Presentation of

1
Produce bioethanol in north-eastern France

• Presentation of
• a business opportunity
• Prepared by CAPEMM
• an economic development agency
• in the north-east of France.
• 06/2006
• v1.2

2
Content

• Drivers - market and regulatory
• Market overview - EU and France
• 3 issues for industrializing bioethanol
  production in France
• A business case for the location of north-eastern
  France (Meurthe-Mosel County in Lorraine)
• How Capemm can help

3
Drivers - market and regulatory

• EU and French directives and targets
• European Union
• Needed compliance with the Kyoto Protocol
• Currently, 84 of CO2
• emissions are transport
• related

Source PriceWaterhouseCoopers/IFP commissi
oned by ADEME/DIREM
4
Drivers - market and regulatory

• EU and French directives and targets
• European Union
• Economic benefits of biofuels, especially
  associated with job creation from new
  installations as well as decreased dependence on
  oil imports
• Stepped increase in fuel blend targets as per EU
  directive 2003/30/CE
• (see graph on page 6)

5
Drivers - market and regulatory

• EU and French directives and targets
• Market
• Rising price of oil increasingly renders biofuels
  an economically feasible alternative
• (see graph on page 12)
• Over 30 of EU energy consumption comes from the
  transport sector
• At least a 20 rise in transport fuel prices is
  expected by 2010 (IEA forecasted)
• Most vehicles currently in circulation in the EU
  are capable of using the low biofuel blend
  targeted

6
Drivers - market and regulatory

• EU and French directives and targets
• French fuel blend targets
• France seeks to stimulate industrial investments
  by increasing production quotas, exceeding EU
  targets.

7
Drivers - market and regulatory

• EU and French directives and targets
• France
• Ample fallow land (1,5M ha) for increased crop
  production
• Call for bids to increase annual biofuel
  production to 3M mt by 2008
• A clear change of policy where production quotas
  have been fixed since 1998 at 317 000 mt
• The next round due this year is expected to be
  for 150 000 mt of bioethanol (production in 2004
  was only 108 500 mt)

8
Drivers - market and regulatory

• EU and French directives and targets
• France
• Deregulation in the form of reduced pump tax and
  special benefits for farmers to stim-ulate
  consumption and thus investments
• TGAP is a polluter-tax. Distributors must
  pay as a penalty a percentage of the tax if they
  do not respect the targeted fuel-mix objectives.

9
Market overview - EU and France

• EU-25
• Biofuel demand to increase significantly
• Estimated demand
• 2005 (grey)
• 2010 (green)

Source courtesy of Degussa
10
Market overview - EU and France

• France
• Biofuel production capacities to increase
• due end 2007 (estimates)
• Company, Location, Total capacity,
  Investment in new capacity (if avail.)

new plant plant expansion
Source LUsine Nouvelle, No.2978, Sept.22, 2005
11
Market overview - EU and France

• France
• Transport fuels market shares
• Expected Consumption
• 2006

Source DIREM, June 2005
12
3 issues for industrializing bioethanol production

• Issuance of production quotas
• Nuisance of administrative lags
• Examples
• Euralis and Abengoas 120M joint-venture has
  received 40k mt authorized (bioethanol) for its
  180k mt plant in Lacq
• Tereos 130M investment in Lillebonne has
  received 80k mt authorized (bioethanol) for its
  200k mt plant
• as of September 2005

13
3 issues for industrializing bioethanol production

• Profit-earning capacity
• Bioethanol profitability factors

Source Austrian Biofuels Institute
14
3 issues for industrializing bioethanol production

• Profit-earning capacity
• Petroleum market price
• A price for light
• sweet crude exceeding
• 70 to 80 per barrel
• will soon render biofuels
• competitive

Production prices / hl, before tax (with oil at
65 per barrel)
Source LUsine Nouvelle
15
A business case for the location of north-eastern
France

• 21,7 of Frances cultivated agricultural land
• 9,4M mt of wheat harvested annually
• gt 5,5 mt/ha crop yield

16
A business case for the location of north-eastern
France

• Local feedstock supply
• Ample local wheat production

Source Agreste 2004
17
A business case for the location of Lorraine

• Proximity to three national borders ( B, L, D,
  and near NL and CH )
• Inland waterway leading directly to the North Sea
• 1,2M mt average annual harvest
• Solid local supply partners
• gt 100 collection points

18
A business case for the location of Lorraine

• Local feedstock supply
• Solid local supply partners
• Epilor
• An association of 4 Lorraine co-operatives
• 400M in annual consolidated sales
• 700 employees
• 1,1M mt annual crop yield (all crops)
• 73 silos including 3 port facilities
• EMC2
• A co-operative
• 220M in annual sales
• 250 employees
• 900k mt annual crop yield (all crops)
• 40 silos including 2 port facilities

19
A business case for the location of
Meurthe-Moselle County

• Complete and partially toll-free east-west and
• north-south road network
• The Mosel is the 3rd inland waterway
• after the Rhine and the Seine
• Riverfront public industrial
• real estate available

20
A business case for the location of
Meurthe-Moselle County

• Available and well adapted sites
• Several along the Mosel river-canal
• The region boasts Frances largest port silos
• Frances major international in-transit rail
  freight region
• Fully developed highway network

Location of three riverfront sites (see next
slide)
21
A business case for the location of
Meurthe-Moselle County

• Available and well adapted sites
• Several along the Mosel river-canal
• site of Belleville
• - 20km north of Nancy
• - 3,8 ha levelled plot
• - public property
• site of Gondreville
• - 15km west of Nancy
• - undeveloped public property
• site of La Nouvelle
• - 15km north of Nancy
• - levelled
• - public property

22
Capemm - An investment attraction agency

• How we can help
• Location business case
• to assist investors determine the feasibility of
  their project and compare with other candidate
  locations
• Recruitment and training
• employment figures, wage rates, and organisation
  of preliminary recruitment campaign as well as
  apply for government grants
• Legal and financial issues
• Executive care
• Marketing support
• Site location search

23
Capemm - An investment attraction agency

• How we can help
• Location business case
• Recruitment and training
• Legal and financial issues
• assistance in finding appropriate corporate, tax,
  and HR counselling as well as optimise government
  grant opportunities
• Executive care
• Lorraine is unique in its ability to offer
  investors the services of Lorraine International,
  personalised relocation assistance for
  expatriates
• Marketing support
• Site location search

24
Capemm - An investment attraction agency

• How we can help
• Location business case
• Recruitment and training
• Legal and financial issues
• Executive care
• Marketing support
• Local networking with suppliers, your client base
  as well as competitors
• Site location search
• Managing the development of all of the Countys
  public industrial real estate, Capemm find
  investors fitting plots including the search for
  existing buildings

25
Capemm - an investment attraction agency

• We can help
• Just contact us
• Capemm
• 48, rue du Sergent Blandan
• B.P. 43643, Cedex
• 54096 Nancy - France
• Your contact Rodrigo Madiedo
• Tel. [phone]
• Email rmadiedo_at_capemm.com
• European offices in Milan, Italy
• Barcelona, Spain
• Dillingen, Germany
• Please visit us at www.capemm.com