American Fats & Oil Association 2012 Annual Meeting October 10 th – 11 th, 2012 Grand Hyatt, NYC, NY Bioheat® Fuel Market Overview Paul Nazzaro, President, Advanced Fuel Solutions, Inc., Representing the National Biodiesel Board

Industry Challenges Carbon Intensity/Government Intervention Particulate Matter Emissions/Sulfur, GHG Market Contraction, Conservation Market Uncertainty Natural Gas

Market Contraction 1980 –13.6 Million Homes heated with #2 heating Oil –8.4 million Northeast Homes –Natural Gas Utilities, (small, fragmented, regulated) 2010 –7.7 Million Homes heated with #2 heating oil –6.1 Million Homes in the Northeast –Natural Gas Utilities, (large, consolidated, unregulated) –Government declaration to abort the use of carbon intensive fuels

#2 Heating Oil, Market Contraction Source,

Oil heat Industry Vision On September 15, 2009, approximately 100 individuals representing the 23 NORA states and the District of Columbia gathered together to set a new vision for the future of Oil Heat.

The Resolution The National Oil heat Research Alliance The heating oil industry recommends and will encourage the Congress and appropriate state bodies to mandate the following changes for heating oil, By July 2010, all heating oil will be mixed with a bio component that meets the appropriate specifications to ensure that at least 2 percent of the fuel is renewable. That such levels shall increase over time as technical and economic feasibility permit. By July 2011, the petroleum base stock we now call heating oil will be transitioned to ultra low sulfur diesel fuel. In the interest of lowering the carbon intensity of heating oil applications, that training will be provided to heating oil companies on thermal solar applications.

The Market Opportunity 6.5 billion gallons is concentrated in the Northeast and Mid-Atlantic, NE, 30%, Mid-Atlantic, 43%. Fell off to 3.9 billion in 2010, (no winter, conservations, conversions). There are approximately 7000 Oil heat retailers delivering heating oil and Bioheat in 40,000 diesel powered trucks

Bioheat® The Market Opportunity Heating oil market represents a 325 million gallon biodiesel market as it emerges, at its peak 1.3 billion gallons. The peak is representative of a 20% blend which necessitates ASTM approval. NBB Technical Team currently overseeing multiple projects to achieve this goal (BTSC). Studies revealed that a 12%+ blend of biodiesel with ultra low sulfur heating oil will enable fuel oil distributors to compete environmentally against natural gas, the industries most formidable foe.

Bioheat ® / ULSHO Allows Us To Compete

ULSHO/Bioheat ® Advantages No retrofit or equipment modifications Enhances and extends equipment life Can help reduce periodic maintenance intervals No change in service protocols It’s ready for distribution

Compliments ULSHO No.2 heating fuel, 0.04% Sulfur by weight No.2 heating fuel, 0.18% Sulfur by weight No.2 heating fuel, 0.34% Sulfur by weight No.2 heating fuel, 1.08% Sulfur by weight

Legislation Federal Biodiesel Blenders’ Tax Credit RFS2, Renewable Fuel Standard State Requirements Incentives Low Carbon Fuel Standards NYS,.01 per gallon credit on every 1% blend of biodiesel into heating oil up to.20 for a 20% blend. Expires 12/17 NY, blends of up to 20% biodiesel with ULSD for on/off road fuel receives a 20% reduced tax rate allowing a savings of an average.06 per gallon, expires, August 2013.

OEM Support & Bioheat Technical Steering Committee R.W. Beckett Company Supports the use of B5, as specified in ASTM D396. Reference Beckett Technical Bulletin, January 2009 for all Alternative Fuel recommendations. Oil heat Manufacturers Association Riello Endorses B5 blends and lower percentage blends which meet the requirements of ASTM D396 Carlin Factory representatives acknowledge that the company endorses a 5% blend Suntec Endorsements of Suntec products for use with Biodiesel fuels are only for fuels blended with biodiesels meeting ASTM D6751 and petroleum meeting ASTM D396. B5 is certified if specifications are above are in check.

Bioheat® Fuel The Evolution of Oil heat

The National Biodiesel Board 605 Clark Avenue Jefferson City, MO PHONE: (573) FAX: (573) Paul Nazzaro