Implications for Agriculture, Energy, and Automotive

Copyright © 2006 Global Insight, Inc.2 The Bio-fuels Boom

Copyright © 2006 Global Insight, Inc.3 Value Proposition Providing an Integrated Perspective  Agriculture, Transportation, and Energy perspectives combined – from Field to Wheels. Identifying the Issues & Answering the Questions in Context  Long-standing expertise in competing and complementary businesses  Based on an economic analysis platform GLOBAL INSIGHT Independent, reliable analysis

Copyright © 2006 Global Insight, Inc.4 Three Major Policy Drivers… …Are They Compatible?  Reduce criteria emissions at local, urban, metro, and national levels  Reduce greenhouse gas emissions  Create new markets for agricultural crops  Reduce subsidies  Energy security  Reduce dependency on petroleum-based energy sources  Diversify energy sources Energy Environment Agriculture

Copyright © 2006 Global Insight, Inc.5 Strategic Questions Addressed in The Bio-fuels Boom What are the global drivers of bio-fuels consumption? What role do the major economic powers play in bio-fuels growth? (U.S., NAFTA, EU-25, Asia, Latin America, Africa) What is the range of long-term policy objectives ?  How will they vary from country to country and at the regional and local levels?  How will policy influence the creation of a commercially viable bio-fuels industry?

Copyright © 2006 Global Insight, Inc.6 Strategic Questions Addressed in The Bio-fuels Boom How is the bio-fuels infrastructure evolving internationally? What is the current state of technology and how will it develop? What is the tipping point, where bio-fuels will impact the energy, agriculture and automotive markets? What are the expectations and limits to growth in the bio-fuels industry?

Copyright © 2006 Global Insight, Inc.7 Ethanol Production Capacity: Growing Rapidly Source: F.O. Licht

Copyright © 2006 Global Insight, Inc.8 A Scenario-based Approach The global bio-fuels industry will unfold based on the evolution of several key factors:  Government mandates and support  Production and process technology in the agricultural, automotive, and energy industries  Cost evolution  International trade issues  Distribution and infrastructure  Global oil prices Alternative scenarios of future supplies and prices are a core element of the study

Copyright © 2006 Global Insight, Inc.9 Proposed Scenarios Market Re-managed: Supply Growth Keeps Pace with Demand Cornucopia: Significant Supply Surplus, Price Drops Supply constrained: Production Does Not Meet Demand Global Insight will also build scenarios with the charter subscribers to the study.

Copyright © 2006 Global Insight, Inc.10 Bio-fuels Growth Ranges from 5-to-25% by Scenario 0% 5% 10% 15% 20% 25% 30% Market Re-managed Supply Constrained Cornucopia Total Global Petroleum Supply (%) Global Insight Petroleum Scenarios

Copyright © 2006 Global Insight, Inc.11 FUEL TYPES Study Coverage FEEDSTOCKS CORNSUGAR BEETSSWITCH GRASS & WOOD CHIPS (NEXT GENERATION FUELS) SUGAR CANESOYBEANSCROP RESIDUES (NEXT GENERATION FUELS) WHEAT & BARLEYRAPESEED, JATROPHA OIL & PALM OIL (BIO-DIESEL) OTHER NON- CONVENTIONAL SOURCES (E.G., ALGAE, FARM & MUNICIPAL WASTES) (Study does not include alternative fuels such as LPG, LNG, CNG, hydrogen, gas-to- liquids, or coal-to-liquids) NEXT GENERATION BIO-FUELS BIO-DIESEL BIO-ETHANOL

Copyright © 2006 Global Insight, Inc.12 Final Report: Proposed Table of Contents Executive Summary Description of Scenarios  Key components of scenarios  Major uncertainties  Summary of scenario stories  Signposts Major Government Bio-fuels Programs and Policies  Incentives, targets, restraints U.S. Europe (by country) Africa Bio-fuels Consumption Forecasts  By bio-fuel type  By scenario  By major consumption country  Trade flows  To year 2030 Bio-fuels Production Forecasts  By bio-fuel type  By scenario  By major production country/region Automotive Sector Response  Technology  Strategies of each of 10 major OEMs  Component sourcing Agricultural Sector Response  Strategies for the Agricultural Sector  Marketing  Major stakeholder responses Energy Sector Response  Markets for bio-fuels in energy sector  Strategies for the Energy Sector  Marketing  Major stakeholder responses Conclusions and Recommendations Appendices  Detailed data tables provided electronically Asia (by major country) Latin America

