1. What You’ll See Now A Fully Functioning, but Version 1 of the Model Fuel Marketplace Conversion R&D Conversion Facilities Investment Feedstock Production Feedstock Cost Vehicle Dynamics Land Use

2. 2 Escalated Capital Cost Attractiveness To Build Required Rate of Return Learning Curve Logic Plant Addition Logic Marketplace Corn EtOH Price Marketplace Fuel Market R&D Applied Fundamentals R&D: Piloting Expected Plant Performance R&D Yield Cost Growth Effort Ratio Equity ROI Potential EtOH Demand from Fuel Usage Prevailing Value Industrial Capacity Detail Plant Pipeline Capacity & Ave. Yield Total Biomass Production & Residue Collection Capital Cost Ave Yield On-line #In D&S #In Start-up #On-line Plant Additions Conversion Yield Output Capacity Cost of Capital & Taxes Effort Ratio & Cost Growth R&D Yield Increase In Ag Output Operating Experience Output Capacity Output Capacity & Ave Yield EtOH Price Corn EtOH Price Cost of Capital & Taxes Output Capacity Corn EtOH Capacity Detail Attractiveness Ave On-line Yield #On-line Learning Curve Logic Detail Feedstock Price Corn Price END Detail

3. 3 Fundamental R&D Maximum Required Effort $500MM Investment Profile & Initial Load MM$/year Maximum Mature Technology Yield R & D Yield R & D Capital Cost Growth Factor Effort Ratio = Accumulated R&D Investment Max Required Effort As the effort is increased (with appropriate dampeners and dissipation) the R&D yield (gal/ton) is increased on a curve from 50% to 100% of maximum. Effectiveness of spending is influenced by $/yr Similarly the Capital Cost Growth is Lowered as a result of increased effort Intro ReturnForward Maximum Effective Annual Spending Fundamental R&D - 1

4. 4 Fundamental R&D Maximum Required Effort $500MM Investment Profile & Initial Load MM$/year Maximum Mature Technology Yield R & D Yield R & D Capital Cost Growth Factor Effort Ratio = Accumulated R&D Investment Max Required Effort As the effort is increased (with appropriate dampeners and dissipation) the R&D yield (gal/ton) is increased on a curve from 50% to 100% of maximum. Yield = Factor x Max Yield Possible Effectiveness of spending is influenced by $/yr Similarly the Capital Cost Growth is Lowered as a result of increased effort ReturnForward Maximum Effective Annual Spending R&D Investment Max Effort Req Yield Factor Fundamental R&D - 2

5. 5 Fundamental R&D Maximum Required Effort $500MM Investment Profile & Initial Load MM$/year Maximum Mature Technology Yield R & D Yield R & D Capital Cost Growth Factor Effort Ratio = Accumulated R&D Investment Max Required Effort As the effort is increased (with appropriate dampeners and dissipation) the R&D yield (gal/ton) is increased on a curve from 50% to 100% of maximum. Effectiveness of spending is influenced by $/yr Similarly the Capital Cost Growth is Lowered as a result of increased effort Cap Cost Growth is multiplier on Cap Cost ReturnForward Maximum Effective Annual Spending Fundamental R&D - 3

6. 6 Illustration of Impact on Yield and Capital Cost Growth of Research Spending Capital Cost Growth Factor is Reduced R&D Yield is Increased Track 1 reaches its expected Maximum of 50 gal/ton Track 2 continues to increase toward its Maximum of 105 gal/ton R&D Spending increases in 2 Research Tracks to a Maximum Of $500MM END Return Fundamental R&D - 4

7. 7 END Return Actual STELLA Module Flowsheet Fundamental R&D - 5

8. 8 Pilot R&D Maximum Required Effort $250MM Investment Profile & Initial Load MM$/year R & D Yield R&D Capital Cost Growth Factor Pilot Effort Ratio Build on the R&D Yield and Capital Cost Growth Accomplished in Fundamental R&D Utilize similar logic of funding drives improvements, but can be dampened and dissipated Result is: R&D Yield after Piloting R&D Capital Cost Growth Factor after Piloting R & D Yield R&D Capital Cost Growth Factor Intro ReturnForward Pilot R&D - 6

