Policy Trend of National Bio-Energy

May. 31. 2012

Korea AMF Team

Contents

World bio-energy trends and prospects

Policy trends of domestic Bio-Energy

Current state of domestic Bio-Fuel

Current Challenges of Bio-Energy

1 Energy sources consumption in 2010

2. Policy trends of Bio-Energy

fossil fuel 80 % of total primary energy consumption

Petroleum(40.1%) > Coal(29.2%) > Nuclear(12.2%)

Renewable and other 2.8% Nuclear 12.2% Coal 29.2%

Naphtha (41.7%) Diesel (17.0%) LPG (13.3%) B-C (7.8%) Gasoline (8.7%)

LNG 15.7%

Total : 260.5 mtoe

Petroleum 40.1%

Other (11.5%)

Total : 794.5 mbbl

Energy consumption distribution by sector [2010]

2. Policy trends of Bio-Energy

industry sector takes possession of 59.2% more than half Transportation sector about 20%.

Industry(59.2%) > Home(19.6%) > Transportation(18.8%)

Home & Commercial 19.6 %

Other 2.4 %

Total : 195.0 mtoe

Transportation 18.8%

Industry 59.2 %

National Energy Main plan(08.12)

Optimal Energy Mix(derived results)

2. Policy trends of Bio-Energy

Atomic, 14.9%

LNG, 13.8%

RNE 2.5% Oil, 43.4%

LNG, 12.0%

RNE, 11.5% Oil, 33.0% Coal, 15.7%

Atomic,
27.8%

Coal 25.3%

2007: 233m TOE

2030 : 300m TOE

Clean and self-sufficient energy for green growth and energy security
Renewable Energy share increase

(07) 2.5% (07) 14.9%

(30) 11.5% (30) 27.8%

Nuclear energy share increase

Reduction from 83% up to 61% for oil and other fossil fuels
Oil Coal annually 0.1% decrease, dependence to change from 43.4% annually 0.8% decrease, dependence to change 25.3% 33% 15.7%

National Energy Main plan(08.12)

Renewable Energy supply dissemination

2. Policy trends of Bio-Energy

Supply rate achievement 11%

In 2030, supply rate increase in the developed country such as United states , Japan and the like
Marine , hydro,
solar,
other, Geothermal,

HP, 16.4%

BIO, 6.0% WP,

1.6%
waste , 74.8%

PV , 0.5% ETC, 0.7%

4.1% wind, 4.7% 4.4% 12.6%

3.8%

6.2%
waste, 33.4%

BIO, 30.8%

2007

2030

Current state of domestic renewable energy

Renewable energy Consumption trends

2. Policy trends of Bio-Energy

in 2009, renewable energy consumption was 6886 thousands TOE, total primary energy

consumption(243,311 thousands TOE)

holds 2.5% of the total primary energy consumption

* National Energy Master Plan ('08 .12)), by 2030 11% is expected increase in R.E
236,454 240,752 243,311

233,372
: 1,000 toe Primary energy

228,622 220,238 6,086 5,225 4,582 4,879

(2.1%) (2.2%)

Renewable energy

5,609
(2.3%)

5,858
(2.4%) (2.5%)

180,639 93,192 1,419

(0.7%)

(2.0%)

335
(0.4%)

90

97

04

05

06

07

08

09

Current state of domestic renewable energy

Renewable energy distribution trends(99~09)

2. Policy trends of Bio-Energy

waste(74.89%), hydro(9.97), bio(9.54%) by order distribution d annually increase of renewable energy share by 7.3% * National Energy Master Plan ('08 .12), by 2030 30.8 increase is expected
6,000,000 5,000,000
.
Hydro

2009 renewable energy sources

( : toe)

4,000,000 3,000,000 2,000,000

Waste Bio ETC

Wind

1,000,000 0 2000

PV
PT

2001

2002

2003

2004

2005

2006

2007

2008

2009
FC

GT

Solar (PV) Fuel Cell Bio

Energy from waste Wind

Geothermal Hydro

Solar Heat

Current state of domestic renewable energy

Renewable energy distribution trends (99~09)

2. Policy trends of Bio-Energy

Biodiesel portion of bioenergy increased rapidly from 7.1 % (05) to 43% (09)
700000 600000 500000 400000 300000 200000 100000 0 1999 ()

Unit: 1000 TOE (Tone of Energy) ( : toe) .

