Biofuels now …

Global bioethanol production growing strongly CONCEPT: MOVING SPRAY ANIMATION EXPERIENCE: RUNS AUTOMATIC FROM BEGINING OF SLIDE ANIMATION TIME: 5 SEC. POSSIBLE TO CHANGE COLOURS OF THE SPARY CONCEPT: MOVING SPRAY ANIMATION EXPERIENCE: RUNS AUTOMATIC FROM BEGINING OF SLIDE ANIMATION TIME: 5 SEC. POSSIBLE TO CHANGE COLOURS OF THE SPARY Sources: US Energy Information Administration, F.O. Licht, Novozymes estimates

USA Bioethanol boom Estimated 2007 production ~ 6.5bn gal. 1 Source: 1 – U.S. Energy Information Administration/ Renewable Fuels Association; 2 - SJH & Company Inc.; 3 – Novozymes est. 1 Gallon = 3,785 liters

Jan 7, 2007 In operation 110 Construction 79 Proposed >200 American ethanol plants

Novozymes and biofuels  ~10% of total revenues in 2006, ~12% of total H revenues  20-25% growth over next 3-4 years  Largest supplier of enzymes to the fuel ethanol industry  Mainly an US business but Europe & Asia nice growth from lower levels  Collaborations in Biomass with industry leaders  Poet Energy in the US  COFCO in China  Abengoa in Europe  CTC in Brazil

… next, biomass to ethanol …

- There is a limit as to how much ethanol you can produce from grain and sugar - You can produce much more ethanol from biomass - If the ambitious objectives are to be carried out, we need to base production on biomass in order to produce sufficient amounts of ethanol - Better utilization of agricultural production - Biomass has superior environmental advantages because a larger part of the plant is used Why biomass-based ethanol?

Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK guide BIOETHANOL AND CO 2 REDUCTION Reduction of CO2 emission from producing and combusting 1 MJ fuel Gasoline Conv. boilerCHP tech Energy from straw 2nd generation 85% savin g 70% savin g 45% savin g 30% savin g Gasoline 1st gen. wheat starch g/MJ 2nd gen. wheat straw

Natural Gas Oil Based < 10 ppm sulfur 2 nd generation of biofuel based on biomass 1 st generation grain-based bio-ethanol & biodiesel Oil Based <500 ppm sulfur F 20F 30F Hydrogen regenerative ~23% ~35% ~38% ~4% 2030 global vision for biofuel Source:McKinsey Analysis Latest quote from President Bush: “35 billion by 2017” Cellulosic ethanol is taking off

Cellulosic ethanol developing worldwide  Three main regions have a head start in cellulosic ethanol: the USA, China and Europe  All on-going pilot/demonstration plant projects experience very basic feedstock / logistics issues (supply chain, grinding, conveying, mixing…)  USA:  New RFS of 35 bill. gal. by 2015 ~9-10% of total road transport fuel consumption  2030 target of 30% alternative fuels  6 to 8 final contenders for the DoE grant on the construction of 2 to 3 commercial bio-refineries  Overall, corn stover / fibers and wheat straw are the two types of feedstock considered to hold the most potential  Other companies are looking at woody substrates (sawdust, wood trimmings, soft wood (pine trees, poplars), hard wood) or rice straw, citrus peels and urban waste  Energy crops are being considered  POET-Novozymes partnership  No pilot plan running yet… but several will start up by the end of 2007

Cellulosic ethanol in Europe  EU Energy Strategy targets:  20% renewable energy  20% reduction in GHG emissions  20% energy savings compared to projections  10% binding min. target for biofuels  EU Biofuel directive:  Encouarges member states to reach 5,75% biofuel before 2010  Only 1,4% has been reached, but Member States show increasing commitment  Some EU Members have a biofuel share of 1+%: AT, FR, SE, DE  Cellulostic ethanol status:  A few pilot plants will run in 2007 and one larger scale demonstration plant  Main feedstock: wheat straw  The drive is more technological and opportunistic

