ABENGOA BIOENERGY

www.abengoabioenergy.com

Abengoa Bioenergy : The Global Ethanol Company

Seville, April 2010

Javier Salgado Leirado
President & CEO

Science. Solutions. Service. 1

 ABENGOA BIOENERGY Facing the reality…

Negative trends in climate change have accelerated with industrial development

Arctic summers ice free

by 2040 study predicts
(National Geographic)

Science. Solutions. Service. 2

ABENGOA BIOENERGY Facing the reality…

The Planet is heating up - and fast

-Glaciers are melting, sea levels

are rising, cloud forests are
drying, and wildlife is
scrambling to keep pace. It's
becoming clear that humans
have caused most of the past
century's warming by releasing
heat-trapping gases as we
power our modern lives. Called
greenhouse gases, their levels
are higher now than in the last
650,000 years.
Science. Solutions. Service. 3
ABENGOA BIOENERGY …Climate Change is a fact

Stern Report

Costs of climate change were calculated at between 5% and 20% of global

domestic product. While costs of taking actions on emissions would be about 1%
of GDP.

International Energy Agency

If governments stick with their current policies, the World´s energy needs will be
more than 50% higher in 2030 than today and emissions of CO2 will jump by 57%
per cent between 2005 and 2030.

IPCC (Intergovernmental Panel on Climate Change)

It predicted a temperature rise of 3ºC within the next 100 years with catastrophic
consequences for the planet unless greenhouse gas emissions were stabilised and
then cut within the next decade.

Science. Solutions. Service. 4

ABENGOA BIOENERGY Facing the reality

The world is changing

State dominance of energy resources

(state owned companies control 80% of energy resources)

Science. Solutions. Service. 5

ABENGOA BIOENERGY …Insecurity is a fact

Using energy to drive policy

Next
oil
crisis?

Shift of resources from oil consuming to oil producing states

Science. Solutions. Service. 6

 ABENGOA BIOENERGY This is what we call the new energy paradigm

Energy Consumers Energy Producers

Convergence of
Companies Climate Change Companies
Governments Governments
and
Energy Security

End of easy Challenging demand

and cheap oil growth
Politics and economics
become more
interconnected

Mutual interdependence

Science. Solutions. Service. 7

ABENGOA BIOENERGY …We need alternatives to oil

Energy security Energy Resource nationalism & Higher public & private
prices global competition for investment in
Climate change
hike resources alternative energy

Science. Solutions. Service. 8

ABENGOA BIOENERGY And we have them…

Biofuels already represent competitive clean energy

Climate Energy
Change Security

Charting a new energy

To fight against climate
change and its
potentially catastrophic
effects
future by embracing
alternative and renewable
energy, playing as a global
actor and ending
dependence on fossil fuels

Science. Solutions. Service. 9

ABENGOA BIOENERGY Biofuels: essential player in the energy matrix

Biofuels are critical for meeting current and future fuel demand

IEA
Biofuels account for more than half of the extra fuel coming to the market from
sources outside OPEC.

Jeroen Van Der Veer ( Shell President)

• World demand is increasing and needs all kind of available fuels, including
biofuels
• The high prices of crude oil are not enough to reduce fuels demand

Christophe de Margerie (Total CEO)

It will be difficult for the World to reach an oil production of 100 barrels/day

BP
Based on announced targets and pending regulations, BP’s assessment is that
biofuels could account for between 11 and 19% of the transport fuel market by
2030. The company also thinks there is a possibility, if the industry can address
some of the land, feedstock and technology issues that exist today, for up to 30%
biofuels penetration into transportation by 2030, according to Susan Ellerbusch,
VP Global Biofuels for BP.
Science. Solutions. Service. 10
ABENGOA BIOENERGY Even so…biofuels are still controversial

