1. Global Market Opportunities for Ethanol – A Clean, Green, Renewable Fuel Comments By: James W. Miller Vice President / Chief Economist Growth Energy December 4, 2015

2. Growth Energy Background Largest U.S. trade association representing ethanol producers Established in 2009 82 ethanol plant members 86 associate member companies and other trade associations Represents over 40% of U.S. ethanol production 21 Professional Staff 2

3. Growth Energy: What We Do Government & Regulatory Affairs Domestic Market Development Foreign Market Development Public Relations Membership & Grassroots Organizing 3

4. Discussion Topics U.S. motor fuel standards Background - Renewable Fuel Standard (RFS) RFS: Goals & Benefits U.S. ethanol experience Trade challenges Colombian ethanol market perspectives

5. U.S. Motor Fuel Standards Motor fuels and additives regulated by EPA under the Clean Air Act o Air and water pollution – strict limits on emissions o Public health and welfare – federal ban on leaded gasoline o Extensive testing – EPA & Department of Energy States, local governments and industry regulations & standards also apply o Many states and municipalities have banned MTBE as a fuel oxygenate o Specific state requirements – i.e. California has rigorous fuel standards o ASTM standards are applied by about 20 states Each new fuel (i.e. e15) is reviewed by EPA to determine if “substantially similar” to gasoline Alternative fuels with greater than 50% ethanol content not subject to same regulations – EPA reviewing how to best regulate

6. Renewable Fuel Standard (RFS) Nearly 60 nations have some form of RFS for motor fuels U.S. and global goals and challenges are similar U.S. exports fuel and/or industrial ethanol to over 100 countries Domestic renewable fuel production coupled with more open trade is a key to future success for all parties 6

7. RFS GOALS / BENEFITS Improve environment - reduce GHGs Reduce health hazards associated with engine emissions Enhance energy/national security Create rural economic growth and consumer fuel price benefits

8. U.S. Experience Production efficiency up 4% since 2008 Water use declining Energy input down over 9% since 2008 Net energy balance up – 1996 = 1.37:1.0 BTUs, 2014 – 2.5:1.0 BTUs Commercial cellulosic production – 4 plants in operation Moved from net importer to net exporter in 2010 3.5 – 4.0 billion liters excess production capacity relative to domestic demand

9. U.S. Net Ethanol Exports Million Liters Source: USDA/FAS-GATS, EIA

10. Improve the Environment and Human Health Average GHG reductions (including ILUC) compared to gasoline: o Corn starch ethanol = 34% o Sugar cane ethanol = 51% o Cellulosic ethanol (stover, dedicated crops) = 88 - 108% Hazardous additives eliminated (lead, MTBE) Toxic emissions reduced 20% at a 10% blend rate

11. Energy/National Security Production of over 54 B liters per year – displacing oil imports by nearly 1 million barrels/day Still importing from Mideast and other foreign oil producers Fuel industry battle over oil marketshare

12. U.S. Oil Demand/Imports Declining 12 Source: U.S. Energy Information Administration

13. Stimulate Economic Growth Adds over $50 B to GDP each year Supports nearly 400,000 American jobs Revitalizing rural communities Saves U.S. consumers $100B in 2014 Octane is key element in the fuel blending market

14. Ethanol Has Consistently Traded Below The Level of Gasoline & Blend-stock Prices Source: EIA: National Average Gasoline Prices (average of monthly average prices) OPIS: Spot RBOB, Ethanol and RIN Prices (average of monthly average prices)

15. Annual U.S. Ethanol Production 15 Source: U.S. Energy Information Agency

16. STIMULATE RURAL ECONOMIC GROWTH U.S. Net Farm Income 16 Source: USDA Economic Research Service

17. Global Grain Production 17 Source: USDA/WASDE

18. TRADE CHALLENGES Balancing the RFS Goals / Benefits o Rural economy v. environment, health, national & energy security, general economy o Policy can discourage investment and innovation o Limit growth potential of domestic industry and trade Enforcement of RFS Requirements o Low blend-rates & enforcement Border Measures o Tariffs - under FTA, Colombian duties on ethanol fall to zero in 2016 o Non-tariff barriers to trade  Import restrictions  Fuel standards - Colombia’s Ministry of Environment and Sustainable Development and Ministry of Mining and Energy have promulgated new standards for ethanol Exchange Rates

19. U.S. Ethanol Exports To Colombia: 2010 – 2015 Quarterly Volumes Barrels

20. Colombian Ethanol Market Perspectives Inconsistent, uncertain blending requirements o Blend mandate of 10% announced October 2013 to stimulate domestic production o Result: increased imports and rollback of mandate to 8% in January 2014 o Actual blend-rate likely less than 6% o MME removed blend mandate April 2015 due to lack of domestic supply Colombia has an ethanol production shortfall o Even with new distillery, domestic production might support an 8% blend-rate (510 mL) o Ethanol production shortfall in 2016 could be 100 million liters o Protectionist policies – administered prices and import restrictions - undermining RFS WTO notification of proposed standards for ethanol quality o When will the final regulations be implemented? o Does this annul the 2014 restrictions on ethanol imports?

24. Value Of Octane Gasoline grades based on octane or ability to reduce engine knocking o Higher octane - less engine knock o U.S. typically offers 87 octane regular, 89 octane mid-grade, 93 octane premium Differing octane measurements o U.S. --- [Research Octane Number (RON) + Motor Octane Number (MON)] / 2 o Many countries utilize an octane measurement based on RON o RON is 4-6 octane points higher than [RON + MON] /2  e.g. U.S. 87 octane gasoline comparable to European 91 octane gasoline Globally, ethanol remains a competitive source of gasoline octane o Denatured ethanol has an octane value of about 110 o Compare per unit cost of ethanol octane to per unit cost of conventional gasoline octane (E-0) With adequate ethanol availability, gasoline blend-stock can have a lower octane value (i.e. 84 octane regular blend-stock) o Reduces gasoline blend-stock cost o Reduces the requirement for other toxic octane boosters – Benzene, Tuolene, Xylene, etc.

25. U.S. Grain Production Increasing With Little Change in Acreage Source: USDA/NASS 7 Major Grains: Wheat, Rice, Rye, Corn, Barley, Oats, Sorghum Million

26. Global Grain Stocks Rising Source: December, WASDE multiple years, 2012/13-2014/15 – March, 2015 WASDE Grains: Wheat, Milled Rice, Corn, Sorghum, Barley, Oats, Rye, Millet, Mixed Grains MMT