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Growing Your Business

with Biodiesel
Jon Scharingson
Executive Director, Sales & Marketing

Copyright 2017 Renewable Energy Group, Inc.


Growing Demand for Biodiesel
U.S. Biodiesel Consumption, Production and Volume Obligations

2500

2000

11 months
1500
Million gallons

11 months
1000

500

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Biodiesel production Biodiesel consumption RVO

Source: U.S. Energy Information Administration 2 Copyright 2017


Renewable Energy Group, Inc.
Travel Centers Strong Adopters of Biodiesel

National chains early adopters of biodiesel.

2006 REG has been supplying travel centers


with biodiesel since 2006.

>200M
REG supplying >200 million gallons
annually direct to travel centers.

Customer pickup at plants or delivered


direct.

3 Copyright 2017
Renewable Energy Group, Inc.
Nationwide Biodiesel Retail Locations

4 Copyright 2017
Source: National Biodiesel Board website 03/21/2017 Renewable Energy Group, Inc.
Biodiesel Economic
Considerations
5
States with Notable Biomass-Based
Diesel Policies

New York
City

LEGEND
Low Carbon Fuels Standard
Mandate - Fuel use or
Bioheat
Tax Incentive - sales
Tax Incentive - production
Fleet Requirement
Bioheat Mandate passed
Awaiting Surrounding States
Policy currently suspended
No major policy

Note: Current as of 01/08/2016


Source: DOE Alternative Fuels Data Center and Individual State Statues

6 Copyright 2017
Renewable Energy Group, Inc.
Examples of State Incentives

Iowa: Retail tax Illinois: Retailers Texas: 20-cent California: LCFS


credit of 4.5 cents selling B11 and retailer incentive creating tremendous
per gallon for B5 above exempt from for every gallon biodiesel blending
and above, plus 3 the state excise tax of B99 blended economics
cents per gallon
for B11 and above

Selling biodiesel blended fuels can give your business a financial advantage

7 Copyright 2017
Renewable Energy Group, Inc.
Incentives in Action Illinois

6.25 %
Retailers selling This exemption Bottom line:
B11 or higher exempt can be a big Retailers not offering
from states 6.25% competitive biodiesel are leaving
sales tax advantage money on the table

8 Copyright 2017
Renewable Energy Group, Inc.
Biodiesel Tax Credit

2005 $1.00/gal
Biodiesel Tax Credit Blenders receive $1.00
first enacted in 2005 for each gallon of biodiesel
blended into diesel fuel

9 Copyright 2017
Renewable Energy Group, Inc.
EPA RFS2
Volumes used to determine the final percentage standards
2014 2015 2016 2017
Cellulosic biofuel 33 mm gal 123 mm gal 230 mm gal 311 mm gal
Biomass-based diesel 1.63 bn gal 1.73 bn gal 1.90 bn gal 2.0 bn gal
Advanced biofuel 2.67 bn gal 2.88 bn gal 3.61 bn gal 4.28 bn gal
Total renewable fuels 16.28 bn gal 16.93 bn gal 18.11 bn gal 19.28 bn gal

Growth in Biomass Based Diesel Standard Growth Advanced Biofuels Standard


Final Volume Standards
4.0 4.0
3.5 3.5 Actual
Billions of Gallons

Billions of Gallons
Final Volume Standards
3.0 3.0
Actual
2.5 2.5
2.0 2.0
1.5 1.5
1.0 1.0
0.5 0.5
0.0 0.0
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016

Source: EPA 10 Copyright 2017


Note: All volumes are ethanol-equivalent, except for biomass-based diesel which is actual. Renewable Energy Group, Inc.
Historical Biodiesel RIN Prices
$2.00

RINS 03/21/2017 = $1.00/RIN or $1.50/gal

$1.50

$1.00

$0.50

$0.00
1/2012
3/2012
5/2012
7/2012
9/2012
11/2012
1/2013
3/2013
5/2013
7/2013
9/2013
11/2013
1/2014
3/2014
5/2014
7/2014
9/2014
11/2014
1/2015
3/2015
5/2015
7/2015
9/2015
11/2015
1/2016
3/2016
5/2016
7/2016
9/2016
11/2016
1/2017
D4 Biomass-based Diesel D5 Advanced Biofuel D6 Other Renewable Fuel

Source: REG, OPIS 11 Copyright 2017


Renewable Energy Group, Inc.
Biodiesel Blending Economics (IA Example)

#2 ULSD = $1.60/gal
REG Plant Price(B99) = $2.85/gal
Less RINS Values ($1.00) = ($1.50)/gal
Net Biodiesel Price = $1.35/gal
Biodiesel Blending Economics = $0.25/gal
B11 Blending Economics =$0.0275/gal
B11 State Incentive =$0.075/gal
Total B11 Incentive =$0.1025/gal

Example only, based on approximate numbers from Fall 2016 12 Copyright 2017
Renewable Energy Group, Inc.
Biodiesel Blending System
Implemented at hundreds of U.S.
travel center locations.

