Making renewable fuels a serious business

Case Neste Oil

Esa Lindgren Koli Forum 15 September 2011

Content
Neste Oil in brief Why biofuels? Neste Oils NExBTL renewable fuel Renewable fuel from current and new raw materials

Neste Oil in brief

A refinery and marketing company concentrating on delivering fuels for cleaner traffic Refining of 15 million tons of oil products per year Listed on NASDAQ OMX Helsinki Net sales EUR 11.9 billion in 2010 Operations in 15 countries Personnel 5,000 State of Finland as primary owner (50.1% holding)

We have a long track record in developing cleaner fuels

1982
Neste Alfa lubricants

1988
Futura brand: gasoline that keeps engines clean

1991
City Futura, with an oxygenate Synthetic PAO

1994
New Futura: less sulfur than ever before

2003
New Futura gasoline market launch

2005

2010

Neste Green NExBTL 100 -diesel diesel from renewable raw materials

1985
City-gasoline: lead-free, with oxygenate

1989
Lead-free Futura 95E, replacing 92-octane gasoline

1993
Futura Citydiesel

1997
VHVI base oils

2004
Sulfur-free gasolines and diesel fuels

2008

2011

Neste Green NExBTL diesel renewable aviation fuel

Why biofuels?

Energy industry is facing a need for change

Why biofuels?
1. To combat climate change and local emissions 2. To reduce dependency on fossil oil 3. To improve security of energy supply

There is a clear request to develop biofuels EU legislation is leading the way

What is required from a good biofuel?

CONSUMER Ease of use, sufficient availability High fuel quality > trouble-free use Compatibility to current cars Bearable fuel price

CAR INDUSTRY Compatibility to current engines High fuel quality -> possibility to develop engine technology
SOCIETY Clear green house gas emission reduction, air quality improvements Sustainability over the whole value chain No additional or low infrastructure costs Bearable fuel price

Fuel pathways

Mineral Oil Sugars Vegetable Oil Vegetable Oils Biomass

Refining Fermentation Bioprocesses Hydrocarbons: Gasoline Jet Diesel Transesterification HVO (NExBTL) Gasification FischerTropsch Hydrocarbons: paraffins

Alcohols: Ethanol Butanol

Esters

Hydrocarbons: paraffins

Commercial

Commercial

Commercial

Commercial by Neste Oil

Development

GASOLINE DIESEL

GASOLINE

DIESEL

DIESEL

DIESEL GASOLINE

Neste Oils NExBTL renewable diesel the highest quality diesel in the world

NExBTL use reduces traffic related emissions

Helps combat climate change 50-80% lower greenhouse gas emissions compared to fossil diesel Measured over the products entire life cycle

Helps improve urban air quality

Contributes to a significant reduction* in tail pipe emissions compared to fossil diesel
Nitrogen oxide (NOx) -10% Particulates (PM) -28% Carbon monoxide (CO) -28% Hydrocarbons (HC) -50%

*Emissions reduction figures are averages based on numerous field and laboratory tests.

12

Renewable NExBTL diesel

Product quality easily outperforms conventional

biodiesel (FAME) and fossil diesel Fully compatible with fossil diesel drop-in solution
Can be used in all modern diesel engines without any modifications (passenger cars, buses, trucks, etc.) Meets engine manufacturers toughest quality

specifications
Can be used in diesel engines as such (100%) or blended with fossil diesel (as in Neste Green diesel)
Can be transported and stored like fossil diesel

No Best before date

Compatible with existing logistical and distribution systems

Excellent cold properties Commercially available today

NExBTL aviation fuel

Neste Oil is a pioneer in renewable jet fuel ASTM approved bio jet Fully compatible with current jet engines, a true

drop-in solution for airlines

Helps airlines significantly minimize carbon

footprint and GHG emissions

Worlds largest test is going on: Lufthansa flies

8 legs each day between Hamburg and Frankfurt using Neste Oils bio jet

NExBTL production capacity some 2 Mtons/a

On stream 2007 Location Porvoo 1, Finland Tons/year 190 000

2009
2010

Porvoo 2, Finland
Singapore

190 000
800 000

Q3/2011

Rotterdam, Holland

800 000
2 000 000

Investments in NExBTL capacity total Eur 1.5 billion.

Neste Oils NExBTL plant in Porvoo, Finland.

16

Renewable feedstock

Oil is the largest commodity traded in the world. In order to substitute fossil oil to any meaningful degree, we need a lot of new renewable feedstock. Right now, we work with what we have.

NExBTL renewable fuel can be produced flexibly from a mix of various vegetable oils and waste animal fats. The fuel has constant high quality independent from raw material used.

Currently used raw materials

Palm oil, palm stearin, palm fatty acid distillate (PFAD)

Waste animal fat from the meat processing industry

Rapeseed oil

Camelina oil

Jatropha oil

Soy oil

New raw materials and process alternatives

Nonfood vegetable oils Algae Microbes

Waste animal fats and waste oils, side streams

Harvesting residue and biomass gasification

About 80% of the companys R&D costs totaling ~40 MEUR in 2010 were directed to researching renewable raw materials and the refining technologies.

Comparison of selected biofuel pathway costs

Sugar ethanol

Starch ethanol wet

Starch ethanol dry

FAME

HVO

Cellulocic ethanol

BTL

0%

20 %

40 %

60 % Conversion cost

80 % Capital cost

100 %

Feedstock cost

Neste Oils criteria for selecting new raw materials

Applicability Availability for industrial scale production Economical perspectives Features of sustainable development Carbon foot print (greenhouse gas emission balance) Water foot print Nutrients Land use

Recognized for the sustainability work we do

, 2008/2009, 2009/2010, 2010/2011, 2011/2012

And finally all we ask for from legislators

Keep ambitious biofuel targets Maintain technology neutrality Dont allow protectionism gain ground Accept that feedstock are global just like oil is

Thank You !