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Advanced Biofuels Conference 2017

Gothenburg, Sweden

May 18, 2017

Europe’s Largest Biorefinery: Policy and Expansion

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Ethanol Europe

• Ownership

• ILUC

• Technology Bias

• Core Focus

• Current Production / Pannonia Ethanol Zrt.

• Value to EU

An Entrepreneurial and Outspoken European Bioeconomy Investor

INTRO

one family / management

never denied

none

EU’s agriculture potential

500,000,000 liters fuel and 400,000 tons feeds

climate mitigation at scale, innovation, jobs, growth & real progress

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EU biofuels regulators fooling around POLICY

ANALYSIS

• Pannonia Ethanol Mohacs Zrt. (2011-2012): 200 million liter corn ethanol --- cancelled

• Pelagonia Ethanol d.o.o. (2013-2015): 100 million liter energy crop cellulosic ethanol --- suspended

• Regulatory mismanagement has lost the EU 100s of thousands of jobs and billions in investment. The first lost decade is coming to a close. The second lost decade is already assured.

Fool me twice . . .

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Fool’s Paradise POLICY

ANALYSIS

• 64% greenhouse gas savings over fossil oil and fast improving

• No adverse impacts on land or food: Made from small fraction of huge & growing EU starch output. EU starch growth 500% greater than ethanol growth, even under most favourable ethanol policy. That’s maths, not slogan.

• Provides farm demand, jobs and local value-add plus EU energy security, investment and innovation (as per 1st par of RED2)

• Yet EU “cap & phase-out” prohibits Member States from counting it towards their climate progress

• Member States should stop Brussels regulatory mismanagement

EU grain ethanol: effective climate solution, no adverse side effects

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Good Policy POLICY

ANALYSIS

• Use metric of carbon intensity

• Inspire massive (not niche) investment

• Mobilise and reinvigorate farmers & foresters

• Embrace best available science (i.e. only real waste; apply ILUC in scientific sense, not NGO sense; exclude JRC and DG Energy ideologues fooling around with biased Annex V-IX lists instead of developing proper performance metrics)

• Work for Europe

• Focus on fuel standards

• Keep oil in the ground

An intelligent EU-wide transport decarbonisation policy

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Bad Policy POLICY

ANALYSIS

• “First-generation biofuels were a zero-sum game. Fuel production affected the global food supply, as well as land use”

• “Advanced biofuels are the only option to significantly reduce emissions from the transport sector with the existing fleet”

Statements such as these are false (indeed they are lies)

• 2G undermines 1G and hurts itself by sloganeering. 1G could react.

• Fossil oil only winner when 2G focus is replacing 1G (double counting to 2020 and cannibalism thereafter). 2G becomes irrelevant this way

Policy by slogans thrives where science and evidence are not applied

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Flagship Investment POLICY

RESPONSE

• 2009 investment decision: Pannonia Ethanol Zrt.

• New US and Irish investors enter a sector in which all existing EU biofuels investor had given up

• 2012: 207 million liters, under budget, ahead of schedule, flawless commissioning

• 2013: corn oil and 280 million liters

• 2014: expansion to 450 million liters (using “2G” earmarked funds)

• 2020- probably much more than 500 million liters and 90% GHG savings. Fuel ethanol likely

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2015 Bioeconomy Pivot POLICY

RESPONSE

• 1G regulatory Barriers to Entry are the main policy advantage, not the mythical mandates

• EU slogans, jargon and labelling (cascading use, etc) ensure failed policy

• EU grant programs demoralize the meritorious and structurally ensure irrelevance to decarbonisation objectives

• Any energy source that can be held in your hand has lots of uses outside energy sector

• A large ethanol plant is not a result. It’s a platform

EU Institutional Failures in the Bioeconomy Create Opportunities

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2015 - 2017 Equity Investments POLICY

RESPONSE

• Novel “nano” oil feed. Could have been zero ILUC biodiesel

• Carbon capture and use to create vegetable oils. Could have been advanced biofuels

• Prebiotics. largest production site by 2018

• Pure cellulose commissioned by 2018. Could have supplied EU’s 2nd largest cellulosic ethanol plant

• Novel grain fractionation commissioned by 2018

• No technologies from among Commission favourites; Commission turned down 100+ invites to visit Pannonia but has in writing opined that our investments lack business sense and are not feasible

Anything but biofuels . . .

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Take Aways CONCLUSIONS

• EU is laughing stock of biofuel world

• Blame lies with EU Commission, driven by ill-informed ideologues

• One constant with Brussels biofuels regulators is that they are in favour of what could be tomorrow and against what works today

• In biofuels, scale matters; small investments (or markets) are irrelevant to the climate and make asset evolution improbable

• Forestry and grain based biorefineries already exist, so the (limited) future of liquid biofuels successes in Europe rests primarily with grain and wood based biorefineries

History Matters

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Advanced Biofuels Conference 2017

Gothenberg, Sweden

May 18, 2017

Annex: Facts for the Ideologues

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MYTHS

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MYTHS

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MYTHS

2

November 3rd, 2015

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Water MYTHS

0

500

1000

1500

2000

2500

3000

Urban Legend Actual Use Actual Impact

Ethanol Production Water Use per Liter

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Pannonia SOCIAL AND

ENVIRONMENTAL

FACTS

• supports more than 2000 jobs

• ethanol produced now has 67% GHG savings, up from 49% at inception, and likely to reach 90% savings by the end of the decade

Pannonia Ethanol is the largest bioeconomy project in Europe to be completed under the World Bank’s Social and Environmental Performance Standards

Carbon Abatement Cost: negative €2/ton

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Thank you for your attention

Eric Sievers

esievers@eerl.com

+36 30 283 8136

mailto:esievers@eerl.com