1. Opportunities and Challenges in the Nebraska Ethanol Industry Governor’s Ethanol Coalition August 2007 Presentation by Todd Sneller Nebraska Ethanol Board

2. Historical Perspective “Induced Employment”: Lincoln, NE- 1933; Governor’s car being filled up with corn alcohol gasoline ( E-10)

3. Ethanol: An Economic Catalyst for Nebraska “Unquestionably, the most important value- added product to the State’s economy is, and will continue to be, ethanol production.” “Unquestionably, the most important value- added product to the State’s economy is, and will continue to be, ethanol production.” “Policy decisions at the federal level along with increased demand for ethanol could dramatically increase U.S. net farm income and create many jobs over the next few years.” “Policy decisions at the federal level along with increased demand for ethanol could dramatically increase U.S. net farm income and create many jobs over the next few years.” “Nebraska must communicate that it is eager to attract desirable businesses such as…bio- fuel plants…through a combination of tax breaks and innovative policies.” “Nebraska must communicate that it is eager to attract desirable businesses such as…bio- fuel plants…through a combination of tax breaks and innovative policies.”

4. Ethanol Production By Incentive 1985-2007 No Incentive 1985-1989; LB1124 1990-2000; LB605 2001- 2005; Overlap of LB605 & LB536; LB536 2003-2012

7. Oil: Hidden Costs By including externalities, the true cost of oil may exceed $150 per barrel

8. Ethanol Plants in Nebraska OperatingLocationmgybu/year Chief Ethanol FuelsHastings6524 ADM Corn ProcessingColumbus10037 Abengoa Bioenergy Corp.York5520 Cargill, Inc.Blair10037 Nebraska EnergyAurora3513 AGP Corn Processing, Inc.Hastings5520 Husker AgPlainview3212 KAAPA EthanolMinden6022 Trenton Agri Products, LLCTrenton4517 U.S. Bio Platte Valley, LLCCentral City9636 Midwest Renewable EnergySutherland207 Cornhusker EnergyLexington8030 E3 BioFuelsMead249 Siouxland EthanolJackson5520 US Bioenergy - OrdOrd11844 Mid America Bio EnergyMadrid5520 Abengoa BioenergyRavenna8030 17 plants producing nearly 1.1 billion gallons per year

9. Plants under construction Husker AgPlainview4617 CargillBlair14052 Midwest Renewable EnergySutherland10037 Abengoa Bioenergy CorpRavenna207 KAAPAMinden5019 Sub-Total356132 Under Construction Aventine Aurora West, LLCAurora11041 ASA BiofuelsAlbion11844 E-Energy Adams, LLCAdams5019 Mid American Agri Products, LLCCambridge8431 Elkhorn Valley Ethanol,LLCNorfolk5320 NEDAKAtkinson207 ALTRA, Nebraska, LLCCarlton10037 BioFuels SolutionsWood River11041 Advanced Bio Energy, LLCFairmont10037

10. Emerging Issues Jobs/Training Jobs/Training Energy/Natural Gas/Coal Energy/Natural Gas/Coal Transportation (Rail/truck) Transportation (Rail/truck) Remediation Remediation Safety Training Safety Training Water Water Distillers feeds Distillers feeds Pipeline Pipeline E85 expansion/E10 Saturation E85 expansion/E10 Saturation

12. Annual NE Ethanol Production Capacity and Corn Use Status ( as of 07-2007 ) Ethanol (Mil. gal) Corn use (Mil. bu) Installed capacity 950300+ [25%] [25%] Under construction +800530 [40%] [40%] Permitted+2,100750 Total3,6901,320 [97%] [97%]

13. Economic Benefits of Ethanol Production Economic Benefits of Ethanol Production Increased Economic Value for Cattle/Dairy Industry; Feed Manufacturing Increased Economic Value for Cattle/Dairy Industry; Feed Manufacturing Stimulates Transportation Sector; Rail/Truck Stimulates Transportation Sector; Rail/Truck Quality Jobs; Retention of Skilled Workers Quality Jobs; Retention of Skilled Workers Plants Well Suited for Rural Communities Plants Well Suited for Rural Communities Expands Local Tax Base & Tax Revenues Expands Local Tax Base & Tax Revenues Value-Added Industry; Promotes Export of Finished Products Value-Added Industry; Promotes Export of Finished Products Growth Industry that Attracts Capital to the State; Plant Expansion Potential Increases Capital Outlay and Related Economic Activity Growth Industry that Attracts Capital to the State; Plant Expansion Potential Increases Capital Outlay and Related Economic Activity Stimulates Allied Industries and Enhances Infrastructure Stimulates Allied Industries and Enhances Infrastructure

14. Ethanol development provides opportunities for expansion of Nebraska businesses and industries. The impact of an expanded ethanol industry extends well beyond the agricultural sector. Ethanol Related Opportunities

15. Opportunities – Related Industries Parts Providers Service Providers

16. Current and Projected Job Demand July 2007 NE Ethanol Industry Jobs: July 2007 NE Ethanol Industry Jobs: 885 Direct Jobs at 17 Plants 885 Direct Jobs at 17 Plants 1,500 Indirect (“induced”) Jobs 1,500 Indirect (“induced”) Jobs Six Plants w/ major expansion underway Six Plants w/ major expansion underway -Expansions to be completed by 1Q ’08 -Expansions to be completed by 1Q ’08 -100 new Direct Jobs from expansions (est.) -100 new Direct Jobs from expansions (est.) -165 Induced Jobs from expansions (est.) -165 Induced Jobs from expansions (est.) 9 Plants Under Construction 9 Plants Under Construction -400 Direct Jobs in new plants by 1Q ’08 -400 Direct Jobs in new plants by 1Q ’08 -630 Induced Jobs in new plants -630 Induced Jobs in new plants 1,300 new Direct and Induced Jobs by 1Q ’08 1,300 new Direct and Induced Jobs by 1Q ’08

