INVESTMENT IN THE BIOFUELS SECTOR

BIOFUELS IN COLOMBIA

In 2005, the National Government initiated policies oriented towards establishing incentives for the production and use of biofuels in the country, with the goal of promoting a productive development alternative for the formal use of the soil, contributing to generating jobs, diversifying the offering of energy options in the country and converting Colombia into an exporter of biofuels.

GROWTH, CONFIDENCE AND OPPORTUNITIES TO INVEST

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RATE OF RETURN FOR ETHANOL PRODUCTION (LT/HA/YEAR)

ETHANOL PRODUCTION 2005-2012 (THOUSANDS OF LITERS)

BIODIESEL PRODUCTION 2009-2012 (TONS)

RATE OF RETURN FOR BIODIESEL PRODUCTION (LT/HA/YEAR)

A continuous increase in the production of biofuels will create a market for surpluses; Colombia will be able to supply the needs of other countries where internal production is not sufficient and where the need for its use is growing.

Although the international trade in biofuels is not large and has exchange barriers due to the existence of production subsidies, it is expected that in the medium term it will grow, since many countries will not be able to meet internal demand with domestic production.

2005 2006 2007 2008 2009 20092010 20102011 20112012

2012

The production of biodiesel and ethanol in Colombia has increased over recent years thanks to the obligatory mixing policy. In 2012, 368 million liters of ethanol and 489 thousand tons of biodiesel were produced.

Source: Fedebiocombustibles

27,034

265,684 255,584

327,705 337,398369,722

271,773 291,286

169,411

337,713443,037

489,991

SUGAR CANE

BEETS

YUCCA

SWEET SORGHUM

CORN 3,200

4,400

4,500

5,000

9,000

0 5,000 10,000

PALM OIL

COCONUT

CASTOR

AVOCADO

JATROPHA

COLZA

PEANUT

SUNFLOWER

SOY

5,5504,200

2,600

2,4601,559

1,100990

890 840

0 2,000 4,000 6,000

MIXING POLICY: Diesel and gasoline sold in Colombia must be mixed with biodiesel and ethanol. The amount of biofuels in the mix would tend to increase over the years, depending on the levels of supply and other variables. (Current mix: E8, B8 - B10).- Fedecombustibles-2013). The mixing policy (map) could change as result of an inter-sectoral biofuels mandate.

ESTABLISHMENT OF PRICES: The Ministry of Mines and Energy establishes the prices for biodiesel and ethanol every month. This price is one of the highest in the world. (Ministry of Mines and Energy).

Based on the “Life Cycle Analysis, 2012”, the ethanol produced in Colombia reduces GHG emissions by 74%, and biodiesel reduces these levels by 83%. (EMPA and Universidad Pontificia Bolivariana).

Palm oil and sugar cane used in Colombia for creating biofuels have been proven to have higher yield than other raw materials used around the world.

Once the domestic demand for biofuels is covered, any surplus can be exported.

Source: National Federation of Biofuels

BIOFUELS IN COLOMBIA

E0 - B0

E8 - B0

E8 - B8

E8 - B10

INVESTMENT OPPORTUNITIES

BUSINESS NETWORK

Five ethanol plants (in production): Incauca, Ingenio Providencia, Manuelita (Palmira), Manuelita (Candelaria), Ingenio Risaralda and GPC.

The growing production of palm oil and sugar cane requires the construction of new bio-refineries, biomass plants and development of transesterification, which allow the transformation of sugar cane and oil palm into biodiesel.

Colombian soil can be used for planting crops aimed at biofuel production (following a soil study).

Exports of biofuels to the United States and the European Union under free trade agreements are seen both as a challenge and an enormous opportunity.

It is expected that the future demand for biofuels in Colombia will be greater in the next few years, to the extent that the mixing policies are increased. As a consequence, local demand will have to be covered by increasing the production of ethanol and biodiesel.

Five biodiesel plants (in production): Oleoflores, Biocombustibles Sostenibles del Caribe, BioD, Ecodiesel de Colombia and Aceites Manuelita.

Thirteen sugar mills and more than 50 palm oil extraction plants.

5 5 13

BUSINESS NETWORK

BIODIESEL PLANT

ETHANOL PLANT

ETHANOL/BIODIESEL PLANTS

Source: Fedebiocombustibles.

ETHANOL

REGION COMPANY CAPACITY (L/DAY)

Miranda, Cauca Incauca 350.000

Palmira, Valle Ingenio Providencia 300.000

Palmira, Valle Manuelita 250.000

Candelaria, Valle Manuelita 250.000

La Virginia, Risaralda Ingenio Risaralda 100.000

Pto López, Meta GPC* 25.000

TOTAL 1.275.000

BIODIESEL

REGION COMPANY CAPACITY (T/YEAR)

Codazzi, Norte Oleoflores 70.000

Santa Marta, Norte Biocombustibles Sostenibles

100.000

Facatativá, Oeste Bio B 115.000

B/bermeja, Central Ecodiesel de Colombia 115.000

San Carlos de Guaroa,Meta

Aceites Manuelita 120.000

TOTAL GPC* 520.000

LARGE FOREIGN COMPANIES HAVE CHOSEN COLOMBIA AS A PLACE TO INVEST

MERHAV (ISR AEL):has invested in the development of an ethanol production project in the northern part of the country.

M I T S U B I S H I C O R P O R A T I O N ( J A P A N )formalized its entrance into fuel alcohol production in Colombia via the purchase of BioOriente’s share in BioEnergy, a company that is building the largest fuel ethanol distillery in the country.

PROGRAM FOR PRODUCTIVE TRANSFORMATION: public-private alliance that promotes productivity and competitiveness in sectors with high export potential, by means of more efficient coordination between the public and private sectors.

FEDEBIOCOMBUSTIBLES: the National Federation of Biofuels is a non-profit organization that gathers together leading entities willing to work in the service of the Nation for converting the biofuels sector into means of leveraging wealth in regions where industrial centers are established.

PROCOLOMBIA:the entity in charge of promoting international tourism, foreign investment and non-traditional exports in Colombia.

INTER-SECTORAL COMMISSION FOR BIOFUELS: responsible for biofuel policy management. It is made up of the Ministry of Agriculture and Rural Development, the Ministry of Mines and Energy, the Ministry of the Environment and Sustainable Development, the Ministry of Transportation, the Ministry of Commerce, Industry and Tourism, and the National Department of Planning.

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