Purpose Grown Trees as an Economical and Sustainable Feedstock Source for Bioenergy Production

2009 TAPPI International Bioenergy and Bioproducts Conference

October 14, 2009

2009 TAPPI IBBC 2

A Global Leader in Tree Improvement, Production & Sales

• The largest producer of trees for planting• >275 million trees sold per year

• Technology leader• Unique platform is built• Most forestry field / regulatory

trials• Pipeline of world-class elite

germplasm• Global with business operations in:

• Southeast U.S.• New Zealand & Australia• Brazil

• A team with experience, skill and credibility for delivering operational, technical and business success

Summerville, SC – Global HQ

Campinas, SP, BR–S. America HQ

Whakatane, NZ –Australasia HQ

Americas• 250MM Sales• 33% share of pine market• 20% share of hardwood market

Australasia• 23MM Sales• 45% NZ Radiata market• 20% Australia softwood market

2009 TAPPI IBBC 3

Demand for Woody Biomass is Growing

Advanced Biofuels

Demand Drivers

Pellets (Heat & Power)

Electricity (Direct & Co-firing)

Pulp, Paper & Wood Products

2009 TAPPI IBBC 4

Trees Have Fundamental Advantages as a Biomass Feedstock

Living Inventory

“Storage on the Stump”

• Reduced storage and inventory holding costs• Reduced losses due to shrinkage and

degradation• Mitigation against annual yield fluctuations

Year Round Harvest

• Reduced infrastructure and capital needs for harvest and transport of biomass

Multi-Year Rotation

• Fewer acres planted annually improves deployment feasibility

• Extended periods with limited disturbance reduces environmental impact

Established Market

• Multiple end uses provide landowner flexibility• Sustainable production practices in place• Efficient harvest and transport systems

developed

2009 TAPPI IBBC 5

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Demand Drivers Over Time

Pulp, Paper & Wood Products

Pulp, Paper & Wood Products

Electricity Direct & Co-

firing

Electricity Direct & Co-

firing

Advanced Biofuels

As Demand for Woody Biomass Increases, there is a Focus on Improving the Productivity of Trees

Electricity Direct & Co-firing

Bio

mas

s/A

cre

ArborGen Product Improvements Over Time

Improved Control

2009 TAPPI IBBC 6

Several Technologies Improve Tree Productivity

Improved Germplasm

Management Systems

Biotech Improvements

• Improved growth • Stress tolerance• Improved wood quality

2009 TAPPI IBBC 7

Biotechnology Brings a Step-Change in Tree Productivity

Time and Product Testing

Val

ue

Seedlings• Elite Material•MCP – opportunity for near-term landowner gains

Varieties• Genetic Uniformity• Increased Productivity• Improved Product Mix• Management Efficiency

Value-Enhanced Traits• Increased Growth Rates• Stress Tolerance• Improved Wood Quality• Breakthrough Applications

Improved Control

2009 TAPPI IBBC 8

Case Study: Hardwood Productivity Potential through the Application of Knowledge & Technology

11,576kWh/dry ton biomass 2100 gallons ethanol/dry ton biomass

Biomass Yield

Biopower Yield 1

Ethanol Yield 2

Baseline

Naturally Regenerated

0.5 Dry Ton/Acre/Year

800 kWh/Acre/Year

150Gallons/Acre/Year

Planted Trees

5 to 7

7,900 to 11,000

500 to 700

Biomass Management

6 to 8

9,500 to 12,600

600 to 800

Potential

Biotech Improvements

17.5 to 22+

27,600 to 35,500

1,800 to 2,300

2009 TAPPI IBBC 9

Case Study: Pine Productivity Potential through the Application of Knowledge & Technology

11,576kWh/dry ton biomass 2100 gallons ethanol/dry ton biomass

Biomass Yield

Biopower Yield 1

Ethanol Yield 2

Baseline

Currently Planted

3 Dry Tons/Acre/Year

4,600kWh/Acre/Year

290Gallons/Acre/Year

Biomass Management

4 to 6

5,700 to 9,500

360 to 600

Improved Germplasm

7 to 9

11,000 to 14,800

700 to 940

Potential

Biotech Improvements

11 to 13

18,000 to 21,000

1,140 to 1,330

Improved Control

2009 TAPPI IBBC 10

High Productivity Enables Close Proximity

• A processor consuming one million dry tons of wood from forest residues would require 35 miles to support it.

