Sustainable Bioenergy and Economic Aspects Dr. John P. Ranieri Vice President, Industrial Biosciences GBEP Executive Capacity Development Seminar Rome, Italy November 11, 2011 Smart, Sustainable Growth DuPont’s commitment: Creating shareholder and societal value while decreasing the environmental footprint along our value chains “Environmental footprint” = injuries, illnesses, incidents, waste and emissions, and depletable forms of raw materials and energy 11/11/2011 2 DuPont Pro Forma Sales – 2010* $3.0 B $7.8 B Nutrition & Health $3.8 B Agriculture Performance Coatings $2.8 B $6.3 B Total Electronics & Performance Communications Company$34.2B * Materials $34.1B $6.3 B $3.4 B Performance Safety & Chemicals Protection $0.9 B Industrial * Includes $0.2B in ‘other’ sales. Total company sales exclude transfers. Biosciences 11/11/2011 3 Megatrends Opportunities Megatrend DuPont Solutions Goals Increasing Food Production • Seeds, crop protection, food & nutrition products, and food packaging materials Goals Decreasing Dependence • PV, fuel cell components, energy efficient Tyvek® materials, lightweight composites for transportation, on Fossil Fuels biofuels, biomaterials • Kevlar®, Nomex® and Tyvek® for worker protection, Goals Protecting People & the SentryGlas®, safety services, environmental protection Environment material solutions Goals Growing in Developing • Agricultural products, food packaging, materials for Markets construction & infrastructure projects, PV… Strong Renewable Products Portfolio Megatrends Drive Opportunities for Tailored, Differentiated Offerings & Market Partnerships 11/11/2011 4 History of Industrial Development According to the Center for Biobased Renewable Chemicals (CBiRC) We are entering into an age of Industrial Biotechnology Source: CBiRC 5 11/11/2011 Innovation Aimed at Global Megatrends $1.7 billion in 2010 DECREASING DEPENDENCE ON (prior to Danisco acquisition) FOSSIL FUELS * Chemistry PROTECTING Engineering PEOPLE & THE ENVIRONMENT * FEEDING THE Materials Science WORLD * Nanotechnology Industrial Biotech Agriculture Biotech CHEMICALS AND MATERIALS ELECTRONICS 85% of R&D Spend is on Innovation Addressing Megatrends * 11/11/2011 6 DuPont Growth Strategy The Premier Market-Driven Science Company Creating Value for Our Customers Building three world-leading, integrated competencies: • Ag & Nutrition • Bio-based Industrials • Advanced Materials & Processes Advanced Ag & Nutrition Materials Seeds Electronic Materials Traits Protective Materials Ag Chemicals Alternative Energy Specialty Food Advanced Polymers Ingredients Advanced Processes Biotechnology Enabled Materials Science Enabled 11/11/2011 7 Unlocking the potential Industrial Enzymes Food & Feed Enzymes Genencor Enzymes Fabric & Household Care Performance Agriculture Sugar Proteins & Peptides DuPont Biomaterials Biorefinery Biochemicals Gasoline Diesel Biofuels 11/11/2011 8 World Energy The opportunity to replace oil-based transportation fuels in existing vehicles & infrastructure is large (in(in MMmillion tons tonsoil equiv./ oil equiv./ year) year) Renewables 4000 Hydro 3500 Nuclear Coal 3000 Gas 2500 Oil 2000 1500 World Energy Energy World World 1000 500 0 Transportation Stationary Electricity Source: IEA World Energy Outlook 11/11/2011 9 DuPont and the Biofuels Industry Strategy Element Product Market Vehicle Corn HTF Hybrids Higher Yielding Crop Protection Crops Chemicals Conversion of Cellulosic Cellulosic Ethanol Feedstocks Advantaged Biobutanol Products FermaSure ® Biofuel Production MarketPoint ® Improvements Ethanol 11/11/2011 10 Biofuels - Large Addressable Market Globally • Growing ~10%/yr through 2020, >$100B market 250 Biofuel Demand by Region 2010-2050 (Source: IEA 2010-11) • 27% of total transport fuel (from 2-3% today). 