Renewable diesel: a key contributor to West Coast low-carbon markets
Presented at PRIMA/ISCC Conference San Francisco, California April 6, 2017 Safe Harbor Statement
The following information contains, or may be deemed to contain, -looking . These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures, future cash sources and requirements, liquidity and cost savings that involve known and unknown risks, uncertainties and other factors that may cause Neste or its actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward looking statements. In some cases, such forward-looking statements can be identified by terminology such as or or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. All forward-looking statements made in this presentation based on information presently available to management and Neste Corporation assumes no obligation to update any forward-looking statements. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities or otherwise to engage in any investment activity. Neste in brief 4 Neste in numbers
Production Several years in Revenue employees capacity of the Global 100 list largest producer in 15 countries renewable diesel: $12.7 of over 900 million most sustainable renewable diesel ~ 5,000 billion gallons per year companies Neste has been a leader in cleaner solutions throughout the years
Lead-free Renewable Renewable and Low-sulfur Renewable Diesel Jet Fuel sulfur-free fuels marine fuel Propane
1980 2007 2011 2013 2014 2015 2016 2005
Renewable products refineries ~ 900 million gallons per year Porvoo, Finland renewable diesel refinery ~3 MMbbl/yr
Singapore renewable diesel refinery ~8 MMbbl/yr Rotterdam, The Netherlands renewable diesel refinery alongside Singapore Biopropane will be available on the market during the year 2017 ~8 MMbbl/yr Production based on proprietary NEXBTL technology Annual production capacity 2.6 million tons = 900 million gallons Meets ASTM D975 and CARB diesel specifications largest producer of Fully fungible can use the existing renewable diesel petroleum diesel infrastructure Flexible and sustainable raw material base over 10 different feedstocks in use Diverse demand for Neste MY Renewable Diesel, as blending component and 100% use
Commercial and Dump and Truck fleets Construction; municipal bus garbage trucks Mining fleets
Aviation Marine Emergency Agricultural generators machinery Low-carbon Neste MY Renewable Diesel is ideal for fleet operations and also a cost competitive fuel
High performance Consistent quality, free of sulphur, oxygen, and aromatics. Together with a high cetane number of 75-85 the fuel ensures an efficient and clean combustion.
Smaller environmental footprint Reduces greenhouse gas emissions by up to 80% in addition to sizable reductions in tailpipe emissions.
Lower maintenance and operating costs Longer service and maintenance intervals than for other alternative fuels.
Superior cold weather performance Suitable for very cold weather conditions. No matter the raw material, Neste guarantees its fuel will exceed cold temperature requirements.
Long shelf life Can be stored over long periods of time with no deterioration in quality or water accumulation.
Easy switch; no additional investments Fleets can switch to renewable diesel overnight without any conversion of vehicles or to logistics systems.
11 Based on several scientific studies with different engines and after- treatment system, Neste MY Renewable Diesel provides significant reductions in major air pollutants:
Particulate matter (PM) -33% Nitrogen oxides (NOx) -9% Carbon monoxide (CO) -24% Hydrocarbons (HC) -30%
A low-carbon, clean-burning premium diesel fuel Neste MY Renewable Diesel is being used by cities, municipalities and corporations around the world; the number of neat users is growing steadily Renewable Fuel Endorsement
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* San Francisco Bay Area Super Bowl 50 Host Committee
This material is confidential and intended for *)Neste User internal of Neste use only Renewable Jet Fuel 13 Californian based Propel Fuels was the first retail chain in the world to sell neat Renewable Diesel to consumers
Stations across California Mary Nichols, CARB Chairman Neste MY Renewable Diesel is being used by UPS fleets operating in the USA since mid- 2015 UPS is planning to use up to 46 million gallons equivalents of renewable fuels over the next three years Google's gBuses in Silicon Valley, California are running on neat renewable diesel
gBuses shuttle employees from their homes in San Francisco and Oakland campuses
16 The City of San Francisco leapfrogged its efforts to protect the climate from harmful effects of diesel emissions by phasing out the use of petroleum diesel in their municipal fleet and replaced it with renewable diesel at the end of 2015
17 The City of Oakland began filling its vehicles with renewable diesel in order to reduce the emissions of their municipal fleet Oakland operates 250 diesel-powered vehicles and equipment Oakland has used 230,000 gallons of renewable diesel per year The City of Walnut Creek is the first city in the US to convert its municipal fleet to renewable diesel The switch to renewable diesel in August emission by more than 60% They operate around 60 diesel powered vehicles and equipment The City of San Diego has converted its municipal fleet to Neste MY Renewable Diesel Over 1,100 vehicles and equipment, representing approximately 25% of the city's fleet, run on renewable diesel The City of Carlsbad has converted its municipal fleet to renewable diesel
Carlsbad runs renewable diesel in a range heavy- duty vehicles including fire trucks, dump trucks and vacuum trucks The County of Sacramento has converted its municipal fleet to renewable diesel; reducing greenhouses gases by approx. 8,000 tons annually renewable diesel is used in a range of heavy- duty vehicles including more than 400 municipal public works and specialty vehicles Sustainability, raw materials and R&D
We work continuously to offer cleaner solutions for our customers, reduce the environmental impact of our operations, and improve the sustainability of our supply chain. Five California pathways can reduce carbon intensity up to 83%
Currently Used Raw Materials GHG Emission Reduction in California
Carbon Intensities of different raw materials under CARB LCFS: Neste can produce high-quality renewable hydrocarbon diesel from more than ten different feedstocks on an industrial scale. -83%
Neste MY Renewable Diesel used in California may be produced produced from: Animal Fat Fish Fat