9. 9 Pilot R&D Maximum Required Effort $250MM Investment Profile & Initial Load MM$/year R & D Yield R&D Capital Cost Growth Factor Pilot Effort Ratio Pilot Effort Ratio = Acc Pilot R&D Investment Max Required Effort Convert the Pilot Effort Ratio into an “S” type learning curve. Piloting will reduce Capital Cost Growth by a maximum of 0.785 from 2.04 - 1.61 to 1.6 – 1.26 based on “S” ratio Cap Cost Growth = Cap Cost Growth-R&D x [1 – (0.215 x “S” ratio)] R & D Yield R&D Capital Cost Growth Factor ReturnForward Pilot R&D - 7

10. 10 Pilot R&D Maximum Required Effort $250MM Investment Profile & Initial Load MM$/year R & D Yield R&D Capital Cost Growth Factor Pilot Effort Ratio Pilot Effort Ratio = Acc Pilot R&D Investment Max Required Effort Piloting enables Yield to approach Fundamental R&D Yield Without Piloting - R&D Yield is 50% of Fund R&D Yield Yield Reduction is minimized by Pilot Effort – “S” Ratio R&D Yield = R&D Yield x Impact of Pilot Effort R & D Yield R&D Capital Cost Growth Factor END Return Pilot R&D - 8

11. 11 END Return Actual STELLA Module Flowsheet Pilot R&D - 9

12. 12 Calculating Escalated Capital Cost Co-Location Reductions Total Plant Investment & Fraction Debt Financing Accumulated Operating Experience Pilot Effort Ratio & R&D Capital Cost Growth Factor Escalated Capital Cost Determine the “Real” Capital Cost for Demo, Pioneer and Full-scale Facilities Utilize experience at previous scale (e.g., pilot for Demo), R&D Capital Cost Growth and total industry size Allow reductions in capital cost for co-location of Demo plants with existing corn mills EtOH Output Capacity Debt Investor Multiplier Intro ReturnForward Calculating Escalated Capital Cost - 1

13. 13 Accumulated years of Experience at Pioneer Scale Cap Growth Full Scale Years Growth Pilot Effort Ratio Ratio Growth Cap Growth Demo Calculating Escalated Capital Cost Co-Location Reductions Total Plant Investment & Fraction Debt Financing Accumulated Operating Experience Pilot Effort Ratio & R&D Capital Cost Growth Factor Escalated Capital Cost Determine the Debt Investor Capital Growth Factor for Various scale-up Demo – 1 to 2 growth factor based on Pilot Effort Ratio Pioneer – 1 to 2 growth factor based on Accumulated Operating Experience at the Demo Scale up to 1 yr Full Scale - 1 to 2 growth factor based on Accumulated Operating Experience at the Pioneer Scale up to 1 yr All times the Debt Investor Multiplier EtOH Output Capacity Debt Investor Multiplier ReturnForward Calculating Escalated Capital Cost - 2

14. 14 Industrial Capacity Billions of Gal per yr 500MM Gal/yr Industry Experience Factor Calculating Escalated Capital Cost Co-Location Reductions Total Plant Investment & Fraction Debt Financing Accumulated Operating Experience Pilot Effort Ratio & R&D Capital Cost Growth Factor Escalated Capital Cost Finalize Capital Cost Growth Factor = Industry Experience Factor (see graph) x R&D Cost Growth Factor (~1.2 to 2) x Equity Frac + Debt Investor Cost Growth (~1.25 to 2.5) x Debt Frac IndExp x (R&DCapGrowth x Equity + DebtCapGrowth x Debt ) + 1 - IndExp EtOH Output Capacity Debt Investor Cost Growth ReturnForward Calculating Escalated Capital Cost - 3

15. 15 Calculating Escalated Capital Cost Co-Location Reductions Total Plant Investment & Fraction Debt Financing Accumulated Operating Experience Pilot Effort Ratio & R&D Capital Cost Growth Factor Escalated Capital Cost Escalated Capital Cost is then Cost Growth x User Input Capital Cost for each scale plant Allowances for Capital Reduction for Demo (75% for 5MM gal/yr) and Pioneer (50% for 50MM gal/yr) for co-location or reduced “Greenfield” EtOH Output Capacity Debt Investor Multiplier END Return Calculating Escalated Capital Cost - 4

16. 16 END Return Actual STELLA Module Flowsheet Calculating Escalated Capital Cost - 5

17. 17 Calculating Required Rate of Return Investor Type New Industry Risk Factor Accumulated Operating Experience Pilot Effort Ratio Equity Required Rate of Return Utilize Prior Scale Experience & Investor Type (Conservative to Aggressive) Along with a Mature Industry Rate of Return and New Industry Risk Factor To Determine the Required Rate of Return EtOH Output Capacity Equity Mature Rate of Return Willingness to Skip from Demo to Full Scale Debt Fraction & Debt Interest Rate Net (with Debt) Req Rate of Return Intro ReturnForward Calculating Required Rate of Return - 6

18. 18 Calculating Required Rate of Return Investor Type New Industry Risk Factor Accumulated Operating Experience Pilot Effort Ratio Equity Required Rate of Return EtOH Output Capacity Equity Mature Rate of Return Willingness to Skip from Demo to Full Scale Debt Fraction & Debt Interest Rate Net (with Debt) Req Rate of Return Prior Scale Experience Risk Factor (dependent on investor) Use Pilot Effort Ratio for Demo Use years of experience at Demo Scale for Pioneer Scale Use years of experience at Pioneer Scale for Full Scale Or years of experience at demo for Full Scale if skipping Pioneer ReturnForward Risk for Demo Pilot Effort Ratio e.g. Aggressive Investor Risk for Pioneer Years at Demo Accumulated Op Exp e.g. Moderate Investor Risk for Full Scale Years at Pioneer Accumulated Op Exp e.g. Conservative Investor Calculating Required Rate of Return - 7

19. 19 Calculating Required Rate of Return Investor Type New Industry Risk Factor Accumulated Operating Experience Pilot Effort Ratio Equity Required Rate of Return Overall Industrial Experience Risk Factor Use Output Capacity & Investor Type for all Scales EtOH Output Capacity Equity Mature Rate of Return Willingness to Skip from Demo to Full Scale Debt Fraction & Debt Interest Rate Net (with Debt) Req Rate of Return ReturnForward Industry Experience Risk Factor Calculating Required Rate of Return - 8 Industrial EtOH Capacity Conservative Investor Moderate Investor Aggressive Investor

20. 20 Calculating Required Rate of Return Investor Type New Industry Risk Factor Accumulated Operating Experience Pilot Effort Ratio Equity Required Rate of Return New Industry Rate of Return (ROR) = Mature Rate (e.g., 10%) x New Industry Risk (e.g., 3) x Prior Scale Risk (2 for none, 1 for high exp) Range from 10 to 60% Final Equity Rate of Return = New Industry ROR x Industry Exp Risk (1 for none, 0 for high exp) + (1 - Ind Exp Risk) x Mature ROR Range from 60% with no industry experience & no scale experience down to 10% EtOH Output Capacity Equity Mature Rate of Return Willingness to Skip from Demo to Full Scale Debt Fraction & Debt Interest Rate Net (with Debt) Req Rate of Return ReturnForward Calculating Required Rate of Return - 9

21. 21 Calculating Required Rate of Return Investor Type New Industry Risk Factor Accumulated Operating Experience Pilot Effort Ratio Equity Required Rate of Return EtOH Output Capacity Equity Mature Rate of Return Willingness to Skip from Demo to Full Scale Debt Fraction & Debt Interest Rate Net (with Debt) Req Rate of Return Venture Capital Utilization for Demonstration Pilot Effort Ratio > 0.95 Full Scale EtOH Production Price < Prevailing Gasoline Price Industry Output < 20 MM gal/yr If the above Criteria is met then demonstration will be done with Venture Capital at 2% Hurdle Rate END Return Calculating Required Rate of Return - 10

22. 22 END Return Actual STELLA Module Flowsheet Calculating Required Rate of Return - 11

23. 23 Calculating Cost of Capital and Taxes Plant Life Equity Rate of Return Annual Loan Payment Utilize standard financial calculations to calculate: Capital Recovery Factor Annual Return Before and After Taxes Annual Loan Payment All are combined in one term  Cost of Capital+Taxes+Loan / Gallon of Capacity Escalated Capital Cost Time for Design, Const & Startup Debt Fraction & Debt Interest Rate Cost of Capital And Taxes Intro Return EtOH Output Capacity Tax Rate Forward Calculating Cost of Capital and Taxes - 12

24. 24 Venture Capital Ends for Demo due to Industry Volume Venture Capital Starts for Demo Example of Cost of Capital for Different Scale Plants over Time End Return Calculating Cost of Capital and Taxes - 13

25. 25 END Return Actual STELLA Module Flowsheet Calculating Cost of Capital and Taxes - 14

26. 26 Calculating Expected Plant Performance Mature Plant Design Feed Rate R&D Max Yield Purpose is to Calculate the plant EtOH production capacity Plants are designed on Feedstock Rates Use Maximum of; Installed Yield or 90% of R&D Yield Influenced by Overall Experience in the Industry (installed capacity) – “Learning Curve” Net effect is a reduction in the capacity until 600MM gal have been installed EtOH Plant Capacity Intro Return EtOH Installed Capacity Forward Average Online Yield Calculating Expected Plant Performance -1

27. 27 Calculating Expected Plant Performance Mature Plant Design Feed Rate R&D Max Yield Purpose is to Calculate the plant EtOH production capacity Plants are designed on Feedstock Rates Maximum of Installed Yield or 90% of R&D Yield Influenced by Overall Experience in the Industry (installed capacity) – “Learning Curve” Yield is constrained until 600MM gal have been installed EtOH Plant Capacity Return EtOH Installed Capacity Industry Capacity Billions of Gallons Experience Impact on % Capacity 600MM Gallons/y Forward Average Online Yield Calculating Expected Plant Performance -2

28. 28 Calculating Expected Plant Performance Mature Plant Design Feed Rate R&D Max Yield Purpose is to Calculate the plant EtOH production capacity Plants are designed on Feedstock Rates Maximum of Installed Yield or 90% of R&D Yield Influenced by Overall Experience in the Industry (installed capacity) – “Learning Curve” Yield is constrained until 600MM gal have been installed EtOH Plant Capacity END Return EtOH Installed Capacity Average Online Yield Calculating Expected Plant Performance -3 Theoretical – No Plant Construction - Uneconomical

29. 29 END Return Actual STELLA Module Flowsheet Calculating Expected Plant Performance -4

30. 30 Marketplace – Fuel Market Various Oil Price Projections Oil to Gasoline Conversion Utilizing various future oil price projections (AEO & User) Convert the price of oil into a price of gasoline Gasoline Price ($/gal) = Oil Price x 1.175 + 0.187 At low volumes, EtOH has a enhanced value because of its properties (e.g., octane, as an oxygenate, etc.) Prevailing Price ($/gal) = Gasoline Price x EtOH Relative Value Gasoline Price Intro Return EtOH Output Capacity Gasoline Fixed Costs EtOH to Gasoline Value Ratio Prevailing Price Forward Marketplace – Fuel Market -9

31. 31 Marketplace – Fuel Market Various Oil Price Projections Oil to Gasoline Conversion Utilizing various future oil price projections (AEO & User) Convert the price of oil into a price of gasoline Gasoline Price ($/gal) = Oil Price x 1.175 + 0.187 At low volumes, EtOH has a enhanced value for octane, as an oxygenate, etc. Prevailing Price ($/gal) = Gasoline Price x EtOH Relative Value Gasoline Price Return EtOH Output Capacity Gasoline Fixed Costs EtOH to Gasoline Value Ratio Prevailing Price Forward Marketplace – Fuel Market -10

32. 32 Marketplace – Fuel Market Various Oil Price Projections Oil to Gasoline Conversion Utilizing various future oil price projections (AEO & User) Convert the price of oil into a price of gasoline Gasoline Price ($/gal) = Oil Price x 1.175 + 0.187 At low volumes, EtOH has a enhanced value for octane, as an oxygenate, etc. Prevailing Price ($/gal) = Gasoline Price x EtOH Relative Value Gasoline Price END Return EtOH Output Capacity Gasoline Fixed Costs EtOH to Gasoline Value Ratio Prevailing Price Marketplace – Fuel Market -11

33. 33 END Return Actual STELLA Module Flowsheet Marketplace – Fuel Market -12

34. 34 Marketplace – Corn Ethanol Price Corn Price Corn Ethanol Plant Life Corn EtOH price is calculated based on specified capital, operating, and corn, and DDG costs minus the subsidy. An “Attractiveness” based on the competing prices of EtOH and gasoline is calculated The “Attractiveness” is used along with “Max growth Rate” to determine the corn EtOH growth and Total Capacity Corn EtOH production Corn EtOH Price Intro Return Mature Plant Return on Equity New Plant Capital Cost, Operating Cost & Tax Rate Prevailing Price Conversion Yield Maximum Corn EtOH Growth Rate & Ultimate Capacity DDG Price & Rate of Change Corn Ethanol Subsidy EtOH Price (Cellulosic) Corn EtOH Capacity Forward Marketplace – Corn Ethanol Price -4

35. 35 Marketplace – Corn Ethanol Price Corn Price Corn Ethanol Plant Life Corn EtOH Price Plant Capital Cost (~1.30 $/gal) & ROI (10%) Taxes (39%) Operating Costs (35¢/gal) DDG Price (29¢/gal EtOH decreasing with volume 0.006¢/MM gal) EtOH yield per bushel (2.8 to 3.0 gal/bu) EtOH Subsidy (50¢/gal until 2020) Corn Price – dynamically calculated Corn EtOH Price Return EtOH Output Capacity Mature Plant Return on Equity New Plant Capital Cost, Operating Cost & Tax Rate Prevailing Price Conversion Yield Maximum Corn EtOH Growth Rate & Ultimate Capacity DDG Price & Rate of Change Corn Ethanol Subsidy EtOH Price (Cellulosic) Corn EtOH Capacity Prevailing Price Yield Gal/bu Year 2010 2020 Forward Marketplace – Corn Ethanol Price -5

36. 36 Marketplace – Corn Ethanol Price Corn Price Corn Ethanol Plant Life Corn EtOH “Attractiveness” drive Industry Growth Function Related to the Ratio of Corn EtOH price to lower of Cellulosic EtOH or Gasoline Ratio of 1  Attractiveness is 1 Ratio 1 Corn EtOH Price Return EtOH Output Capacity Mature Plant Return on Equity New Plant Capital Cost, Operating Cost & Tax Rate Conversion Yield Maximum Corn EtOH Growth Rate & Ultimate Capacity DDG Price & Rate of Change Corn Ethanol Subsidy EtOH Price (Cellulosic) Corn EtOH Capacity Prevailing Price Corn EtOH Price Cellulosic EtOH or Gasoline Corn EtOH Plant Attractiveness Corn EtOH Price Cellulosic EtOH or Gasoline Price Forward Marketplace – Corn Ethanol Price -6

37. 37 Marketplace – Corn Ethanol Price Corn Price Corn Ethanol Plant Life Corn EtOH Capacity “Attractiveness” (1 to 2 scale) is converted into a frac growth rate Max Growth Rate is set at 20% Actual Growth Rate is FRAC x MAX Rate As long as the Industry Capacity is less than the Maximum Allowable, set at 30 billion gal/yr MAX Corn EtOH Price END Return EtOH Output Capacity Mature Plant Return on Equity New Plant Capital Cost, Operating Cost & Tax Rate Conversion Yield Maximum Corn EtOH Growth Rate & Ultimate Capacity DDG Price & Rate of Change Corn Ethanol Subsidy EtOH Price (Cellulosic) Corn EtOH Capacity Prevailing Price. Attractiveness. FRAC of MAX Growth Rate Marketplace – Corn Ethanol Price -7