Allows retailers to purchase neat


biodiesel direct from suppliers.

Blending system components:


Dedicated biodiesel tank
(>10,000 gallons)
Piping that allows biodiesel
and #2 ULSD tanks to feed
the dispenser B5-B20 blends.
Manages flow of correct blend
to dispenser.
Telemetry that allows store to
digitally change blend quickly.
13 Copyright 2017
Renewable Energy Group, Inc.
Blending Without Biodiesel Tank

Can purchase B5-B20 blends direct from


rack from many suppliers.
Utilize existing #2 ULSD tanks

B5-B20 blends typically offered without


RINS.

REG offers B5-B20 blends at locations


across the country.

14 Copyright 2017
Renewable Energy Group, Inc.
What If My Customers
Dont Want It?
15
Performance Stays Strong with Biodiesel

Drop-in fuel Meets stringent ASTM specs

47
BIODIESEL
40
DIESEL
2 =2
BIODIESEL
%
MORE
X
ASTM CETANE SPEC ASTM CETANE SPEC LUBRICITY

When we switched to biodiesel there was zero degradation


in fleet performance. It was a huge success.
Vince Buonassi, G&D Integrated, a for-hire carrier

16 Copyright 2017
Renewable Energy Group, Inc.
Biodiesel Myth Busters

17 Copyright 2017
Renewable Energy Group, Inc.
Cold Weather Myth
Voyageurs National Park:

Diesel fleet of pickup


trucks, dump truck, snow
groomer, skid steer and
boats

Uses biodiesel year-round

Used B20 at 30 F

18 Copyright 2017
Renewable Energy Group, Inc.
Filter Clogging Myth
Biodiesel has inherent
cleansing and
solvency properties
Cleans out residue
build up from ULSD
Filters may need to
be changed more
frequently at first,
but then business
as usual

19 Copyright 2017
Renewable Energy Group, Inc.
OEM Myth

100 %
OEMs support
90 %
Medium- and heavy-duty
B5 and lower truck OEMs support B20

Source: National Biodiesel Board 20 Copyright 2017


Renewable Energy Group, Inc.
Feedstock Myth

Biodiesel made from Feedstock flexibility The feedstocks used


diverse feedstocks captures the best help achieve lower
provides predictable properties of carbon intensity scores
pricing and supply different feedstocks

21 Copyright 2017
Renewable Energy Group, Inc.
Trend Alert Sustainability
Emissions comparison with conventional ULSD

Total Hydrocarbons Particulate Matter Carbon Monoxide


0% 0% 0%
% Change from

% Change from

% Change from
Federal ULSD

Federal ULSD

Federal ULSD
-20% -20% -10%
-40% -40% -20%
-60% -60% -30%
-80% -80% -40%

B20 (higher cetane B100) B100 (higher cetane) 100% RHD

B20 (lower cetane B100) B100 (lower cetane) 80% RHD / 20% Lower cetane BD

Biodiesel is better for the environment, and Im not going


to look my grandkids in the face and go, Grandpa had a
choice and chose not to do anything for your future.
Ed Davison, co-owner S.K. Davison hauling company

Data collected from 2006 Cummins ISM 370 on Federal Test Procedure driving cycle. Error bars reflect the 95% confidence interval.
22 Fuel Comparison Study, 2011.
Biodiesel and RHD data taken from Durbin et al., 2011. Federal ULSD data taken from "Diesel Copyright 2017
Renewable Energy Group, Inc.
Customer Case Study: Petroleum Wholesale

Distributes fuel in 9 states; operates


40 travel centers/c-stores
Began offering biodiesel blended fuel in 2013
Today, up to 95% of locations offer up to
B20 year-round
Economics drove decision to offer biodiesel blends

Theres no downside to biodiesel, and a lot of advantages to


it. The benefits include state incentives such as an exemption
from the diesel fuel tax in several states, price advantages
over traditional diesel, biodiesel being a renewable fuel and
its clean-burning properties.
John Cook, CEO, Petroleum Wholesale

23 Copyright 2017
Renewable Energy Group, Inc.
REG Overview

24
REG At A Glance

20+ 502 MMGY


YEARS NATIONAL DEDICATED
of biodiesel Nameplate LOGISTICS SERVICE
experience Capacity Rail, Truck, and technical
and expertise Barge, Pipeline support

25 Copyright 2017
Renewable Energy Group, Inc.
Broad Marketing and Logistics Capabilities
Distribution Footprint
at Plants, Terminals
and to Customers
38 terminal locations
(plus 12 plants)
Delivered biodiesel
and co-products
to 47 states,
5 provinces
in Canada
REG markets:
B99/B100
#2 ULSD
B2-B20 Blends

26 Copyright 2017
Renewable Energy Group, Inc.
Contact Us

27 Copyright 2017
Renewable Energy Group, Inc.
Questions?
Jon Scharingson
515-239-8042
Jon.Scharingson@regi.com
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