• Biotechnology can reduce the area needs by over 90 percent

Processing Facility

Forest Residues

Planted Trees

Biomass Management

Biotech Improvements

Assumptions:• One million dry tons/year consumption• 20 percent land utilization

2009 TAPPI IBBC 11

Pipeline of Conventional and Biotech Products to Address Biomass Markets in the Southeast

Eucalyptus

Conventional Eucalyptus, South Florida Eucalyptus,

Freeze Tolerant Eucalyptus (FTE), FTE-Gen2

Populus

Short-Rotation Populus(SRP), SRP-Gen2

Pine

Pine Seedlings (OP, MCP™), Varieties, Short Rotation Loblolly (SRL),

SRL-Gen2

2009 TAPPI IBBC 12

High Productivity in Freeze Sensitive Tropical Eucalyptus

27 Months Growth –Central Florida

Pulpwood Yield Potential:

7.5 – 12.5 dry tons/ac/yr

Biomass Yield Potential:

12.5 – 17.5 dry tons/ac/yr

Eucalyptus Example

2009 TAPPI IBBC 13

Freeze Tolerant Eucalyptus (FTE) Demonstrated in Multiple Field Trials

• Results from first winter in South Carolina

• Results from second winter in Alabama

Field results indicate freezing tolerance to ~16°F (- 8°to - 9°C)

Control

Lead Lines + Control

Lead Line

Eucalyptus Example

2009 TAPPI IBBC 14

Growth Rates Comparable to the Brazilian Standard

• Tree volumes were calculated for lead biotech lines in 27 month trials in central Florida and southern Alabama using an accepted volume equation from Brazil

• Full rotation (seven years) volume projections were made using an accepted growth and yield model from Brazil

Eucalyptus Example

Central Florida

Southern Alabama

Height (ft) 48 40DBH (in) 4.5 4.5Yield (dry tons/acre) 18 16

Central Florida

Southern Alabama

Site Index (ft) 113 105Basal Area (ft2/acre) 211 175Yield (dry tons/acre) 52 42MAI (dry tons/acre/year) 15 12

2009 TAPPI IBBC 15

• Southeastern pine plantations represent the largest market for planted trees in the United States

• Landowner management decisions are currently driven by sawtimber production

• Biomass focused management regimes have the potential to improve biomass productivity and provide high returns to landowners

Purpose Grown Pine has Excellent Potential as a Bioenergy Feedstock

PineExample

2009 TAPPI IBBC 16

• Hybrid sawtimber + biomass planting in South Carolina at age six• 27 dry tons/acre @ thinning (eight years)

• 106 dry tons/acre @ clearcut (Sawtimber: 65, CNS: 22, Biomass: 19)

Broad crown/ large branched

OP biomass take-out row

Narrow crown/ small branched MCP sawtimber

row

Improved Productivity with Alternative Management Regimes

• High density varietal pine trial in Georgia at age six• Projected to yield 62 dry

tons of biomass per acre @ age 11

Sawtimber Tree

Biomass Tree

Sawtimber Tree

Biomass Tree

8’

4’10’

PineExample

2009 TAPPI IBBC 17

Summary

• Demand for woody biomass is on the rise

• Trees have numerous supply chain advantages over alternatives

• Trees are and will be managed to meet sustainability targets• ArborGen technology and insight is revolutionizing productivity

potential

• Increased yields

• Shortened rotations

• Increased environmental adaptability

• Higher quality wood• Trees have the advantage of filling the raw material requirements for

multiple markets (pulp and paper, energy, wood products)