A Potentially Valuable Component of Texas Bioenergy Projects Tobacco Biomass A Potentially Valuable Component of Texas Bioenergy Projects Great Spirit Bioenergy Partners Bill Drake bdrake@ktc.com

Biomass Tobacco Profile for more info: bdrake@ktc.com 50-70 Tons/Acre – the most conservative case NCSU range was low of 20 tons to high of 70 tons/acre 100+ tons/acre – reasonable expectation for Texas Given Texas growing season, hours of sunlight, etc Use of higher yield tobacco varieties 100 tons/acre yields 10 – 20+ tons dry weight** 2.5 -5.0 tons sugars - nearly 100% are ideal sugars for biogas & ethanol Standard biofuel conversion formulas apply 1-2 tons starches Conversion to biofuel same as corn 4-8 tons cellulose with very favorable biofuel properties 1-4 tons F1 & F2 proteins with complete amino acid profile ** Tobacco variety, growing conditions, harvesting strategy are all important factors

Basic Tobacco Biofuel Calculations for more info: bdrake@ktc.com From 100 MT (one acre) of tobacco biomass 10-20% dry weight, or 10-20 tons total breaks out to: @ 5.5 MT sugar, @ 2.5 MT starch, @ 8 MT cellulose Yields are approximate because of variables like tobacco variety Sugars an ideal profile for fermentation 90% of total cellulose (7.2 MT) is hemicellulose – lignin is 1.5% Sugar to ethanol – conventional conversion formula (DOE) (11,000) X (.47) X (.97) / (6.6) = 760 gallons Starch to ethanol – conventional conversion formula (DOE) (5290) X (.90) X (1.11) X (.47) X (.97)/6.6 = 365 gallons ethanol So we are at 1125 gallons before we also convert the cellulose to biofuel Hemicellulose to ethanol (DOE estimates) Estimate @100 gallons/ton (using reference data for cellulose from corn stalks) = 720 gallons/acre Probably more because tobacco cellulose is 90% hemicellulose and Corn cellulose is only 28% hemicellulose Also tobacco lignin is only 1.5% Provisional total of @ 1845 gallons/acre for 100 tons/acre of tobacco biomass Even at 50 tons/acre we get @920 gallons/acre

Compared With Cellulosic Crops For Biofuel for more info: bdrake@ktc Compared With Cellulosic Crops For Biofuel for more info: bdrake@ktc.com High fermentable cellulose yields/acre 100 tons fresh tobacco biomass per acre yields 4-8 tons of dry weight cellulose, characterized by: The highest proportion of hemicellulose of any major cellulosic feedstock crop, and The lowest % lignin of any major cellulosic feedstock crop Corn Stover 35% Tot. Cellulose 28% hemicellulose 16-21% Lignin Switchgrass 44-51% Tot. Cellulose 42-50% hemicellulose 13-20% Lignin Sugar Cane 32-48% Tot. Cellulose 19-24% hemicellulose 23-32% Lignin Tobacco 40% Tot. Cellulose 90% hemicellulose 1.5% Lignin

Biofuel Feedstock Potential for more info: bdrake@ktc.com Tobacco has far greater environmental range Tobacco has more economic byproducts Tobacco has more flexible crop management requirements Tobacco doesn’t displace food crops Can be produced on marginal land Uses far less land per million gallons of fuel output Compare: 50,000,000 gallon/year ethanol plant Requires 178,000 acres of corn @ 100 Bushels/Acre At $4.50/bushel feedstock cost is $80 million 50 Million Gallon plant would require 50,000 acres of biomass tobacco @ 100 tons/acre At $10/ton for biomass tobacco feedstock cost is $50 million Even at 50 Tons/acre biomass tobacco would only need 100,000 acres to supply a 50 million gallon plant Processing and operating costs significantly less than corn, grain, cane etc Perhaps possible to pay growers in fuel credits, not cash Co-locate with tobacco-based biogas electricity, biodiesel, & co-products processing plants for added revenues & profit centers

Dairy Farm Biogas-Electricity Installation www.biogas-nord.com

Tobacco Biogas Electricity Basics – First Look At This Data 1 MW electricity generation Requires 5681 m3 CH4 per day Proven yield = 550M3/day of total biogas per ton of fresh tobacco This from a Virginia/Burley mix; other varieties likely higher yield 5681 m3 of methane = 550 m3 biogas/ton MOS tobacco * 55% (methane content) * 18% (solid matter) * 92 % (biodegradability) = 114 wet tons fresh tobacco/day Requires @ 400 acres/year at @ 100 tons/acre Ideal substrate composition = 70% tobacco/30% manure 2 MW = 56,000 wet tons/year or 560 acres at 100 tons/acre Less than 2X acreage of a 1MW plant due to engine efficiencies Larger generator engine, more KW per M3 of biogas 4 MW = 110,000 wet tons/year or 1100 acres at 100 tons/acre Less than 4X acreage of a 1 MW plant due to engine efficiencies Relatively small acreage requirement allows rotation from year to year even in very small communities

Biogas - Unlocking Value from Waste Tobacco Biomass xxxxxxxxxxxxxxxxxxxx 550 M3/Ton

Potential Model for Rural Texas Biogas Electric Low cost decentralized uninterruptible electricity production Existing Rural Electric & Agricultural Coops become electric power producers For local consumption and as export energy product Farmers provide biomass for electricity credits and/or cash No new grid connections needed Unlike wind-generated electricity Sell excess into existing grid for urban users Operate one plant for power, one plant for revenue? Redundancy If biomass tobacco supply is interrupted for any reason the biogas electricity plant can operate on 100% manure Reduced capital & operating costs over conventional electric power generation Utilize existing energy distribution infrastructure Shortened pay-back period compared with conventional power generation options Power generation independent from rising fuel costs

Complete Rural Energy Solution? Community Energy Cooperative Community owned co-located cooperative biogas electric, small-scale ethanol, biodiesel, and co-product processing plants 1100 acres biomass tobacco @ 100 tons/acre for single 4 MW biogas electricity plant All capital and operating costs established 8 months to turnkey electricity Operates above breakeven selling power to coop members at $0.12/Kwh after paying growers with electricity credits Not calculating tax credits, incentives, grants etc 5000 acres biomass tobacco @ 100 tons/acre @ 1500 gallons/acre = 7.5 million gallons/year (7500 vehicles @ 20,000 miles/year) Capital requirements & operating costs TBD Ethanol output cost may be > $1/gallon Also provides “insurance” for biogas electric facility Role of biodiesel needs to be studied – synergies are clear. Co-products would add to ‘community energy coop’ bottom line Could pay for conversion of all vehicles to use E-85 Can bioenergy revenues replace property taxes as a revenue source for government services in small communities?