1. 1 Biofuels Market and Technology Overview 1 st Biofuels International Conference Guadalajara, Jalisco, Mexico May 7, 2008 Brad Chadwell

2. BUSINESS SENSITIVE 2 Generates $4 billion annually in global R&D Oversees 20,000 employees in 130 locations worldwide Who We Are Global enterprise –Applying science and technology to real-world problems –Managing machinery of scientific discovery and innovation –Creating commercial value by bringing new technologies to international marketplace Non-profit, charitable trust formed by Will of Gordon Battelle in 1925 BUSINESS SENSITIVE 2 12 International Locations

3. BUSINESS SENSITIVE 3 Long term Inexhaustible fusion power Capturing and sequestering CO 2 Cleaner coal plants and engines Biotech and materials processes for efficient industry Smart, efficient electricity grid High-yield, robust biofuel crops Oil shale extraction technology Net-zero energy houses Sustainable nuclear reactors and fuels Closing the nuclear fuel cycle Efficient vehicles and engines Near term The $890m energy R&D portfolio Battelle manages is first in the nation in breadth and depth in energy science and technology Abundant, affordable energy supplies More efficient energy use Protection of the environment Nano materials for affordable solar

4. 4 Biofuels in the News Green Energy Sings the Blues: Credit Crunch Hits Clean Tech, Too Wall Street Journal Global venture capital and private equity investments in clean energy were down significantly in the first quarter; U.S. ethanol investments tumbled from $1.7 billion in 1Q last year to just $311 million this yearWall Street Journal Ethanol Profits May Still be Hindered by Overcapacity, Corn Prices, Despite Government-Mandated Use Associated Press Ethanol profits remain near record lows and industry plans to increase capacity will likely continue to outpace mandated use. Associated Press Shocked, Shocked: Biofuels Are Bad, Saudis Say Wall Street Journal The list of those opposed to biofuels continues to grow, including British Prime Minister Gordon Brown, who blamed biofuels for food shortages in a letter to fellow G-8 members Wall Street Journal Studies Say Clearing Land for Biofuels Will Aid Warming Washington Post Clearing land to produce biofuels such as ethanol will do more to exacerbate global warming than using gasoline or other fossil fuels, two recent scientific studies have shown. The studies were written by a team of researchers from Princeton, Woods Hole and Iowa State as well as a team from Nature Conservancy and the University of Minnesota Washington Post

5. 5 U.S. Energy Secretary Defends Biofuels The bottom line is this: concerns about the sustainability and environmental impact of biofuels are not misplaced, but they are absolutely not a reason to ignore the tremendous promise of biofuels. They are an argument for developing them in a way that makes sense for our environment, for our food supply, for our agricultural community and for our nation's economic health. – U.S. Energy Secretary Samuel Bodman, April 18, 2008

6. 6 Energy and Fuel Costs Continue to Rise

7. 7 Energy Security Has Become a Watchword EIA forecasts that by 2030 U.S. will be importing 2/3 of its oil and nearly 25% of its natural gas Source: EIA, Annual Energy Outlook 2007, December 2006

8. 8 Conventional Feedstocks Encountering Difficulties After peaking in mid-2006, ethanol margins have slowly eroded Food vs. Fuel debates EISA Renewable Fuel Standard (RFS) mandate saturated with corn ethanol –As of January 2008, the US had total, on-line ethanol production capacity of 7.5B gallons with another 5.8B under construction –This would put total capacity in the next few years ahead of RFS mandate US ethanol development is dead until 2009, says exec after 15-bank tour – Reuters 3/26/2008

9. 9 U.S. Showing National Commitment to Biofuels Goals Cost-competitive cellulosic ethanol –Cost-competitive in the blend market by 2012 20 in 10 (from the 2007 State of the Union address) –Reduce U.S. gasoline* use by 20% by 2017 through… -5% reduction from enhanced efficiency standards (CAFÉ) -15% reduction from new Alternative Fuels Standard at 35 billion gallons/year (consistent with the current RFS) EISA (Energy Independence & Security Act) –36 billion gallons renewable fuel by 2022 -21 billion gallons advanced biofuels 30 x 30 (followed from the 2006 SOU) –Longer-term biofuels goal –Ramp up the production of biofuels to 60 billion gallons –Displace 30% of U.S. gasoline consumption* (based on 2004 use) by 2030 Source: J. Spaeth, DOE, Overview of U.S. Energy Policies, Feb 13, 2008

