1 Industrial Gasification The Counter-Intuitive Strategy Play Mark Costa Senior Vice President Corporate Strategy & Marketing

2 Agenda: Industrial Gasification Gasification Is Advantageous Eastman's Strong Gasification Credentials Our Strategy To Transform Eastman Chemical Company

3 The Problem for the U.S. "Currently, there are plans to build more than 80 large-scale chemical plants across the globe in the coming decade … with price tags of a billion dollars or more, and thousands of good jobs. Andrew Liveris Chairman & CEO Dow Chemical Oct. 30, 2006 "Not a single one is planned for the U.S."

4 The reason? Natural gas prices

5 There is an alternative Coal Is Lower Cost and Less Volatile Coal Prices vs. Comparable Raw Materials Natural Gas and Coal $ / MMBTU Crude $ / bbl Crude (West Texas Intermediate) Natural Gas (Houston Ship Channel) Coal (Illinois Basin) Note: All prices are in constant 2006 dollars Source: Eastman, GED

6 % of Total World Reserves United States has 250+ year supply of coal Coal is One Alternative The U.S. Has Over 25% of the World's Coal Reserves Source: International Energy Agency and Dept. of Energy Information Adm. (EIA)

7 Coal is An Alternative Coal Remains Low Cost Even as Demand Grows Source: Cost Curve from ICF Consulting – 2003 updated to 2006, EIA for 2025 consumption

8 Eastman's Strategy: Build on Coal Leverage advantages of coal Leverage our technology / know-how Build world-class cost position in the U.S.

9 + Air Oxygen (95-99%) N2N2 Carbon Source (e.g., coal) + Water Rod Mill Gasifier Section: Controlled chemical reaction High temperature High pressure Short residence time Quench Zone (quench gasifier only): Gas and molten ash quenched in circulating water bath Ash/slag discharged out bottom as inert, glassy frit (saleable byproduct) Slag (Inert Minerals/Ash from Coal) Gas Clean-Up Before Product Use! Air Separation Unit Products (syngas): CO H 2 By-products: H 2 S CO 2 Ash (slag) Steam can adjust CO/H 2 ratio Gasifier (quench type) Gasification Basics 10

First to operate a commercial coal gasification facility in the U.S. –Only company to produce commercial quantities of acetyl chemicals from coal Best, most experienced operator Developed intellectual property related to gasification Contributing to strong, sustained acetyl stream operating earnings Eastman's Coal Gasification Credentials Proven Expertise & Reliability Over 20+ Years

11 Achieve low, stable cost positions in our olefins, acetyl, and polyester streams, capitalizing on the crude-to-coal spread Position for growth in current products Selectively expand into attractive new products Producer, net buyer position in key raw materials Our Goal Is To Increase Volume Derived from Coal to 50%

12 What Raw Materials Are We Targeting From Gasification? Top Purchased Energy and Raw Materials Olefin Feedstocks Paraxylene Ethylene Glycol Natural Gas Other Crude and Natural Gas-Based Raw Materials Cellulose Coal Electricity Other

13 Polyester Raw Materials Through Gasification Improves Product Costs PET Products Copolyester Products

14 Polyester Raw Materials An Example Of One of Our Projects North American Gasification Project –Facility would be base-loaded with high-value products to third-party customers –Several interested potential partners –Supply methanol to Eastman Eastman Ethylene Glycol Project –Related project with Eastman as sole owner –Developing new technology to produce ethylene glycol –Projected 2 nd quartile global cost position –Replace portion of Performance Polymers' and Specialty Plastics' purchased raw materials with low-cost, stable feedstock

15 Market Technology Partner Engineering, Procurement & Construction 1 st or 2 nd quartile cost position Long-term contracts for base-load products EOR or sequestration of carbon Mixture of in-house and licensed technologies Partner with others where it can cut development time Rely on our proven track record, best practices Design choices for high-capital cost environment Eastman is favored partner for gasification projects Appropriate deal structure Execution Proactive hiring and training of staff Stage execution of projects Disciplined Strategy to Mitigate Risk

16 Demonstrate technology possibilities for the US chemical industry Position Eastman for growth in current products and, potentially, new products Use domestic feed-stocks to transform our company Summary Taking the Counter-Intuitive Route

17 Industrial Gasification The Counter-Intuitive Strategy Play Mark Costa Senior Vice President Corporate Strategy & Marketing