Bio-Fuels Project & Industry Introduction Dr. Dawne Martin College of Business July 25, 2012

Agenda Project Over – Review Timeline Bio-fuels Industry Drivers – Types of Bio-Mass Used Business Issues in Bio-Fuels Researching Bio-fuels – Sara Kearns, Undergraduate Library Coordinator

Identify Bio-Fuel Input June 29, 2011 Overview of the Industry July 5, 2011 Agriculture & Business Issues July 12, 2011 July 19, 2011 Engineering Issues Conclusions about the future July 20, 2011 July 25, 2011 Complete Posters Poster Presentations July 27, 2011 Bio-Fuels Project Timeline

Why Are Bio-Fuels Important?

Forecast of World Oil Production The Oil Drum, World Oil Production Forecast, May 2009,

Petroleum (oil) production peaks between not 2030 Supply won’t meet demand in 2015 Climate change on release of CO 2 Hazards of drilling, transporting & refining oil

World biofuels Production Millons Tonnes Oil Equivalent Global biofuels production stagnated, rising by just 0.7% or 10,000 barrels per day oil equivalent(b/doe), the weakest annual growth since Growth in the US (+55,000 b/doe, or 10.9%) slowed as the share of ethanol in gasoline approached the ‘blendwall’, and Brazilian output had the largest decline in our data set (-50,000 b/doe, or -15.3%) due to a poor sugar harvest

World Biofuels Production Million tonnes oil equivalent Source: BP Report on Renewable Energy,

Identify three business related problems with Bio-Fuels

Bio-Fuels Supply Chain National BioFuels Action Plan, Oct

Bio-Fuels Industry Drivers Economic - Price of oil - Cost of capital -Cost of production - Cost of production facilities - Transportation costs - Channels of distribution Technological - New technologies to increase efficiency of process - New inputs Social & Culture - Concern about the environment - Concern about global warming - Green attitudes in general Natural Resources - Land use - Co 2 uptake - Water use - Fertilizer production Political & Legal -Biofuels targets set by US -Biofuels subsidies by federal & state government - CO 2 cap & trade program

Some Examples of Business Issues Supply – Will the biomass be available at a reasonable price? Is there enough to meet production demands. Costs – Biomass inputs – Processing – Storage & Transportation Scalability – Can you scale up production enough to reduce costs and meet demand Transportation – Can you put the finished product in a pipeline?

Issues (cont.) Profitability – demand, tax incentives, penalties (need to purchase carbon credits) Marketing Accounting – How to account for variations in the cost of inputs, processes and transportation. Environmental impact? Consumer perceptions – Will consumers be adverse to using animal waste? Getting the product to the customer – Is there a way to get the product to the customer? Who will distribute the product? How?

Bio-refinery Locations Source: Renewable Fuels Association: Climate of Opportunity, 2010 Ethanol Industry Outlook.

Types of Bio-Mass Used

US Distribution of Bio-Mass Corps Source: interestingenergyfacts.blogspot.com/2008

Web Resources Sciencedaily.com Department of Energy – Renewable Fuels Association Trade and Industry Associations Alternative-energy-news.info

Project Interdisciplinary groups of 3 -4 will be assigned Each group will investigate and report on one input for bio-fuels Use internet research, industry tours and panel discussion to gather information Be sure to document (or cite) your information sources Three bio-fuel afternoon sessions to develop your poster and presentation Report will be a poster presentation on Wednesday, July 27, 1:30 – 3:30 pm

Project Outline Overview of the industry as a whole – Current products produced – Size and Growth rate of the industry in dollars and output – Driving factors in the external environment – what is affecting this industry? Economic – economic growth, interest rates, number of cars sold Social, cultural and demographic trends – environmental awareness, population growth and more affluent people in China and India requiring more energy Political & legal – restrictions on emissions, subsidies for bio-fuels or for oil and gas Technological advances and changes – changes in technology for both creating bio-fuels and for powering transportation and other uses Natural resources – oil reserves, issues with crops, feeding the world Define the bio-fuels applications for this input – How is the bio-fuel used? Automobiles? Trucks? Energy generation?

Project Outline (cont.) What are the agricultural, natural resource and sustainability implications of producing bio-fuel from this input? – Crop modifications, requirements and implications for resources and food stocks – Placement of plants relative to growing areas – Issues of water, run-off and land use What are the engineering and environmental issues associated with producing, distributing and using this product? – Engineering challenges of producing and using the bio-fuel – Special engineering requirements for each input type. – Future developments

Project Outline (cont.) What are the business considerations for producing and marketing this product? – Capital requirements – Market(s) for this product – Issues in developing channels of distribution and transportation of the product – Competitors and competitive advantage – New business opportunities What are your conclusions about the future of using your bio-mass “input” for producing bio-fuels? Will this be a good alternative to oil and gas? Is it economically viable? Will the production heavily affect food availability? Are there unintended consequences, for example, excessive water use or pollution.