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

()

()
Bio-GAS (Heating) Woodchip

()

Bio-GAS (Electricity) Bio-Diesel

Landfill-GAS (Electricity) Coal Forest fuel

Landfill-GAS (Heating) Wood-Pellet

Contents

World bio-energy trends and prospects

Policy trends of domestic Bio-Energy

Current state of domestic Bio-Fuel

Current Challenges of Bio-Energy

Current state of domestic bio-fuel

3. Domestic Bio-Fuel current status

(petroleum alternative fuel)

Petroleum and petroleum alternative fuel act decree

Clause 5(petroleum fuel alternative types) amendment(09.4.30)

Bio-Diesel fuel oil

Bio-Ethanol Fuel Oil

Coal Liquefaction Fuel oil

Natural bituminous oil

Emulsification Gas liquefecation Fuel oil fuel oil

DME Fuel oil

Bio-Gas Fuel oil

others

Domestic Bio-Fuel

3. Domestic Bio-Fuel current status

Transportation fuel

Alternative Bio-Fuel

Diesel
*i.e
HBD, BTL R&D in progress

Bio-Diesel
* Note: Promoting quality stand is mandatory

Gas

Bio-Ethanol

Second-generation bio-alcohol ( ethanol, butanol, etc.), research and development in progress

Natural Gas

Bio-Gas

* Bio methane fuel for transport research and development in progress

Domestic supply of biofuels current state and Policy

3. Domestic Bio-Fuel current status

Biodiesel 2004 2006. 7 2008 2009 ~ 2010 2011 - BD20 Model Distribution Project (2002-2005) - Temporary medical supplies to start biodiesel (BD 0.5%) -

Bio-ethanol
Oxygenated gasoline as a fuel (BE, ETBE) allowed mixed

Empirical evaluation of bioethanol (2006-2008)

- Introduction of domestic renewable fuels obligation Study of mixed system

-The second long-term supply planning biodiesel (BD temporary exemption until 2011 after the 2012 Sunset support) - Promoting biodiesel mandate (revised quality standards)

Long-term plans to supply bio-diesel

Mixing ratio (goals)

0.5%

1.0%

1.5%

2.0%

2.0%

2.0%

Duty-free support
Composition based on raw material
Diversification of raw materials An Empirical Study

Duty-free support

Review
Pilot project for the use of rapeseed as Bio-Diesel

Quality mandated by standards

Quality and technology

Strengthen quality standards

Low-cost, high-efficiency biodiesel production www.mocie.go.kr, 07. 9. Source: technology 2007 2008 2009 2010 2011 2012 2013

Supply status of domestic biodiesel Dissemination plan

second long-term distribution plans for Biodiesel(2010. 12)

Dissemination plan

first pointing out problems of Biodiesel Cost & improving raw material supply conditions Commercialization of animal bio-diesel, overseas farm pioneering promote activation
Early commercialization of next-generation biofuel production technologies, expand domestic wastes recycling

By 2011, bio-diesel fuel taxes to maintain tax-exempt institutions from 2012 Quality standards introduced by the mixing of the duties of biodiesel 2.0% to maintain the mixing ratio, mixing rate increased the price competitiveness and the future Given the improved conditions determined by raw material supply

Supply status of domestic biodiesel Dissemination plan

Distribution

Diesel : Currently marketed by blending 2% biodiesel in diesel distribution

BD20: Bio-diesel 20%(winter10%) + mixture of diesel fuel Limited supply

Distribution Structure

BD100

(BD2)

Bio-diesel production
* 2011.5 currently 15 companies * production capacity : annually 1,064 thousands kL/yr

4 refineries

Fuel station

Diesel (BD2)