38. 38 END Return Actual STELLA Module Flowsheet Marketplace – Corn Ethanol Price -8

39. 39 Industrial Capacity Detail OnLine Yield Utilizing the number of Plant online and starting-up, their feed capacity, average online yield and utilization (startup are considered running at 50%) Industry Output in gallons is Calculated Feedstock Requirements are Calculated If Feedstock Available is less than Plant Requirements EtOH is reduced to match Feedstock Total EtOH is then the Sum of Corn EtOH and Cellulosic EtOH Industry EtOH Output Cellulosic and Total END Return Corn EtOH Capacity Mature Plant Feedstock Demand Plants Online & Starting up Start-up Utilization Factor Biomass (inc Residue) Production Cellulosic EtOH Capacity Cellulosic Feedstock Demand Industrial Capacity Detail -10

40. 40 END Return Actual STELLA Module Flowsheet Industrial Capacity Detail -11

41. 41 Plant Pipeline: Track Number of Plants & Yields Given the number of new plant starts demanded, the time for design & construction and time for start-up The number of plants (demo, Pioneer, Full Scale) in each phase (D&S, Start-up, Online) are determined Utilizing a Learning Curve Logic – On-line yield is increased Accumulated Years Of Operating Experience END Return Conversion Yield Start-up Time Plants Additions Subsidized & Unsubsidized Design & Construction Time Learning Curve Logic Average Online Conversion Yield Number of Plants Online, In Start-up, In Design Plant Pipeline: Track Number of Plants & Yields -5

42. 42 END Return Actual STELLA Module Flowsheet Plant Pipeline: Track Number of Plants & Yields -6

43. 43 Plant Addition Logic Investment Attractiveness (1 to 2) is converted to a fraction (0 to 1) Market Attractiveness is a function of Current Capacity/Demand Attractiveness Frac & Market are used to adjust Max Growth Rate (25%) Smaller of Growth Rate x # Existing Plants or 30 becomes the number of new plants started per year As the industry grows to 1 billion gallons the need for Govt Subsidized Plants is eliminated Intro Return Investment Attractiveness w/o Cap. Subsidy Max New Plants Per Year Max New Plants Subsidized Maximum Growth Rate Potential EtOH Demand Number of New Plants to Build Investment Attractiveness With Cap. Subsidy Total Plants in D&S, Start-up and Online Total EtOH Output (Capacity) Forward Plant Addition Logic -20

44. 44 Plant Addition Logic END Return Investment Attractiveness w/o Cap. Subsidy Max New Plants Per Year Max New Plants Subsidized Maximum Growth Rate Potential EtOH Demand Number of New Plants to Build Investment Attractiveness With Cap. Subsidy Total Plants in D&S, Start-up and Online Total EtOH Output (Capacity) Investment Attractiveness. Investment Attractiveness Fraction. Market Attractiveness. EtOH Capacity/EtOH Demand Investment Attractiveness (1 to 2) is converted to a fraction (0 to 1) Market Attractiveness is a function of Current Capacity/Demand Attractiveness Frac & Market are used to adjust Max Growth Rate (25%) Smaller of Growth Rate x # Existing Plants or 30 becomes the number of new plants started per year As the industry grows to 1 billion gallons the need for Govt Subsidized Plants is eliminated Plant Addition Logic -21

45. 45 END Return Actual STELLA Module Flowsheet Plant Addition Logic -22

46. 46 Learning Curve The Rate of Doubling x Technology Gap x Progress Ratio (0.8) is an “S” type learning curve Technology Gap is [Max Yield – Online Yield] Learning Curve Logic is used to improve the online yield Intro Return Max Technology Yield Progress Ratio Learning Curve Logic ‘Online Yield Improvement’ Online Yield Total Plants Online Total EtOH Output (Capacity) Forward Learning Curve -7

47. 47 Learning Curve The Rate of Doubling x Technology Gap x Progress Ratio (0.8) is an “S” type learning curve Technology Gap is [Max Yield – Online Yield] Learning Curve Logic is used to improve the online yield END Return Max Technology Yield Progress Ratio Learning Curve Logic ‘Online Yield Improvement’ Online Yield Total Plants Online Total EtOH Output (Capacity) Learning Curve -8