Science. Solutions. Service. 11

ABENGOA BIOENERGY Current controversies on biofuels

Main Controversies

Biofuels GHG associated emissions are similar

GHG Savings
or higher than fossil fuels they substitute

The energy balance for biofuels is similar or

Energy Efficiency
worse than fossil fuel they substitute

Biofuels will mean deforestation of

Deforestation and Biodiversity
rainforest and biodiversity

Biofuels destroy the world´s aquifer

Water Consumption
reserves

Biofuels are responsible for the increase in

Food Prices
world food prices

Biofuels jeopardize food security in many

Food Security
countries

Science. Solutions. Service. 12

ABENGOA BIOENERGY GHG emissions

Biofuels GHG associated emissions are similar

The Controversy or higher than fossil fuels they substitute
GHG emmision footprint (EPA on RFS2)
90 % - Reduction vs. gasoline
• Life cycle analyses and more recent studies
performed by US DOE, A. Farrel of University
of Berkeley, Joint Research Centre (JRC) for -21%
50
the European Commission and CIEMAT, -38%
conclude that ethanol reduces significantly

GHG Emissions (000 gCO2-EQ/MMbTU)

-61%
GHG emissions in comparison with gasoline. 10

• The International Energy Agency (IEA) has Gasoline Drymill Drymill Brazilian SwitchgrassCorn stover
baseline Natural gas Biomass sugarcane Biochem Biochem
stated that biofuels, no matter they are used (30) ethanol ethanol ethanol ethanol ethanol
individually or blended with other fuels,
improve the air quality.
(70) -110%
• US Energy Bill defined “biofuels” only those
that imply a 20% GHG reduction on fossil -129%
fuels. New legislation from the European (110) Source: EPA

Source: A. Farrel
Commission coming up, consider “biofuels” g CO2 equivalent
GHG Emissions
per MJfuel
only those that reach a minimum greenhouse
Gasoline 94
gas emission saving of at least 35%.
Ethanol today 77
Cellulosic Ethanol 11

The Facts
Biofuels contribute significantly to reduce the
GHG in respect of fossil fuels
Science. Solutions. Service. 13
 ABENGOA BIOENERGY
Energy Balance
The energy balance for biofuels is similar or
The Controversy worse than fossil fuel they substitute

• US DOE, A. Farrel of University of Berkeley and CIEMAT studies show that biofuel
have in all cases a better energy balance than fossil fuels, which means that in
comparison to gasoline, ethanol saves primary and fossil energy.

• The U.S. Department of Energy study shows that ethanol provides an average net
energy gain of at least 67% in respect of the energy used in its production.

Net Fossil Inputs Net Fossil Ratio Petroleum Input

Energy Balance MJfuel produced MJpetroleum
MJfossil needed
for each MJfossil needed for each
for each MJfuel
input MJfuel
Gasoline 1,19 0,84 1,10
Ethanol today 0,77 1,30 0,04
Cellulosic Ethanol 0,10 10,0 0,08
Source: A. Farrel

Source:DOE

The Facts Biofuels save more energy than fossil fuels

Science. Solutions. Service. 14

 ABENGOA BIOENERGY
Deforestation and Biodiversity
Biofuels will mean destructing rainforest and
The Controversy biodiversity

Despite increased demand, the land dedicated to grain production globally has actually
fallen steadily since the early 1980s. From 2008 to 2009 alone, the global cropland area
for grain dropped nearly 9 million acres as a result of significant increases in productivity
per unit of land. In the US, average corn yields have increased 72 bu per acre in 1970 to
165 bu in 2009 (130%)

90% of the incremental

agricultural production in the
world for the oncoming years
will come from existing crop
2009 = 164.9 bu/acre land through yield increases and
agricultural infrastructure
investments.
Source: Monsanto

The Facts
Bioethanol targets will be reached without
destroying rainforest and biodiversity
Science. Solutions. Service. 15
 ABENGOA BIOENERGY
Deforestation and Biodiversity (2)

Brazil has managed to substitute 50% of gasoline consumption just with 1% of total
land used for ethanol sugar cane.

IPCC already warned in 2004 of

deforestation issues in Brazil, showing
that this in a old problem that can not be
blamed on bioethanol (nor even indirectly
because of crops displacements). Raw
material demand for bioethanol
production has barely direct influence in
rainforest deforestation in Brazil.
Moreover, Amazon Rainforest don´t
comply with agronomics conditions to
produce bioethanol

New legislations have proposed that no bioethanol would count towards a members state´s usage
target if it does not meet strict sustainability criteria. This would exclude bioethanol coming from
land with a high biodiverstity value or land with high carbon stocks.

The Facts
Bioethanol targets will be reached without
destroying rainforest and biodiversity
Science. Solutions. Service. 16
 ABENGOA BIOENERGY
Water Consumption

The Controversy Biofuels destroy the world´s aquifer reserves

Virtual Water Content of Farm Products (M liters / tonne)

20 Yield response and water requirements in irrigated and
non irrigated agriculture :
15
Source: UNESCO

10

0
on
ce
ze

at

e
y

r
rk

se

he

e
rle

Ri
he

Po
ai

Be
ee

tt

ff
at
M

Ba

Co

Co
W

Ch

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Source: UNESCO
9 It takes 3 liters of water to produce 1 liter
of ethanol
9 It takes 94 liters of water to proccess crude
oil into 1 liter of gasoline
9 It takes 560 liters to produce a Sunday
newspaper
9 It takes 8000 liters for a leather shoes…
EU, US and Brazil have a negative evolution in
their irrigation balance in the last 10 years. Thanks
The Facts to the biotechnology we will reach the same yield
with less water requirements.

Science. Solutions. Service. 17

 ABENGOA BIOENERGY
Food Prices
Biofuels are responsible for the increase in
The Controversy world food prices

Cereal consumption 2007-2009 (Mtn)

9 There are other factors behind : growing demand
2007 2008
51 71
in developing countries, dietary changes, commodity
funds, energy prices, exchange rates…
2% 3%
2,149 2,284 9 World cereals consumption for biofuels account
2009 for only 2-4% on World cereal 2007-2009
83

4% 9Need to take into account that aprox. 30% of

bioethanol cereal consumption is reintegrated in the
2,238 food chain for animal consumption through DGS
Sources: USDA, FO LIchts, RFA, eBIO. (Million Metric tons)

The overall improvement in the global supply and demand balance of cereals is underscored
by the ratio of world cereal stocks to utilization, an important indicator for global food
security, which is expected to remain unchanged from the previous season at an above-
average level of 23%,“ FAO

Bioethanol, in the worst case scenario, has a much more

The Facts limited impact in terms of significance and time than
argued

Science. Solutions. Service. 18

ABENGOA BIOENERGY
Food Prices (2)

Tra
Lab

De
Far

Ad
nsp

pre
ou

Pac
m

ver

Int Rent
ort
r
Va

cia

Rep sts 3
Ene

Pro
kag

O th
cos

ere 4%
t

Tax 2%
ati

i
lue

s
tio
ing
fits
rgy

air %
ing
t

ers
on
s3

es
n3
19%

s
4%
4%
4%
4%
8%

8%

4%
3%
%
Farm Inputs =
19% of Food
Dollar
Energy Inputs =
over 60% of
Food Dollar
Sources: USDA-ERS; Urbanchuk,
“The Relative Impact of Corn and
Energy Prices in the Grocery Aisle.
2007

A $1 per gallon increase in the price of gasoline has three times the impact on retail food prices as
a $1 per bushel increase in corn prices. J.M. Urbachunk, LECG

The Facts Energy prices having the heavier impact….

Science. Solutions. Service. 19
 ABENGOA BIOENERGY
Food Prices (3)
Biofuels are responsible for the increase in world
The Controversy food prices
$/ton $/bbl
350 80
High crude prices are causing a severe price increase in 300
Cost of fertilizer ($/ton) 70
fertilizers. This is limiting and will limit the World 250
Oil price ($/bbl) 60
response for achieving higher crop outputs, mainly in 200
50
developing countries. 40
150
30
100
20
50 10
0 0
1998 2000 2002 2004 2006 2007
Source: Financial Times, Bloomberg, EIA

Bullish fertilizers prices having big impact in food prices

The Facts and jeopardizing yield increases in developing countries
Science. Solutions. Service. 20
ABENGOA BIOENERGY
Food Prices (4)
Biofuels are responsible for the increase in world
The Controversy food prices
Change in World Wheat and Corn
World Population is expected Consumption (2005- 2007)
to increase in more than
10%
3.000 million people by 2050 16%
from current seen figures.
This increase will take place
mainly in China and India,
which for instance, have the 74%
Rest World Source: USDA
greater impact on cereal
China
world consumption trends.
India

Emerging economies are not

Source: Biofuels Digest

only eating more but more

meat. This exacerbates grain
consumption as it can take up
to 9 Kg of grain to produce 1
Kg of meat.

