07/26/2010 National Petroleum Council Future Transportation Fuels Study - Biofuels Subgroup Framing Questions 1

07/26/ Biofuels Sub-Task Group – Draft Framing Questions Draft Framing Questions : 1.How will we enhance the acceptability of biofuels? 2.Are there new possible synergies between fuels types 3.How to incentivize biofuels across all elements of the value chain e.g. from vehicle design, through feedstock provision, and fuel production to end use 4.Is the fuel type more efficiently utilized in a regional or national model 5.How to address forward and backward compatibility of biofuels with engine types 6.What biofuels volumes can be supply at what cost and by when? 7.What is our defined base case and basis for selection? 8.How will biofuels meet actual demand by fuel/user type? 9.How do we meet current projections of demand by 2030? i.What are the alternatives possible? ii.Which biofuels/propulsion system combinations are capable of meeting commercially and materially significant volume? 10.What constitutes a commercially and materially significant volume? 11.What are the characteristics of each biofuel (using the agreed fuel characteristics measures)? 12.How do we ensure eco-evolution of biofuels wit next generation engine design? DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

07/26/2010 Biofuels sub groups 3

07/26/ Biofuels Framing – Source Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Initial view is US sourced biomass only Need awareness of total biomass availability versus global food supply/demand position Land application / utilization for fuel vs food or flexible food-fuel biomass Availability of viable acreage Optimization of plant scale / infrastructure relative to raw material source Sourcing includes collection of raw material Feedstock flexibility / versatility ­e.g. co-location for biomass / coal production, co-generation of power (security / reliability of supply / production, for droughts etc) Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Is edible biomass in scope (vs only non-edible biomass)? Use of internationally sourced sugarcane for US processing? Use of US food based materials relative to global food supply/demand position? Cost of emissions Framing Questions: What is the economic radius for biomass supply to processing / conversion infrastructure? Is there a relevance threshold e.g. must be able to meet x% of supply by 2030/2050 Relevant Study Materials 90 billion gallon study (GM/Sandia) 1 billion tonne DOE Study DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

07/26/ Biofuels Framing – Raw Material Transport Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Clarification: This ‘transport’ element covers raw materialtransport in the value chain Cost to transport Energy required to transport Cost to value ratio for end product (i.e. economic / environmentally appropriate radius to harvest –transport-process – distribute Practical operating transport radius for infrastructure Implications of above on scale of infrastructure Storage (for raw feedstock to deliver system reliability / ratability) ­Physical availability of storage ­Cost ­Shelf life of feedstock Regional / seasonal variability of feedstock and implications for product quality / reliability Is a ‘spoke and hub’ or more local /regional model appropriate versus a broader ‘final fuel’ model (this connects to the question on scale and ‘practical radius’) Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): System and Value Chain Component Efficiencies – is this a separate / overarching theme e.g. ­Cost to value ratio ­Radius of transportation ­Cost of emissions Framing Questions:.Can we create a biofuels business model that is sustainable for 30+ years (possible critical success factor) Relevant Study Materials. DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

07/26/ Biofuels Framing – Process Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Next Phase of Study – thresholds / barriers relevant to differentiate / assess process options Process robustness e.g. how robust from year to year e.g process reliability, feedstock variability, feedstock composition Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Should we use a boundary condition or study threshold based on efficiency of process Cost is not seen as a boundary as it may be too constraining at this phase when the timeframe extends to 2050 Are any process technologies out of bounds at this phase? What is the rationale? Are process and conversion separate parts of the value chain or combined (for this study) Framing Questions:.Need to include some Technology related questions Relevant Study Materials. DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

07/26/ Biofuels Framing – Conversion Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Energy yield vs. energy utilized to produce i.e. the Fuel Value Chain energy balance What flexibility is possible on the conversion process e.g. for supply quality or product quality and to flex between diesel and ethanol production Assume no boundaries to technology in the data gathering/due diligence of the first phase of the study Can methanol be a viable fuel for direct use (it offers the most simple conversion process from syngas) Bio fuels to syngas – implications of policy e.g. recent decision by China on coal to syngas Assessment of state of technology development and future state Assessment of potential for solutions in the next 10 years Identify co-processing opportunities / needs Assessment of waste product implications as well as desired products from any process Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?):. Framing Questions: Should we set a threshold expectation on energy ration e.g. maximum unit energy use/unit energy generation ratio.Need to include some Technology related questions Relevant Study Materials Auto-Oil study of 20 years ago DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

07/26/ Biofuels Framing – Distribution Questions / Boundaries Boundary (in frame or scope for Biofuels Study): Differences in current fuels vs. projected fuels mix e.g. E20, etc Implications for infrastructure and full cycle cost perspective Regulatory implications and successes e.g. biofuels in Brazil, possibly CNG in Colombia, possibly diesel in Europe Options for blending of flex fuel mix i.e. if ethanol is a larger component does the ethanol content require the infrastructure to be re-assessed as we move from gas with ethanol to ethanol with some gas What are the step-out opportunities e.g. biomass to hydrogen Who has jurisdiction on distribution networks What is the right flex fuel mix Who pays for the changes needed to meet new specs (may be a question for later).e.g. infrastructure changes What is the mobility model versus a more hub and spoke assumtpion Will we use existing infrastructure or build a parallel infrastructure for new biofuels What are the fuel characteristics (note: this will help define the possibility of cross regional distribution) What is the relevant timeline for developing vehicles and infrastructure Who will have jurisdiction on pipelines Assessment of ‘drop-in’ fuels implications Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Are we free to consider meeting US demand needs with global biofuel supply e.g. imported ethanol Framing Questions:. Relevant Study Materials EPA Studies Auto Oil Study ARPA –E studies DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only

07/26/ Biofuels Framing – Demand Questions / Boundaries Boundary (in frame or scope for Biofuels Study): How much biofuels demand is expected How much biofuels supply can be achieved Fuel product demand split e.g. mogas vs diesel etc Implications of fuels spoilt on biofuels needs/role e.g. if US stays gasoline long will ethanol solve any supply issues Separate demand into Freight and Passenger and establish economic targets for production Clarify in meeting demand what portion comes from non-US sources of finished product Establish a common description for the fuels being discussed Task for Next Phase – define the volume and charateristics (in terms of economics/environmental/security etc) for each fuel considered in the fuel mix Boundary Issues for Further Discussion (Is it in or out of Biofuels Study boundary?): Describe demand by regions – which regions?. Framing Questions: Need a model for fuel demand by type over time What assessment should be made I offsetting demand vs growing supply What are the predictions for vehicular advancement in the time frame under study What is the economic window (i.e. the affordable / realistic cost to produce Relevant Study Materials. DRAFT – DO NOT CITE OR QUOTE For NPC Study Discussion Only