17. Ethanol Sector Jobs and Wages Ethanol jobs listed on Nebraska sites: Ethanol jobs listed on Nebraska sites: General Manager Lab Supervisor General Manager Lab Supervisor Office Manager Administrative Assistant Office Manager Administrative Assistant Plant Manager Accounts Payable Plant Manager Accounts Payable Commodities Manager Commodities Administrator Commodities Manager Commodities Administrator Controller Risk Management Assistant Controller Risk Management Assistant Process Supervisor Grain Merchandiser Process Supervisor Grain Merchandiser Maintenance Supervisor Sales and Contracting Maintenance Supervisor Sales and Contracting Average annual salary at Nebraska ethanol plants in 2006 was $50,000. Average annual salary at Nebraska ethanol plants in 2006 was $50,000. Demand for transportation sector jobs is high. Demand for transportation sector jobs is high. Demand for skilled trade positions is high. Demand for skilled trade positions is high.

18. Future Challenges Continued Development Will Require: Expansion of engineering and construction services Efficient permitting of new and expanding facilities Continued development of livestock industry to provide new distillers feed markets and products Supply trained workers for ethanol and related businesses Support training and education programs at colleges Foster competitive business environment Increase supply of potential feedstocks for ethanol production Maintain a public policy framework that encourages the production and use of biofuels Enhance transportation efficiency Create awareness of quality and quantity of ethanol related jobs

19. Putting Water Use in Context Virtually all types of manufacturing use water at some point in the production process. Virtually all types of manufacturing use water at some point in the production process. Current ethanol processing technology uses approximately 3 gallons of water for each gallon of ethanol. Current ethanol processing technology uses approximately 3 gallons of water for each gallon of ethanol. Ethanol process improvements indicate water use can be reduced to 1.5 to 1. Ethanol process improvements indicate water use can be reduced to 1.5 to 1.

20. Water Conservation Opportunities Reduce Energy Consumption (less cooling tower evaporation & blowdown) Recycle waste and blowdown streams Treat makeup water (less blowdown) Use air or groundwater to reject heat (less evaporation and blowdown)

21. Water Conservation Opportunities <3 – Current Best Practice 1.5 – Achievable with proven technology at extra capital cost 0 – Possible in future with new technologies Gallons Fresh Water/ Gallon Ethanol less than:

22. Putting Water Use in Context 17 ethanol plants are currently operating in Nebraska; 9 plants are actively under construction; 37 additional plants have been proposed for Nebraska sites. If ALL current and proposed plants were operating, they would use about two-tenths of 1 percent of the water pumped in the state.* 17 ethanol plants are currently operating in Nebraska; 9 plants are actively under construction; 37 additional plants have been proposed for Nebraska sites. If ALL current and proposed plants were operating, they would use about two-tenths of 1 percent of the water pumped in the state.* *Based on USGS estimates. *Based on USGS estimates.

23. Putting Water Use in Context A large (100 mgy) ethanol plant uses the same amount of water annually as it takes for four center-pivot irrigation systems to water a section of land. A large (100 mgy) ethanol plant uses the same amount of water annually as it takes for four center-pivot irrigation systems to water a section of land. In water-short area, ethanol plant developers buy land that has irrigation wells and convert the water use from irrigation to ethanol production. In water-short area, ethanol plant developers buy land that has irrigation wells and convert the water use from irrigation to ethanol production.

24. Most Recent Studies Show Positive Net Energy Balance for Corn Ethanol Energy balance here is defined as Btu content a gallon of ethanol minus fossil energy used to produce a gallon of ethanol

25. Total Energy Conclusions Corn-based fuel ethanol achieves moderate percent reductions in GHG emissions, large percent cuts in oil use. Its total production is limited relative to transport fuel use. Corn-based fuel ethanol achieves moderate percent reductions in GHG emissions, large percent cuts in oil use. Its total production is limited relative to transport fuel use. Cellulosic ethanol can achieve much greater percent GHG benefits than corn ethanol. Per mile oil use benefits are comparable to corn ethanol. Potential production is far greater. Cellulosic ethanol can achieve much greater percent GHG benefits than corn ethanol. Per mile oil use benefits are comparable to corn ethanol. Potential production is far greater.

26. Ethanol Production should remain a targeted industry in Nebraska Ethanol production will continue to be an economic stimulus for many product and service sectors in Nebraska. Ethanol production will continue to be an economic stimulus for many product and service sectors in Nebraska. It is an industry ideally suited for rural communities. It is an industry ideally suited for rural communities. Ethanol production will become an increasingly more important part of Nebraska’s economic base. Ethanol production will become an increasingly more important part of Nebraska’s economic base.

27. Slide Seven Nebraska’s Competitive Advantage for Ethanol Production Nebraska continues to provide some of the highest returns for ethanol investors.

28. Nebraska’s Competitive Advantage for Ethanol Production Corn Supply Nebraska had net exports of 459 million bushels of corn for the 2006-07 crop year. Net exports for current (2008-09) crop year are projected to be 195 million bushels – which would be a quantity sufficient to produce an additional 550 million additional gallons of ethanol. Slide Four

29. For more information, contact: Todd Sneller Nebraska Ethanol Board Lincoln, NE 402-471-2941 www.ne-ethanol.org