Copyright © 2006 Global Insight, Inc.13 Bio-fuels and the Automotive Industry Bio-fuels Automotive Technology Strategies for the 10 Major OEMs How are the on-vehicle systems impacted by each fuel? (e.g., storage, delivery, energy management) What technical solutions are needed and at what cost? Product OfferingsMarketing Which Vehicles? What Fuels? Are alternative fuels a strategic initiative? … OR a “must do” to be competitive? Corporate PositioningComponent Sourcing Wrap itself in green? Take the role of a responsible corporate citizen? View alternative fuels as an extension of product lines necessary to remain competitive? In-house technology development or outsource the expertise? In-house or outsource component production?

Copyright © 2006 Global Insight, Inc.14 Bio-fuels and the Agricultural Industry Bio-fuels Production Technologies Strategies for the Agricultural Sector Major Feedstock Technologies  Grain fermentation advancements  Cellulosic ethanol Production Cost Estimates Energy and Carbon Balances Government policies for use of agricultural surpluses Land use management for food and energy production Current and future subsidization programs Competition with food production and prices MarketingStakeholder Response What is the potential market for crops to produce bio-fuels? (by country & by U.S. state) How will this affect the agricultural industry? Large agricultural companies Farm co-ops Emerging bio-fuels companies Transportation – pipelines, trucks, ports Investors

Copyright © 2006 Global Insight, Inc.15 Bio-fuels and the Energy Industry Bio-fuels Markets in the Energy Sector Strategies for the Energy Sector Fuel for electric power generation Substitute for distillates and home heating oil Blending agents for gasoline and diesel pool Government energy security policies Government environmental policies Product quality regulations Taxes and import/export tariffs Targets and mandates MarketingStakeholder Response What is the potential market for bio-fuels? (by country/region and within the U.S. by region) Large integrated energy companies Refiners Pipelines and retailers New business entities Investors

Copyright © 2006 Global Insight, Inc.16 Who Should Participate? Investors Agri-Business Automotive Energy Policy & Government Bio-fuels Industry Transportation Equipment Manufacturer

Copyright © 2006 Global Insight, Inc.17 Kick-off Meeting: October 2006 Study Timetable Final Client Presentation: Early 2007 Final Report: The Bio-fuels Boom February 2007 Monthly Bio-fuels Webcast: December 2006

Copyright © 2006 Global Insight, Inc.18 Interim Webcasts: SCENARIO REVIEW IMPLICATIONS FOR ENERGY, AGRICULTURE, & TRANSPORTATION SECTORS Deliverables Kick-off Meeting: NORTH AMERICA, EUROPE, ASIA   Results Presentation: NORTH AMERICA, EUROPE, ASIA On-site: OPTIONAL, ON-SITE PRESENTATION OF STUDY RESULTS Final Report: ANALYSIS & RESULTS; WEB-BASED DATA ACCESS

Copyright © 2006 Global Insight, Inc.19 Project Team Kevin Lindemer Refining Sector & Alternative Energy Economics Phil Gott Automotive Technology Stewart Ramsey Agricultural Economics Juliette Kerr Latin American Bio-fuels Industry Policy & Analysis Sarah Kingsbury Automotive Sector Dick Buttigeig Automotive Sector Mary Novak Energy Policy & Modeling Margaret Rhodes Energy Policy & Modeling Copyright 2006 Global Insight, Inc. 19

Copyright © 2006 Global Insight, Inc.20 Previous Studies in Bio-fuels by Global Insight 1.Study of the Global Bio-fuels Market to Identify Business Opportunities – U.S Federal Highway Administration: Forecasting Revenues from Highway Trust Fund 3.Global Bio-fuels – The Next Step Towards Environmentally Neutral Transportation? 4.National Railroad – Prospects for U.S. Ethanol Production 5.The Potential for Increased Market Share for Alternative Fuels 6.Winners and Losers of Ethanol Mandates 7.Identification and Assessment of Alternative Fuels Market Drivers

For Further Information Gil Rodgers Senior Director, Energy Group tel: em: