Maintaining the US' Green Chemistry Leadership

Maintaining the US’ Green Chemistry Leadership

A View from the Frontlines

Marc Verbruggen

NatureWorks LLC www.natureworksllc.com

• World’s leading bio-polymer player − 150,000 ton PLA plant in Blair, NE − Significant manufacturing know-how and an extensive IP position • Jointly owned by Cargill and PTTGC

• Proprietary portfolio of Ingeo bio- polymers & intermediates

• Ingeo - competitive on a cost and performance basis with traditional plastics (PS, PET)

• Superior environmental characteristics − Lower carbon footprint , low fossil energy − Additional end-of-life options

• Established global market channels − Over 100,000 ton in annual sales volume − Commercial partnerships with global brands

Properties Price Preferences

• Broad and Sugars vs oil  Lower carbon adjustable physical footprint and energy property set Favorable yields, usage

Economies of scale  Renewable feedstock Feedstock hedging capabilities  Health Concerns  BPA free Cradle to cradle  Phthalates free economics  Acrylonitrile free  Styrene free

100 60 Our End Applications 58Bn lbs/$50Bn 11 LLDPE

Films / Cards Cards Films HDPE 50 14.5 80 17

1 PC 3 Nylon 40 Apparel Home Textiles 4 ABS 5 PS Fibers / 60 14.0 Non-wovens 7 PET

30 Non-Wovens 9 LDPE

40 13.6 Durables PVC 18 20 Durable Goods Folder Cartons

Food 20 5.9 Serviceware PP 10 Food Packaging Serviceware 25 Fresh Food 5.9 Packaging

3.6 Beverage 0 0 Bottles

$1.60 PET PP PS $1.40

$1.20

$1.00

$0.80

USD/lb $0.60

$0.40

$0.20

Source: IHS 02/14 North America C-M prices $0.00 Jul-14 Jul-13 Jul-12 Jul-11 Jul-10 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Mar-14 Mar-13 Mar-12 Mar-11 Mar-10 Sep-14 Nov-14 Sep-13 Nov-13 Sep-12 Nov-12 Sep-11 Nov-11 Sep-10 Nov-10 May-14 May-13 May-12 May-11 May-10

Polymer Technology Overall Kg sugar for Process Yield 1 kg polymer Bio PLA (Ingeo) Sugar to PLA via lactic 80% 1.25 acid and lactides Bio PP Sugar to ethanol to 47% 2.14 propylene to PP Bio PET Bio MEG + Bio PTA from 36% 2.77 sugar Bio PE Sugar to ethanol to 31% 3.22 ethylene to PE

Investment in innovation and R&D collaboration to grow our Ingeo feedstock portfolio.

GENERATION I: 1st step GENERATION I: 2nd step GENERATION II GENERATION NEXT

Where we are today Where we are going now Next 3-5 years And next?

Dextrose from corn starch Sucrose from locally Lignocellulosics: Sugars CO2 to lactic acid abundant materials such as from bagasse, wood chips, technology? “Bridging Crops” sugar cane switch grass or straw. CH4 to lactic acid technology?

$250 PET $200 Above lines, Ingeo wins $150

($/bbl) PS

Oil

$100 of

Material Indifference Curve $50 Cost Below lines, PET/PS wins $0 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Cost of sugar (c/lb)

PET Analysis from McKinsey margin models, CMAI, February 2006

$250 For Example • When sugar cost ~$.17/lb, the cost $200 of feedstock per lb of Ingeo is the Above lines, same as the cost of feedstock per Ingeo wins lb of PS when oil is ~$50/barrel $150 • OPEX and CAPEX are similar.

($/bbl) PS • The rest is scale… Oil

$100 of

$50 Cost Below lines, PS wins $0 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Cost of sugar (c/lb) Cellulosic sugars Gen 3 sugars PET Analysis from McKinsey margin models, CMAI, February 2006

Retail presence (e.g. Walmart, Target) in all 50 states

Rigids Food Serviceware Films

Nonwovens / Fibers Durables Lactides Bus. Dev.