BD20
Winter, 10% mixed (11/1~3/31)
Self-fueling of plant maintenance facilities with Bus, truck railway construction machinery

consumer

Biodiesel Raw Materials

3. . Domestic Bio-Fuel current status

Vegetable oil : Palm oil(43.1%), Waste edible oil(33.1%), Soybean Oil(18.4%), rapes(1.5 Animal fats and oils: Lard, tallow, etc. (2011 commercial)
Material currently in use

Palm
Raw material commercialization 2011

Frying oil

(Soybean)

Rapeseed

Securing Raw Material R & D

Domestic raw material supply Contribute to stabilization

Lards

Cattle pen

Marine biomass
(Algae)

Supply status of domestic biodiesel Dissemination plan

Long-term performance of biodiesel supply (02~11)

BD5
Item B100(1000KL) Mixing ratio(%)

since January 2006.7, BD5 Biodiesel is advertised in the mixture spread - 1,4231000 kL

2006.7~2006.12 46 0.5

2007 108 0.5

2008 195 1

2009 288 1.5

2010 394 2

2011 388 2

BD20
Item B100 Mixing ratio(%)

2006.7 since January, BD20 advertised in the blend of biodiesel is approximately 1,506 1000L

2006.7~2006.12 20

2007 187

2008 304 20(Winter 10)

2009 311

2010 345

2011 326

17

Domestic supply and demand of biodiesel raw material

Raw materials for biodiesel including domestic waste edible oil, palm oil, soybean oil, Rapeseed Oil, etc.
Mostly dependent on imports (72%), domestic raw materials (28%)

waste Edible Oil other Raw Material Soybean Oil

Waste Oil(33.09%) Palm Oil (43.11%) Domestic Raw Material

Imported Raw Material Domestic Raw Material

Imported Raw material

Rapeseed Palm Oil

Soybean (18.42%) Other Raw Material(18.42%)

Rapeseed(18.42%)

Current status of Domestic Bio-ethanol

Domestic production of bioethanol. State of consumption

Domestic production of bioethanol

Bio-ethanol for the domestic liquor manufacturer 10 times.

Domestic consumption of bio-ethanol

- raw alcohol production is made by refining and fermentation of domestic raw material
- Imports about 45%, about 55% of domestic production
: kL One unit: 1000 Liter

The annual production of bioethanol is approximately 30 to 320,000 kL Lim - Majority 92%, food, pharmaceutical, industrial 8
* Domestic gasoline consumption in 07 , E5 for manufacturing Bio-ethanol is approximately 500,000
others(Food / drink, pharmaceutical, etc. 2 %)

350,000 300,000 250,000 200,000 150,000 100,000 50,000 Import Domestic T otal 2006 137,503 162,497 300,000 2007 145,014 170,986 316,000 2008 152,449 162,551 315,000

46%

46%

48%

Majority (92%)

Current state of domestic ethanol

Introduction of bio-ethanol Status
National feasibility study (05.7~05.12, Korea Institute of Energy Research)with Empirical
distribution infrastructure assessment (06.8~08.7, Korea National Oil Management Service) the quality of standards-based

review, dissemination, etc.

Domestic Biogas current state

Bio-Organic Waste Gasification Facility(09 )
( : , /)

Item
facilities Number

No. 49 37,894

Food waste 2 298

Fresh water 5 1,633

Livestock manure 9 590

Sewage Sludge 20 22,468

Sewage Sludge* 13 12,905

Facility capacity

* Merge: two kinds of organic or bio-gas as a resource to produce pulmonary Facilities

Biogas Utilization(standard of 2009)

(Unit : 1000 S, %)

Usage by Application Bio-gas production 139,799 no 109,934 Develop ment 18,794 Gas Sales 4,798 itself 86,342

Simple throughput

29,865

Domestic Biogas current state

Current state of automotive bio-gas fuel Installation area
Landfill
Sewage treatment plant at Ulsan Yongyeon