200 • Demand highest in OECD countries, • 2030 - Non-OECD countries will account for 60% 150 • Drop-in fuels and non-food feedstocks essential B gals B 100 50 250 Biofuel Demand by Type 2010-2050 (Source: IEA 2010-11) 200 150 B gals B 100 • Tremendous advanced biofuels capacity build-out: Existing + in construction + planned = ~2 billion gallons 2015 50 30-fold increase over currently announced capacity by 2030 4-fold increase again required to 2050 11/11/2011 11 Agriculture & Industrial Biotechnology • Industry requirements: • Low cost cellulosic sugar source for fermentation • Biocatalyst productions of high value products • DuPont provides needed integrated solutions Upstream Downstream Markets Biomass Materials Biomass Microbe Raw Sugar Fermentation Chemicals Processing Engineering Material Biofuels Integrated Metabolic Biorefinery Engineering • Low cost • High performance • Localized feedstocks • Sustainable 11/11/2011 12 DuPont Enables Growth of the Biofuel Industry Upstream Strategy Cellulosic Ethanol: Non-food Feedstocks Demonstration Facility Advantages: Commercialization Path: • >60% greenhouse gas reduction • DuPont Danisco Cellulosic Ethanol (DDCE) • Non-food sources and marginal land • Demonstration facility in Vonore, Tenn. • Multiple feedstocks available • Current feedstock focus: stover, cob, switchgrass, sorghum • Excellent income for farmers • Commercialization: license & build Low Cost, Low Carbon, Scalable, Sustainable 11/11/2011 13 DuPont Cellulosic Ethanol Conversion Process Milling Pretreatment Saccharification Fermentation Separation • Minimal • High solids • C5/C6 • High bulk • Recover capital • High sugar yield utilization density product • Facilitate • High sugar titers • High ethanol • Minimize dirt, • Recover lignin enzymes • Low enzyme yield rocks • Recycle water • Minimize loading • High ethanol inhibitors • Minimize titer • Mild process inhibitors Integrated Science is Key to Low Cost 11/11/2011 14 Deploy Commercializing Cellulosic Ethanol Feedstock Conversion Distribution Collection Preparation Cost Capital Refining Blending Two Feedstock Types • Agricultural residue - Midwest • Development in harvest, storage and transport, densification, moisture issues • Next: grower programs • Energy grasses – growth to full capacity: • Multiple grass sources available e.g. switchgrass • State of TN program - $30 million for upstream development • ~6,000 acres in 2010 Current corn acres Potential Energy Grass Multiple Feedstocks Needed to Satisfy Growth and Goals Source: DDCE, Univ. Tenn., USDA 15 Bio-PDO™ & Sorona® Business Addressable Markets A Case Study Residential Carpet $3B Commercial Carpet $2B Sorona® Apparel $8B Bio-PDO Polymer Auto Interiors - Others $1B Direct Sales Engineering Polymers DuPont $1.5B Packaging $1B Creating cost effective, superior performing renewable materials for large addressable markets 11/11/2011 16 Bio-PDO ™ Business Enabling Building Block for Renewable Materials 100 million lb facility in Loudon TN • Most sophisticated microbial production system • One of the world’s largest aerobic facilities • Bio-PDO ™ business advantages: • Significantly lower cost of manufacture • 50% smaller environmental footprint • Large markets for new Bio-PDO ™ applications: • Sorona ®, Zemea ®, Susterra ® • 35% capacity expansion by mid-2011 Bio-PDO ™ Propanediol 11/11/2011 Breakthrough Innovation for Industrial Biotechnology 17 Bio-PDO™ and Sorona ® Value Capture Model Technology Leverages Installed Asset Base Across Value Chain Upstream Downstream Low Cost Polymer Asset Global Fiber Fermentation Conversion Partnerships Process Capability • Feedstock/site flexibility • Utilize existing assets • Proprietary applications • Low capital/cost intensity • Rapid conversion • Enabling patents • Renewable material • Knowhow enabled • Brand DuPont Proprietary technology repurposes biotechnology advantage available asset infrastructure 11/11/2011 High Asset Productivity - Rapid Scale Up 18 DuPont plays across the value chain Ethanol Formerly DDCE Biobutanol Pretreatment Enzyme Technology Enzymes Business BIOMASS PRE- TREATMENT LIQUEFACTION FERMENTATION Bio-PDO™ Ethanologen Formerly DDCE BioIsoprene Crop Protection 11/11/2011 19 Biofuels Mandates and Targets Around the World… - Energy independence & security - Rural development & support - Reduction of greenhouse gases - Green jobs 11/11/2011 20 Summary Integrated science is critical to success Technical feasibility Market insight Environmental sustainability Partnerships are essential Technology is complex Speed Is critical Resources needed are significant Government support is an important success factor High risk/large investments Value externalities Geography specific strategies Regions require customized solutions 11/11/2011 21.