CORN STOVER APPROACHING ITS REAL WORTH CTIC Meeting David Glassner National Renewable Energy Lab Jim Hettenhaus c.e.a.Chief Executive Assistance October 27, 1999

2 WHY CORN STOVER? l Corn Stover is the largest U.S. single biomass source and is densely located-conversion of all available corn stover will only provide 7 to 20% of transportation fuel use in the U.S. l Biomass accumulation by photosynthesis stores more than 10 times the world’s energy use l The challenge is to collect and convert the biomass efficiently! l Biomass conversion technology has advanced substantially and continues to advance on the back of biotechnology tool development

3 BIOTECHNOLOGY IMPACTS ETHANOL COST Research results from the 1990s Research Goals in the next decade Current Industrial Practice

4 BIOTECHNOLOGY IMPACTS PROCESSING COST l l Base operation 2000 tons feedstock ($25/ton) per day, large scale operation at 10,000 tons per day, corresponding corn mills 80,000 and 400,000 bushels per day

5 BIOMASS CONVERSION TECHNOLOGY IS THE DRIVER l Department of Energy investment in biomass conversion technology is paying off Pentose and hexose fermenting technology developed Consolidated bioprocessing is next key target offering 33 cent per gallon cost reduction l Coproducts such as agricultural fiber for pulp and paper add to the business opportunity and utility

6 CORN STOVER CHALLENGE “Is corn stover collection part of an improved agricultural practice for corn?” We believe the evidence points to the following: l Improved income for the farmer and rural economy l Substantial environmental benefits

7 OVERVIEW REALIZING THE VALUE l OLD BARRIERS “The way it has always been done” Erosion and Nutrient Concerns Harvest, Storage and Process Costs l THE DIFFERENCES TODAY l THE IMPACT For Producers Products from Cellulose, HC & Lignin Economic and Environmental

8 OVERVIEW CORN STOVER POTENTIAL l Impact of Processing 30% of Total l Sustainable Quantity for Removal l Low Cost Collection, Storage l Conversion Process especially Hydrolysis and Fermentation l Lower Cost Fibers, Sugars for Fermentation and Other Products l Greenhouse Gas Mitigation

9 Processing Just 30% of Corn Stover has the following impact: l Adds 5 to 8 billion gallons of ethanol for Fuels with no more land use l Improves Soil Quality by Reducing Need to Till l Increases direct farm income $2.3 billion from Feedstock Sale of 30% of total l Offers 30 MM Tons of De-Pithed Fiber for Agri- Pulp to Replace Hardwood Fiber l Lowers the cost of sugars processed to sweeteners and ethanol to less than $4/cwt l Mitigates GHGs by more than MM metric tons C/year, 12% - 20% US Kyoto Commitment

10 CORN STOVER USAGE Five Major Differences Today l More stover l More knowledge Plowing effect Nutrient value l More Infrastructure l Biotech advances l Environmental drivers

11 CORN STOVER Is Largest Source of Low Cost Biomass Available Estimated Corn Stover available is 153 MM dry tons, 60% of 255 MM dry tons produced, 43% of Total Biomass All less than $50/ton l Corn Stover MM dry tons l Other Ag Stover.. 58 l Corn Fiber l Energy Crops l Wood Co-Products. 72 TOTAL dry tons.. 357MM

12 More Stover ! ! l YIELDS INCREASING l 200 BU/AC COMMON l 1:1 RATIO CORN/STOVER l MORE TO COME PRECISION FARMING BIOTECHNOLOGY GENETIC POTENTIAL IS 400 TO 600 BU/AC l WHAT TO DO WITH IT?

13 SUSTAINABLE COLLECTION Corn Stover Surface Effect l PRO Erosion Protection Retains Soil Moisture Diurnal Temperature Cycle Reduced Nutrients Recycled Some SOM Added If No-till l CON In The Way Harbors Weed Seeds and Disease Retains Soil Moisture Low Spring Soil Temperatures Additional N Fertilizer May Be Required More Pesticide and Herbicide Needed

14 Corn Stover Removal and Erosion l Soil cover is important to prevent wind and water erosion l Erosion control depends on soil, crop rotation, tillage practice, slope and other factors l Extensive 1979 USDA study l Results: 52 MM tons Corn Stover available yields, ~90 Bu/acre l Update shows 76% to 82% removal OK on two specific sites studied in NE and SD l Present baler limit with raking is 70%

15 Corn Stover Removal Can Reduce Tillage l Cold soil temperatures in the spring due to residue cover are often given as the primary reason for tillage operations, especially in colder regions and poor draining soil l Other Reasons? l More than 80% of the stover is tilled under to remove surface material, 60% is Conventional Till

16 Corn Conventional Till Area as % of Total Full Season Crop

17 Corn No-Till Area as % of Total Full Season Crop

18 WHERE THE STOVER GOES NOW l Most surface residue lost as CO 2. The National Soil Tilth Lab reports just 11 to 19% of the carbon in the surface stover contributes to the formation of SOM. Roots contribute 32 to 44 % of their carbon to the soil matter. l If plowed below the surface, a carbon deficit can occur in the soil. The plowing activity exposes soil carbon to oxidation, increasing organic carbon loss with the release of CO 2. The degree of soil disruption determines the carbon loss.