Bio-Gas use(Nm3/hr)
300 1200 600

Form of use
LNG CNG CNG

Progress
commissioning

Processing demand
R&D SK Chemicals Supply
CNG buses / natural gas pipeline connecting

In operation Under construction

Landfill
Southwest Wastewater Treatment Plant
Korea Research Institute of Chemical Technology

210
6

CNG
CNG

In operation
Pilot plant in operation

CNG Bus
R&D

Pending issues
Automotive Repair Act, such as bio-gas production and related infrastructure needed to develop

Bio-gas domestic production industrial status in operation

Seoul, South West Wastewater Treatment Plant Biogas Project Cars RDF

- Facility capacity: sewage sludge biogas 2,940 m3 / day at refinery - Purification techniques: absorption (Water scrubbing, Sweden) - Current Status: 2009. Completion of 5
- Biomethane purification Utilization: Cleaning supplies and a local bus vehicle

Sewage treatment plant in Ulsan Yongyeon biogas-energy facilities

- Facility capacity: sewage sludge biogas refining 10m3/min

- Refining techniques: absorption (Water scrubbing, Sweden), - building (planned) - Current Status: 2009. Completion of 9 - Biomethane refinery utilization: SK Chemicals supply sales (13,800 Nm3 / day)
Gangneung charyangyeonryohwa sewage biogas projects - Facility capacity: sewage sludge biogas 550m3 / day refinery - Refining techniques: absorption (Water scrubbing, Sweden) - Current Status: 2010. Completion of 5 - Biomethane refinery utilization: city buses, cleaning vehicles, General Passenger Vehicle supply (planned)

Biodiesel dissemination current state(2010)

3. Domestic biofuel current state

B5
BD5(Diesel + biodiesel 5% below) By Biodiesel - 06.7 ~ 10.12 BD100 ~ 104 kL Mixed with regular diesel
2006.7~2006.12 B100 Blend Ratio(%) 46,000 0.5 2007 108,000 0.5 2008 195,000 1 2009 288,000 1.5
Unit : kL

2010 2

394,836

B20
BD20(Diesel+Bio-Diesel 20% below) by bio-diesel - 06.7 ~ 10.12 BD100 ~ 1,180 kL Mixed with regular diesel
Unit : kL

2006.7~2006.12
B100 Blend Ratio(%) 20

2007
187

2008
304 20(winter 10)

2009
311

2010
345

Supply of biodiesel feedstock(2010)

3. Domestic bio-fuel current state

Mostly dependent on imports of raw materials (76%) main raw material of biodiesel palm oil(47%), used cooking oil(28%), soybean oil(22%).

24%

4% 22% 28%

76%

47%

Import

Domestic

used oil

palm oil

soybean

others

Current state of Bio-Ethanol supply

3. sa

96. 6 :"Gaseuhol vehicle exhaust pollution in accordance with the test measurements and practical study on"
(Busan Alcohol Industry Technology Research Association)

05 :

The occasion of visit by Brazilian President Luiz Inacio Lula da Silva introduced in earnest BE Review :"The introduction of bio-ethanol feasibility study abroad" (Energy Research)

05. 7~12 05. 12

:"Petroleum and petroleum alternative fuels Act," the quality of petroleum products and inspection standards and test methods Notice on Fee (Ministry of Commerce Announcement No. 2005-123, 12/30/2005

06.8~08.7 :"Evaluation of bio-ethanol demonstration" (Korea Petroleum Management Service)

Current state of Bio-Ethanol supply

Empirical Assessment, including bio-ethanol

3. Bio-fuel supply current state

Introduction of national feasibility study ('05 .7 ~ '05 .12, Korea Institute of Energy Research) and distribution infrastructure, empirical evaluation
review, dissemination, etc.