Cellulosic ethanol in China E-10 required in nine provinces Current production ~0.25 billion gallons per year (2.3% of total Chinese consumption) Goal of 7.5% ethanol in 2010 An enormous sense of urgency! A number of companies are going ahead in the cellulosic ethanol field (organisms, pre- treatment…)…only four companies have officially been granted a license to produce ethanol (subsidies for cellulosic ethanol are pending) COFCO – NZ partnership Provinces: Heilongjiang Jilin Liaoning Province: Henan Hebei Provinces: Hubei Shandong Jiangsu Anhui

Cellulosic ethanol in the remaining world Latin America 85% of all cars sold in Brazil are FFVs Strong industry growth Legislation on burning creating significant additional biomass increasing awareness of bagasse as an important biofuel resource Brazil focussing on export opportunities, target is 10% of the global demand International recognition of Brazil as key supplier and example of a sustainable fuel economy Major agricultural land expansion potential NZ partnership with CTC Japan & Korea Japan will be a net importer of ethanol from Brazil Biofuel target of 500 mill l. in place by 2010 Limited feedstock availability due to limited agriculture. Wood is the primary possibility South East Asia & Indian Sub. Political drive for ethanol production from local feedstocks Political instability limiting implementation of long term biofuel policy Biodiesel dominates the landscape due to feedstock availability Food for fuel debate will foster alternative feedstocks incl. lignocellulosic bionmass Africa & Middle East: Potential major region for growing crops, incl. sugar cane No biofuels effort so far

… biomass challenges …

Corn stover Enzymatic hydrolysis Glucose Fermentation Ethanol Pre-treatment Pre-treated corn stover What about the cost structure? Showstopper?

Enzyme cost no longer dominates the picture - Cost comparison after the BioEnergy Project: grain vs. biomass in USD/gallon ethanol, April, 2005* *Modified from “Determining the Cost of Producing Ethanol from Corn Starch and Lignocellulosic Feedstocks”, NREL/TP joint USDA, NREL study released in October Major cost reduction In enzyme price Estimate for N th - plant production, current cost based on lab- scale is $2- 3/gal

Proteomic analysis of a cellulase producer CDH EG I GH61C EG IV GH74 GH61D CBH I CBH II CBH I EG V SOD GH61F EG III GH61G EG II GH61B

Understanding GH61 ?

Pre- treatment Enzyme Hydrolysis Fermen- tation Collection Recovery/ distillation Enzymes are one of the keys to the process, but are no longer the major barrier for biomass conversion Biomass Fuel Ethanol From starch to sugar -> biomass based fuel ethanol

Ethanol from cellulosic feedstock - market and technical leadership in the development of processes for the conversion of cellulosic biomass to economically viable ethanol. Pre- treatment, hydrolysis and fermentation expertise Extensive leverage from our manufacturing, R&D and marketing capabilities in Europe, North America, Latin America, India and China ”Cellulase Cost Reduction for Bioethanol” with the DoE as a subcontractor funded at 17.8 million USD Current further cellulase performance improvement through an unprecedented R&D effort Development of several hemicellulases Most importantly putting our enzymes to work through partnerships Novozymes and cellulosic ethanol

How far to go before 2nd generation ethanol will be commercial?  The process need be up scaled from lab to factory  Further reduction in overall process costs required  First pilot plants are starting  Larger scale demonstration plants on-line within 2-3 years  Commercial plants on-line within 4-5 years

…… Beyond Biofuels

The future potential for sustainable solutions

Bio-PDO™ - DuPont/Tate& Lyle Joint Venture Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK guide

Tomorrow has already started! Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK Slide Divider Use: Drawing attention to the different chapters or themes in the presentation Edit: Change the photo by marking the background plane (largest object) in the grouped object: > Click on Format AutoShape > Under Fill – Colour, choose Fill Effects > Go to Picture tab and click on Select Picture tab > Choose picture > Click OK guide Loudon Facility- DuPont Tate & Lyle BioProducts October 2006

Conclusion  Novozymes is committed to actively participate in the commercial development of a viable biomass-to-ethanol process  Enzyme costs have been viewed as the major barrier for biomass conversion - this is no longer the case even though improvements still need to be achieved to make it an economically viable process  Continued enzyme research has delivered improved performance which translates into lower costs  Enzymes need to be integrated into the process developments in order to truly optimize the costs in conjunction with other parameters. We are teaming up with strong partners with complementary technologies and with whom we can develop the best solutions to achieve commercial success