World Population growth and dietary changes make the

The Facts real challenge
Science. Solutions. Service. 21
ABENGOA BIOENERGY
Food Prices (5)
Biofuels are responsible for the increase in world
The Controversy food prices

1. US corn production has left

plenty for people, livestock Grain for US ethanol, China Meat, vs. US corn
and for ethanol. Production (1995-2007) (mn t grain)
400
Source: Biofuels Digest

2. Chinese meat consumption 350

is still 45% less than average 300
1995
consumption in US. 2007
250

3. If the Chinese people had 200

consumed the same amount of 150

meat, per person, in 2007 as in 100
1995, there would have been
50
enough grain left over to
support 927 million hungry 0
people with enough grain for US Ethanol China Meat US corn Production

an entire year.

World Population growth and dietary changes make the

The Facts real challenge

Science. Solutions. Service. 22

 ABENGOA BIOENERGY
Food Security
The Controversy Biofuels jeopardize food security in many countries

1.- Price increases can mean good news for the world´s poorest
as it is more cost-effective to import food aid than to produce it
locally.

2.- As FAO admits, there are risks but biofuels can contribute to
increase energy and food security in developing countries.

3.- There are large portions of unutilized arable land and

substantial potential for yield improvement in many countries.
(bu/acre) US Brazil ARS Mex EU27 India
3 year avg yield per acre 157 59 110 52 105 35

High grain prices will represent a great opportunity for

The Facts rural economies in developing countries
Science. Solutions. Service. 23
ABENGOA BIOENERGY
Food Security (2)

The Controversy Biofuels jeopardize Food Security in many

countries

Historically, in the
cereal clasic supply /
demand situation,
when production falls
below demand, prices
are forced up
incentiving future
production increases

Source: US Departament
of Agriculture

2500 US Corn Exports (MM bu)

2000 Despite high increase in

domestic uses of corn for
1500
ethanol use, production in US
1000 has managed to supply both
500 domestic market and exports,
0 thus not affecting food needs
03/04 04/05 05/06 06/07 07/08 08/09 09/10 in developing countries
Source: USDA, National Corn Growers Association

Science. Solutions. Service. 24

ABENGOA BIOENERGY
Food Security (3)

The Controversy Biofuels jeopardize Food Security in many

countries

From the early 90´s both the US and EU have been discouraging crop
production by:

- Restricting the area used for food crops

- Lowering support prices
- Imposing stricter standards

We are now suffering the outcome of more than two decades of

agricultural policies which are totally devoid of economic logic.

Some clear erroneous

measures, i.e.:
- Tariffs and subsidies
have distorted Source: FAO
international markets
- EU has changed from The Facts
having strategic
reserves to a cero stock
policy World Trade Policies are responsible
- Spending on farming of current food shortages; they have
as a share of total been distorting international markets
public spending in and preventing development of poor
developing countries
fell by half between countries for decades. Now we are
1980 and 2004 paying the price
Science. Solutions. Service. 25
ABENGOA BIOENERGY
Food Security (4)

2nd Biofuels Generation

At $70 to $80 a
barrel, the

Source: Mckinsey & Company

replacement of up
to 50% of all
transportation fuel
will be
economically
viable

2nd generation will be possible only through 1st generation cash flows

Science. Solutions. Service. 26

 ABENGOA BIOENERGY
Food Security (5)
World Meat Consumption in Mtn World Oil Consumption in Mb/d

244
beef 97
228 91
chicken 62 84
202
pig
58
53 70
67
55

94 103 112

2005 2010 2015 2005 2010 2015

The World needs solutions for both Food & Energy

Abengoa Bioenergy is both a renewable ethanol producer and a protein

producer, thus Abengoa Bioenergy is providing sustainable solutions to
both the Food problem and the Energy problem
Science. Solutions. Service. 27