48. 48 END Return Actual STELLA Module Flowsheet Learning Curve -9

49. 49 Investment Attractiveness Calculate the cost of Cellulosic Production, including return on investment If there is an RFS – Compare to Corn EtOH Price otherwise compare to Gasoline Price Convert ratio of prices to “Attractiveness Factor” For Govt Capital Subsidy – Appropriately lower the Capital Requirement according to the levels of money available Intro Return Cost of Production & By-Product Credits Subsidies on EtOH Production Attractiveness To Build “Factor” Cost of Capital & Taxes Conversion Yield Corn EtOH Price Forward Gasoline Price Feedstock Price Government Capital Subsidies Investment Attractiveness -15

50. 50 Investment Attractiveness Calculate the cost of Cellulosic Production, including return on investment If there is an RFS – Compare to Corn EtOH Price otherwise compare to Gasoline Price Convert ratio of prices to “Attractiveness Factor” For Govt Capital Subsidy – Appropriately lower the Capital Requirement according to the levels of money available Return Cost of Production & By-Product Credits Subsidies on EtOH Production Attractiveness To Build “Factor” Cost of Capital & Taxes Conversion Yield Corn EtOH Price Forward Gasoline Price Feedstock Price Government Capital Subsidies Cellulose EtOH Price Corn EtOH Price “Attractiveness”. “Attractiveness”. Cellulose EtOH Price Gasoline Price Investment Attractiveness -16

51. 51 Investment Attractiveness Calculate the cost of Cellulosic Production, including return on investment If there is an RFS – Compare to Corn EtOH Price otherwise compare to Gasoline Price Convert ratio of prices to “Attractiveness Factor” For Govt Capital Subsidy – Appropriately lower the Capital Requirement according to the levels of money available END Return Cost of Production & By-Product Credits Subsidies on EtOH Production Attractiveness To Build “Factor” Cost of Capital & Taxes Conversion Yield Corn EtOH Price Gasoline Price Feedstock Price Government Capital Subsidies Government Capital Subsidies Plant Size Max per Project millions Max % per Project Total Pool millions Demonstration $ 2050% $ 200 Pioneer $ 4030% $ 300 Full Scale $ 5020% $ 400 Investment Attractiveness -17

52. 52 Actual STELLA Module Flowsheet ReturnForward Investment Attractiveness -18

53. 53 Actual STELLA Module Flowsheet END Return Investment Attractiveness -19

54. 54 Corn Price Corn EtOH Capacity Max Yield Increase (bu/yr) Corn Production is calculated as the Yield x Acres Yield increases at 1%/year up to a cap of 25% over 2006 value of 160 bu/acre Demand for Whole corn is based on a continued increase in demand of 0.8%/year Demand for corn from Corn Ethanol is calculated from the Corn Ethanol Plant Capacity and Plant Yields Corn Price is determined from a relationship of price to Corn Supply over Demand Intro Return Corn EtOH Yield (gal/bu) Rate of Increase In Corn Demand Initial Corn Yield (bu/acre) Corn Acres Initial Demand for Corn Agriculture Yield Increase Corn Price Forward Corn Price -1

55. 55 Corn Price Corn EtOH Capacity Max Yield Increase (bu/yr) Corn Price is determined from a relationship of price to Corn Supply over Demand Return Corn EtOH Yield (gal/bu) Rate of Increase In Corn Demand Initial Corn Yield (bu/acre) Corn Acres Initial Demand for Corn Agriculture Yield Increase Corn Price Corn Price -2 Corn Demand for Other Uses Corn Production – Corn for EtOH Corn Price = f Corn Demand for Other Uses Corn Production – Corn for EtOH Corn Price Adder $/bu

56. 56 Corn Price -3 Actual STELLA Module Flowsheet END Return

57. After the Break, “The rest of the Story...” A Fully Function, but Version 1 of the Model Fuel Marketplace Conversion R&D Conversion Facilities Investment Feedstock Production Feedstock Cost Vehicle Dynamics Land Use