10. 10 Similar Requirements Across the Globe Source: Renewable Fuels Association, January 2008

11. 11 Mexicos Law for the Promotion and Development of Biofuels (LPDB) Extends Beyond Corn Biofuels defined as fuels obtained from biomass derived from organic material in the following activities: agriculture, cattle activities, forestry activities, aquaculture, algaeculture, fisheries products, households, commercial, industrial, from microorganism, enzymes, and derivatives of the foregoing that are produced by technological sustainable processes that comply with the specifications and quality norms issued by the competent authorities.

12. 12 Biomass Potential Exceeds One Billion Dry Tons Per Year

13. 13 Research Is Underway… Source: NW Biomass Business Case (PNNL) Lignocellulosic Biomass Conversion Strategies

14. 14 …And Supported by US DOE Funding

15. 15 Opportunities to Advance Technology Abound

16. 16 Diverse Feedstocks, Including Algae, Should Be Considered The high cost of algae production remains an obstacle – NREL 1998 Raceway ponds are producing high value nutraceuticals (spirulina) today Photobioreactors (PBRs) currently limited to inoculum production (due to high capital costs) Left: Commercial Photobioreactor in Germany Below: Raceway Ponds (Earthrise Farms, California, USA)

17. 17 Commercialization Valley of Death Remains Source: Ethanol Statistics, March 2008 Volume 1 Issue 1

18. 18 Battelle Energy Technology Provides a Market Facing Asset to Complement Lab S&T Assets Commercial Energy ClientsLaboratory S&T Assets Battelle Energy Technology Client Alliances / Needs S&T Solutions / Products Systems Engineering Program Management Program Management Technology Development Technology Development Product Development Product Development IP Platform Development IP Platform Development Expanding Opportunities for Societal and Commercial Impact from Energy Innovation

19. 19 Basic plant science Fuels research Battelles Bioenergy/Bioproduct Business Will Build on Lab Capabilities Feedstock handling and processing expertise End-to-end process modeling Specialized enzymes End-to-end process modeling Enzymes Fermentation processes Cellulosic Energy Center Pyrolysis and thermal-chemical processes Catalysis End-to-end process modeling Basic plant science Biomass transportation Bio-energy feedstocks Bioenergy Science Center Advanced imaging Fuels chemistry Computational modeling Chemical process engineering Chemical synthesis and application formulation Additional value can be brought to the market through integration of Battelle/National Lab capabilities A systems-engineering orientation will identify technology gaps/needs while providing value to others Opportunities exist for technology maturation/scale up for both Battelle/Lab technologies and for technologies from other sources

20. 20 Battelle Is Integrating Labs Bioenergy Capabilities for Field to Fuel Solutions Basic Biology Research Systems Biology Feedstock Assembly Conversion Processes Better crops and organisms to process them Efficient harvesting and transportation Effective processes to produce fuels Foundational understanding

21. 21 PETRONAS Renewable Energy Laboratory (REL) Battelle has entered a relationship with PETRONAS to scope, design, and develop a renewable energy laboratory (REL) in Malaysia R&D agenda for the new lab –Initially focused on biomass conversion to biofuels, biochemicals, and biopolymers –Future R&D activities to address solar power, hydrogen generation and storage, fuel cells, ocean and other areas REL predominately will be an applied R&D laboratory, with outreach for basic research to Battelle and others The new laboratory will: –Showcase state-of-the-art energy efficiency design and operations –Be modeled after leading laboratories around the world –Provide a suite of new products and technologies, initially aligned with existing PETRONAS business units New Malaysian Renewable Energy Laboratory

22. 22 Biofuels Hold Tremendous Promise for Diversifying the Energy Base The need continues to grow The significant investments being made require strategic focus and sound scientific basis Technical challenges remain, but can be overcome Advanced biofuels offer tremendous promise for helping our nation to bring about a new, cleaner, more secure and affordable energy future. – U.S. Energy Secretary Samuel Bodman, January 30, 2008