Used Cooking Oil 102 Technical Corn Oil
Additional pathways are pending 33 34 37 39 17
CARB Diesel Used Fish Fat North Technical Global Cooking Oil American Corn Oil Animal Fat Tallow
Units are all gCO2e/MJ Broad range of renewable raw materials
Animal fat from food Fish fat from fish Vegetable oil processing Used Technical industry waste processing waste waste and residues cooking oil corn oil (e.g. PFAD, PES, SBEO)
Crude palm oil Rapeseed oil Soybean oil Camelina oil Jatropha oil
Neste uses bio-based ethanol from the global market as a bio-component in gasoline. The company also uses tall oil pitch at its refinery in Naantali, Finland. Waste and residues form nearly 80% of our renewable raw material inputs
Renewable raw material mix 2016 In 2015, we achieved capability to use solely waste and 21 % residues as raw Waste and residues materials in our (e.g. waste and residue fats from food processing. processing, technical corn oil) Other vegetable oils
79% Our approach to sustainability
Neste Sustainable Way includes:
Cleaner solutions Safety Our people Society Climate and resource efficiency Sustainable supply chain
Neste has been chosen for the Global 100 list and the Dow Jones Sustainability Index for many years. All renewable raw materials sustainably produced
Traceability ensures renewable raw Taking leadership in All renewable raw materials are sustainably sustainability materials used by produced and production practices is essential Neste are traced to growing back to the land or human rights or endangered acceptability of production plants rainforests or renewable feedstocks carbon-rich areas Cutting-edge research Continuous research to expand renewable raw material base and further develop NEXBTL technology 70% approx. euro 41 million of R&D costs in 2015 Cooperation with over 20 research institutions around the world Approx. 1,000 people working with research and engineering Expanding our raw material portfolio
Short term Long term
Waste animal fats, Biological Thermo-catalytic Photo- waste oils, residue and pathways pathways synthesis side streams Renewable Jet Fuel: A Solution for Sustainable Aviation The case for renewable jet fuel
Aviation is a significant source of GHG emissions Aviation accounts for 2% of global GHG emissions and 10% of all transportation emissions
The aviation industry will continue to grow Air traffic is expected to double in 15 years
The industry realizes that continued growth must be sustainable Potential benefits include approvals to grow, improved brand image, new revenue streams, price diversification, incentives
Airlines, airports and OEMs are pulling all levers to lower their carbon and emission footprint Improvements in aircraft technology, operations, air traffic management
Renewable jet fuel must be part of the solution Renewable diesel assets can be utilized to produce renewable jet fuel Neste Renewable Jet Fuel Offers airlines an easy way to cut their emissions Compatible with existing jet engines High energy content (MJ/kg), no aromatics, reduces CO2 and sulphur emissions Complies with ASTM D7566 specification (Annex A2 HEFA) Already available at industrial scale Neste Renewable Jet; proven high-level performance that has been used on over 1,000 Lufthansa flights
1,600 1,500 1,187 tonnes tonnes Lufthansa reduction in of blended fuel flights GHG emissions
1% 0 better fuel quality issues consumption In January 2016, Oslo Airport offered Neste MY Renewable Jet Fuel via the hydrant system
Neste has produced renewable jet fuel to be used by airlines Lufthansa, KLM and SAS at Oslo airport
The fuel is transferred to Oslo as a 50% blend with conventional jet fuel
For the first time, renewable jet fuel is delivered into-plane via the airport's hydrant system
The fuel was produced in Porvoo, Finland, as part of the EU- funded ITAKA* project
The feedstock is 100% certified camelina oil
* http://www.itaka-project.eu/default.aspx The next development of HEFA: HEFA+ renewable jet fuel should accelerate use
HEFA+ is HEFA with a slightly higher freezing point Supply should increase as more efficient to produce Will be used at lower blend levels: likely max 15% HEFA+ vs. max 50% HEFA. Boeing is leading the effort for HEFA+ specification Neste is supporting with supply of fuel and testing Research report was issued in The airplane performed as designed with the green diesel blend, November 2016 and Version 3 is just as it does with conventional jet fuel. This is exactly what we want to see in flight tests with a new type of fuel." being issued for review Captain Mike Carriker, Chief Pilot Boeing Product Development and 777X describing test flight with 15% HEFA+ supplied by Neste, Dec 2014 Renewable plastics Bioplastics cooperation with IKEA
What are the goals? IKEA is committed to using 100% renewable or recycled plastics in home furnishing by 2020 We aim to produce plastics and other materials by replacing virgin fossil feedstock with renewable or recycled waste and residue raw materials How are Bioplastics produced? IKEA and Neste will work with a number of partners in the supply chain When will we hear more? We aim to produce the first proof-of-concept during 2017 Pre-order the Future Project to investigate the future of renewable materials and use of technology through product development. Engage audiences in finding bold and innovative solutions to create new kind of renewable products and services for more sustainable future. Future of Public Space Entertainment Travel Mobility Education
39 The Winning Concept: EduCycle EduCycle is an augmented reality game for educating school children about the carbon cycle and the effects of their choices on the environment.
A prototype has already been developed and tested and launched in San Francisco on March 30, 2017
40 The Stone Age did not end for a lack of
CO2 emissions potential of fossil fuel reserves compared to the The world is not 2ºC global carbon budget until 2050 running out of fossil fuel anytime soon. Emissions caused by But the environmental fossil fuel use 1990 2015 impact of GHG Emission potential of proven global fossil emissions means we 2,800 Gt CO2 fuel reserves
cannot burn it all. The maximum 670 Gt CO2 420 Gt CO2 amount of fossil fuel emissions until 2050 before reaching 2ºC carbon budget
Source: IEA, World energy-related CO2 emissions, 2016; Carbon Tracker Initiative, Unburnable Carbon markets carrying a carbon bubble?, 2014
41 Thank you
Neville Fernandes Houston, Texas [email protected]