(06.8~08.7,

Korea National Oil Management Service

Upon completion, the quality of standards-based

Pump

Delivery and Distribution

Fuel gun Fuel gun

Bio-Ethanol Mixed Fuel Production Kyeong.gi (E5)

Ethanol Tank

Ventilation

Dehydrated Ethanol Production

Refinery
Blending Device
Honam [E3] CheongChung (E5)

Suboctane gasoline tank

Delivery Tank Truck

Gas Station

Yeongnam (E5)

Sub-octane Gasoline Production Facility Transportat ion Facilities Delivery to 4 provinces

Consumers

Skmanufacturing Equipment

Current state of bioethanol production and consumption (2010)

3.Bio-fuel supply current state

Domestic production of bioethanol and Consumption State

Domestic manufacturer of bio-ethanol 10 times. - majority is imported, refining and using domestic raw materials Produced by fermentation - Approximately 47% of imports, domestic production of about 53%

The annual production of bioethanol is approximately 30 to 320,00 - majority 92%, food, pharmaceutical, industrial and 8%

Based on domestic consumption of gasoline, E5 for manufacturing Bio-ethanol is approximately 500,000

: kL
350,000 300,000 250,000 200,000 150,000 100,000 50,000 Import Domestic T otal 2006 137,503 162,497 300,000 2007 145,014 170,986 316,000 2008 152,449 162,551 315,000 2009 150,846 163,154 314,000 2010 141,721 157,279 299,000

Other (food / drink, pharmaceutical, etc.) (10%)

(90%)

Bio-Gas current state

The need for introducing Bio-Gas

3. Domestic bio-fuel current state

Biodiesel and bio-ethanol has less greenhouse gas emissions (global warming than the CO2 21 times the inhibitory effect of methane emissions)

The energizing of its waste material, can take advantage of existing natural gas infrastructure

Recycling of biogas systems

Overseas Trends
Europe - Natural gas replaced by a certain percentage of bio-gas - Sweden: The world's first bio-gas diffusion transport of - Year 2020 will replace 20 percent of transportation of fossil fuels - Germany: '30 to 10 percent of natural gas by biogas / synthetic Mandatory alternative to natural gas

Japan - The gas company's non-fossil energy supply obligation - Tokyo Gas, Osaka Gas natural gas, biogas, etc.

Bio-Gas Current state

Biogas to Energy Concept

3. . Domestic bio-fuel current state

Recycling of biogas (energy production)

Heating Fuel

Power production

Landfill Gas
RDF biomethane (City gas, vehicles, etc.)

Methane gas
One of green house gases

Fuel Cell

Sewage Treatment Plant

Digested sewage sludge gas generation

Gas pretreatment / purification

Remove impurities such as moisture Compression

Secure carbon content

1tCH4
Removal of global warming gases Ensuring affordability

21~23tCO2

Contents

World bio-energy trends and prospects

Policy trends of domestic Bio-Energy

Current state of domestic Bio-Fuel

Current Challenges of Bio-Energy

Current issues on biofuel

secure biofuels raw materials
(Biodiesel).

4. Current Challenges of Bio-Energy

- Domestic waste cooking oil, except for the most dependent on imports of raw materials Domestic wastes (waste edible oil, animal fats) utilization, expanding overseas need to support farm development and technology development
(Ethanol). - Bio-ethanol supply relies on imports for most of the expected marine biomass and bio-ethanol as competitiveness through investment in R & D needs

R & D support
(Biodiesel). - Specialized stores take advantage of biodiesel raw materials and production technologies HBD animal fats and Biodiesel Production from Microalgae, etc.
(Ethanol). - Marine / utilize lignocellulose biomass, such as bio-ethanol production technology development bayiohbutanol high concentrations of algae cultivation and harvesting techniques, development of lignocellulose biomass, including pretreatment and enzymatic saccharification

(Biogas). - Bio-gas purification and liquefaction technology development

Current issues on biofuel

Infrastructure
(Biodiesel). - Waste edible oil and animal fats, such as collection system construction

4. Current Challenges of Bio-Energy

(Ethanol). - In the national low carbon fuel ethanol storage and blending manufacturing facility construction, water management response, such as gas stations

Mandatory distribution
(Biodiesel). - Dissemination of current quality according to mandated standards
(Bio-ethanol and biogas) - Renewable fuel duty mixed system (Renewable Fuel Standard) Review of the introduction