1. Lignin in the Future Gaps in the Path Forward H.T. DelliColli Ph.D. Principal R-Theta Consulting LLC

2. Objective The development of a commercially viable technology based on unsulfonated lignin has, to date, been unsuccessful. Reasons for this lie in the basic paradigms used by the R&D, Business Development and Marketing elements within the lignin community and the potential users of this technology It is the purpose of this presentation to identify and delineate these issues and hold them up for discussion.

3. A Few Facts The Reality of the Lignin World Approximately 50 Million metric tons of lignin are produced annually by the world’s pulp mills and biorefineries 1.1 million metric tons of lignin are sold and used as sulfonated lignin < 10,000 metric tons of unsulfonated lignin are sold annually In other words, 2.2% of the available lignin is converted to “items of commerce” Why?

4. Some Somewhat Disturbing Facts ….which deserve examination! 67 years elapsed between the first powered flight by the Wright brothers and the first lunar landing ( is lignin chemistry more difficult than rocket science?) 155 years have elapsed since Drake’s first oil well in Pennsylvania 174 years have elapsed since the “discovery” of lignin and todays commercial utilization of less than 2% of available material WHY?

5. There are significant barriers to the commercialization of unsulfonated lignin There are major gaps amongst the various components within the lignin community These need to be identified and dealt with

6. Some Reasons for our Failures Over reliance on the pulp and paper industry for commercialization Successful early application of lignosulfonates Commercialization of lignosulfonates at costs well below their performance driven or real value Unfortunate tie-ins to current lignin applications Market research…Too little – Too late – and not deep or strategic enough Failure to treat lignin as a discrete chemical feed stock

7. Reasons for the Current Status of Lignin in the Marketplace Dilusional economics and wishful thinking Lack of parallelism with the development of coal and petroleum based chemicals Failure to marry chemistry and chemical engineering Paucity of “Chemical Horse Sense” within the biorefinery community Failure to treat lignin as a chemical feedstock

8. Reasons for the Current Status of Lignin in the Marketplace Lack of a clear and coherent understanding of what lignin is Too many “high school science projects” Lack of adequate funding Excessive government regulation Too many “lignin experts as a function of available funding”

9. Current Lignin Applications Low Value High Volume (Primarily lignosulfonates) Higher Value Lower Volume (Primarily lignosulfonates) Very High Value Low – Intermediate sized market (We need to start here) Building Materials Cement & Concrete Dispersants & Emulsifiers Functional Feed/Food Additive Anti Scaling (boiler water tmt) MicronutrientsProtective Coatings Animal feed BinderConstruction resinsFree Radical Scavengers Dust ControlRubber AntioxidantPharmacology Anti (microbial/mycotoxin) Soil treatmant

10. More Reasons Lack of a clear and coherent understanding of what lignin is based on who is asking the question Too many papers, texts, and presentations beginning with the statement “lignin has a complex structure and is highly variable” Failure to marry the chemistry and chemical engineering related to lignin production

11. A Definition to Move Forward Wi th Lignin is a biobased strongly associative molecular agglomerate which can be chemically and/or physically derivatized to produce polyelectrolytes and a multitude of useful chemical substances …….when treated with the respect due a chemical feedstock

12. Even More Reasons Lack of parallels with the development of coal and petroleum based chemical products (Have we learned from experience?) Failure to marry chemistry with chemical engineering for product manufacture (Javelins and shot putters!) Failure to treat lignin as a discrete chemical feedstock

13. Biomass Coal Petroleum Black Liquor Coal TarDistillate/Residue Separation Isolation Purification Modification Separation Isolation Purification Modification Lignin Filter Cake ??

14. Still More Reasons Incomplete/inaccurate information and ignoring fundamentals (technical issues) Paucity of “chemical horse sense” within the biorefinery community. Lack of strategic thinking Reliance on out-dated information Excessive regulation at all levels

15. A Bit of Advice Reports alone are not enough! Concrete examples improve the chances of finding industry support with potential for successful commercialization. Include interaction with your IP/licensing function and develop a reasonable policy for technology transfer.