Nonwovens / Fibers Rigids Durables Food Serviceware Films

Key Properties Key Properties Key Properties Key Properties Key Properties

 Range of melting  Stiffness  Stiffness  Stiffness  Stiffness points/crystallinity  Gloss, transparency  Miscibility  Compostability  High gloss and levels transparency  Printability  Improved flow  High versatility for  Tunable hydrolysis injection, extrusion  Dead fold / twist  Weight reduction (vs.  Chemical resistance  Hydrophilic / moisture and coating retention PET) wicking processes  Grease, oil and aroma  Inherent odor barriers resistance  Chemical resistance  UV resistance  High throughput  Low bonding temp 13

• Equivalent to 1,320 MT CO2/year savings • Ingeo out performs polystyrene • Stronger/less breakage Performance • Better lid adherence • Lower temperature filling (less energy use) • Maintained line speed and shelf life • Addresses consumer concerns • Well received by key opinion leaders Consumer • Reduction in human toxicity • Did NOT increase our retail price & Cost

Stonyfield CEO Gary_Hirschberg, Innovation Takes Root Conference Keynote: “Inventing a WIN-WIN-WIN-WIN-WIN FUTURE”, February 21, 2012

© 2013 NatureWorks LLC Leadership in Energy & Environmental Design, is transforming the way we think about how our buildings and communities are designed, constructed, maintained and operated across the globe

Structure 9.0(T) x75(W) × 900(L) Ingeo Laminate Water Resistant Plywood

Yellow Soil Adhesive Application Eco-friendly Dent, scratch resistible -. Residential No color change by environmental

2005 – 2013 Our collective Footprint in the market

6 X

1 Billion lb Milestone

aggregate volume in the market as of 2013

2005 – 2013 Our collective Footprint inToday the market

Poised for 6 X Strong Operations Growth Startup & Established 1 Billion lbMarket Seeding Technology & MilestoneIntellectual Property Established aggregate volume in the market 1990-2001 2002-2005 2006-2013as of 2013 2014 - forward 4k -8k mt 2002 -140k mt 2006 - 24/7 Blair Expanding pilot plant facility @ Blair. operations at Blair customer & 2003 -largest 2013 – 150k ton product base. lactic acid plant expansion Plant 2

• The US bio-plastic industry is ready for rapid expansion but: – Our industry is (very) capital-intensive (+/- $1MM per mm lb capacity) – Financial markets (debt and equity) are “reluctant” investors in our sector (technology risk, scale-up risk, market risk) • The bio-plastic industry is “sexy” and US will have to compete globally for investments (jobs, jobs, jobs) • In order to lower investment risk and in order to be competitive against foreign programs, we could use an “incentive basket”

Incentive Schemes Around the World

Supply Incentives Demand Incentives • Tax Credits • Tax Breaks – Production – Carbon tax – Investment • Exemptions • Tax Holidays – Recycle fees • Loan Guarantees • Quotas • Preferred Loan Rates – Taiwan/Korea retail legislation • Bans (PE bags, PS foam)

Country Supply Incentives Demand Incentives Taiwan  Korea  • 8-10 years tax holiday Japan • loan guarantees  Phillipines • guaranteed rate  Australia  European Union   USA   Thailand   Brazil  Malaysia  Singapore  Indonesia  Canada 

PTT Eco Industrial Estate

© 2013 NatureWorks LLC NatureWorks’ Journey: Back to the US & Minnesota thru disruptive technology development and commercialization ? … GHG feedstock US/State Policy 1st gen Ag feedstock  US/State Policy ??

1st gen Ag feedstock

Plant 3: US? 2017: Plant 2 Next 5-8 years Thailand Methane ? Today: Plant 1 New technology ? Blair, NE NextGen technology 150 jobs innovation technology innovation 27

Marc Verbruggen

NatureWorks LLC www.natureworksllc.com