19 SHORT TERM Tillage Induced Soil Organic Carbon Loss

20 MID-TERM Tillage Induced Soil Organic Carbon Loss

21

26 More knowledge CORN STOVER AS A NUTRIENT l HARVESTED STOVER COMPOSITION Dry Basis l P, 0.1% -- P Value is 40¢ to 60¢/ ton l K, 1.0% -- K Value is $2 to $3/ ton l N Value Is Dependent on Crop Rotation and Tillage.... A Complex System -- Local Study Is Needed

27 CORN STOVER and N Fertilizer Requirements l Corn Stover Nitrogen Content, ~0.5% l BUT C/N RATIO, 30 to 70 For Good Microbial Action 10:1 Ratio Is Desired Plowing the stover under the surface requires about 20 lbs N/ton stover, $3.20/ton l If N is not added, nutrient deficiency in next crop may occur l Potential for N leaching to groundwater increases with increased N application l Gulf of Mexico Hypoxia Problem is Growing

28 SUCCESSFUL STOVER COLLECTION, $32/dry Ton Delivered l Harlan, IA Industrial Application In ‘97 Contracted with for 50,000 acres Used more than 30 custom operators Waiting list after signing up 440 producers Collected over a 50 mile radius l Expanded to WI and IL in ‘98 More than 100,000 acres contracted All custom operators for harvest Long Waiting list for producers and custom operators

29 CORN STOVER COLLECTION PROCESS l Most bale windrow left behind combine l Some bale chopped and raked stover l Round and Square bales, 1,200 dry lbs/bale l “Load on the Go” wagons, 17 round bales/load Loading cycle is less than 30 minutes Unloading cycle less than 10 minutes l High speed tractors, Safe at 50 MPH

30 Square Bales & High Speed Tractor

31 “Load on the Go”

32 “Loaded to Go”

33 Bale Storage

34 ‘97-’98 Corn Stover Pricing Summary

35 SUSTAINABLE AGRICULTURAL BENEFITS l REMOVING EXCESS CORN STOVER CAN IMPROVE CURRENT AG PRACTICES REDUCE TILLAGE & SOIL EROSION REDUCE NITROGEN FERTILIZER USAGE SEQUESTER CARBON AND MITIGATE GHG l EXCESS CORN STOVER PROVIDES A LOW COST RAW MATERIAL -- $32/DRY TON DELIVERED IN 50 MI RADIUS l INCREASES RURAL INCOME WITH NO MORE LAND USE

36 More Knowledge CORN STOVER AS A RESOURCE l BIOTECH ADVANCES HAVE MADE STOVER CONVERSION TO VALUED ADDED CO- PRODUCTS POSSIBLE AND ECONOMIC l HARVESTED STOVER COMPOSITION, Dry Basis Product related 38% CELLULOSE, 32% HEMICELLULOSE 20% LIGNIN

37 Processing Just 30% of Corn Stover FOR CELLULOSE FRACTION : l Adds 30 M MT Fiber l De-pithed fiber can replace hardwood fiber Total NA paper market is ~ 100 M MT, growing 2% annually Source: Jaakko Poyry Continue with 40% recycle, % softwood l Cellulase enzymes convert cellulose to glucose sugars, at projected $4/cwt Source: NREL

38 Processing Just 30% of Corn Stover FOR HEMICELLULOSE FRACTION : l Provides 28 M MT low cost pentose fermentation sugars for production of value added products l Can produce 7.5 billion gallons fuel ethanol l Supplies 5% of fuel transportation needs

39 Processing Just 30% of Corn Stover ADDS 15 M MT LIGNIN : Relatively unmodified lignin has valued properties Application K MT $ M Phenol-Formaldehyde Replacement 2,200 2,100 Antioxidants in lubricants, foods Water Soluble Derivatives Environmental Replacements 1, Total WW Market is ~ 4 Million MT, $4 Billion Remainder can be upgraded to liquid fuel additive or used for Processing Energy

40 Process Hydrolysis and Fermentation l Cellulase Assessment l Ethanologen Requirements l “Building the Bridge” with DOE Assistance Build on Existing Industry Infrastructure Engineering Feasibility Study Enzyme Activity Improvements rStrain Needs for Fermentation

41 Cellulase Assessment Results l 10X Improvement in Specific Activity l Lowers cost to 5¢/gal EtOH or less l Partial harvest in Corn Belt can create 2nd Largest Enzyme Market, $250 to $400 MM l Offers 50% to 70% Manufacturing Margins

42 ETHANOL FERMENTATION STRAINS l Three recombinant organisms are now available rEcoli rSaccharomyces rZymomonas l None are currently used commercially. l At least two planned to be in use next year BCI with rE coli Iogen with rSaccharomyces l Current industry users have a clear preference for rYeast, particularly rSaccharomyces

43 Projected Sugar Cost Based on Improved Conversion Technology

44 Greenhouse Gas Mitigation Potential from Corn Stover (30% of total, 70MM dry MT) is 12% to 20% of US Kyoto Reduction US Projected Emissions, MM TCE, ,740 l Kyoto Required Reduction l Corns stover Potential, MM TCE Fossil Fuel replacement, 5.6 to 8 Bil Gal EtOH to 64 N Fertilizer reduction 1.6 M MT N Fertilizer to 17 Reduced Till and No-Till, 50% of 32 MM ha Corn 0.5 M TC/ha/yr

45 PERCEIVED NEEDS l EDUCATION l SUPPORT FROM CORN GROWERS l MARKET DEVELOPMENT FOR EXISTING PRODUCTS PAPER PARTICLE BOARD l ADDITIONAL RESEARCH AND DEVELOPMENT LOCAL SOIL IMPACT NEW, HIGHER VALUE PRODUCTS PROCESS IMPROVEMENT

Funded by DOE Office of Biofuels 46 Conclusion CORN STOVER PROCESSING HAS A MAJOR POSITIVE IMPACT Rural Farm Economy Related Industries Energy Independence The Environment and GHG Mitigation l Recent Advances in Research Supported by the DOE, EPA and USDA are RAPIDLY Moving the Process Closer to Commercialization l Many Envision This to Become Reality in the Next 3 to 4 Years