1/29/13

MAKING BIODIESEL PROFITABLE AT YOUR TRAVEL PLAZA

Featuring: Brian Wierson, Renewable Energy Group

SHOW 2013

NATSO

Renewable Energy Group, Inc.!

! NATSO University, 2013! February 4, 2013 ! Brian Wierson, Biodiesel Sales Representative !
Copyright 2012 Renewable Energy Group

Copyright 2011. Renewable Energy Group

THE

FEB 3-7 SAVANNAH, GA.

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This presentation includes Financial Projections that are managements estimates of the expected results of future operations of Renewable Energy Group, Inc. (REG). Management believes that the assumptions concerning future events and circumstances outlined herein are some of the signicant factors upon which the results of REG will depend. The Financial Projections represent a prediction of future events based on assumptions, which may or may not occur, and may not be relied upon to indicate the actual results which will be obtained. Actual results may vary materially from the Financial Projections. Accordingly, management does not guarantee or warrant the results of REG. The unaudited, historical, pro forma nancials are derived from audited nancial results of West Central, InterWest, and REG LLC, all predecessor companies of REG. In some cases, you can identify forward-looking statements by terms such as "may," "might, "objective," "intend," "should," "could," "can," "would," "expect," "believe," "estimate," "predict," "potential," "plan, or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements reect current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forwardlooking statements.!

Copyright 2012 Renewable Energy Group

Presentation Outline!
!

Biodiesel Market Development! National! State! Biodiesel Economic Opportunity for Travel Centers! RINS! REG Update!

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Biodiesel Today
Drop-In Diesel Replacement Promotes Energy Security

Feedstock Flexibility

RFS2 Driver

Lower Carbon Fuel / Reduces Emissions

Provides Lubricity to Petroleum-based Fuel

Copyright 2012 Renewable Energy Group

Biodiesel Market Drivers!

Federal Policy!
Blenders Tax Credit!
Reinstated for 2013! Retroactive for 2012!

RFS-2!
2013 RVO = 1.28 Billion Gallons! 2014 RVO = To Be Determined!

RINS Values! State Incentives!

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Blenders Tax Credit Current Status!

Federal blenders tax credit reinstated retroactively to cover 2012 and through December 31, 2013! Even with the changes arising from the recent elections, there continues to be bi-partisan support for biodiesel, and a recognition the industry is not as mature as the ethanol industry! Biodiesel industry believes that RFS2, blenders tax credit and state incentive are all critical for sustained industry growth!
7 Copyright 2012 Renewable Energy Group

Its Been A Roller Coaster, But U.S. Now Has a Growing Biodiesel Domestic Market!
Growing domestic market through RFS2 starting in 2011

1,280

1,000

1,100 800 678 490 250 14 2003 28 2004

Blenders Tax Credit Initiated

506 309

91 2005 2006 2007 2008 2009

EU Tariffs Blenders Tax credit lapses

2010

2011
Blenders Tax credit reinstated

2012

2013
Blenders Tax credit reinstated

Sub-prime market crashes

U.S. Biodiesel production in million gallons

Source: EIA and EPA

RFS2 Effective

Copyright 2012 Renewable Energy Group

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US Monthly Biodiesel Production!

180 160 140

U.S. Biodiesel Supply

166.10

121.19
120

118.24 108.72

107.88 120.36 104.62 96.39 92.69

121.64 111.70 98.53 82.63

108.23 98.67 77.76 63.50 63.94 78.48 82.01

Millins of Gallons

100 80 60

70.56

35.69
40 20 0
January 33.47

41.97
34.39

36.29

32.44

32.02 25.34

34.86

30.79

36.46

40.31 32.78 33.67

February

March

April

May

June
9

July

August

September

October

November December

Source Data: EPA EMTS, Census Bureau and DMN EsUmate for Dec

2010 Supply

2011 Supply

2012 Supply

Copyright 2012 Renewable Energy Group

RIN Prices Continue to be the Key to Blending!

2.0000 1.8000

1.6000

Price per RIN (x1.5 per gallon)

1.4000

1.2000

1.0000

0.8000

0.6000

High of $2.02 Per RIN Or $3.03 Per Gallon

0.4000

Low of $.42 in October

0.2000

Midvalue RINS Dec-11 Jun-10 Jun-11 Apr-10 Apr-11 Aug-10 Aug-11 Apr-12 Jun-12 Jul-11 Aug-12 Oct-10 Oct-11 May-10 Mar-11 May-11 May-12 Feb-11 Nov-10 Sep-11 Nov-11 Oct-12 Jan-11 Nov-12 Dec-10 Mar-10 Mar-12 Dec-12 Jan-10 Feb-10 Sep-10 Jan-12 Feb-12 Sep-12 Jul-10 Jul-12

0.0000

10

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RINS: Important in the Value Proposition !

Need to ensure capturing value from RINS! Need to ensure that your RINS are from a valid producer and transferable to the obligated parties.! Need to buy direct from producer to ensure you are maximizing margin potential.! !

Copyright 2012 Renewable Energy Group

State Policy Programs Drive RFS2 Utilization!

Source: REG

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Iowa!
The tax credit now applies to all biodiesel gallons sold at retail! 2013-2017!
For biodiesel classied as B5 or higher, the (credit) rate is $.045 per gallon!

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Copyright 2012 Renewable Energy Group

Illinois!
Incentives! Biodiesel blends between B1 and B10 are given a 20% exemption of on sales tax between July 1, 2003 and December 31, 2013. B100 and blends above B10 are totally exempted on sales between July 1, 2003 and December 31, 2013. All exemptions on all fuels end December 31, 2013. Value of tax exemption is 6.25%.....extended in December until 2018.!

Fleet Mandate! The following entities are required to use a minimum blend of B5 when fueling at a bulk central fueling facility! Diesel powered vehicles owned or operated by state, county or local governments! School districts, community colleges, public colleges or universities! Mass transit agencies!
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Texas!
Incentives! Grants are available for projects improving air quality including heavy-duty vehicle replacement, alternative fuel dispensing stations, and alternative fuel use ! Grants are available for alternative fuel and advanced technology demonstration and infrastructure projects to encourage and support development and commercialization of technologies reducing pollution! $.20/gallon excise tax abatement per gallon of B100.! The biodiesel or ethanol portion of blended fuel containing taxable diesel is exempt from the diesel fuel tax. ! Fleet Mandate! State eets greater than 15 vehicles, may not purchase or lease a motor vehicle unless the vehicle uses compressed natural gas, liqueed natural gas, propane, ethanol E85 or greater blends, biodiesel B20 or greater blends or electricity.! Labeling Laws/Additive Requirements! No longer required to additize biodiesel blends up to B50 in Texas.! Labeling laws simplied: no longer required labeling to 1/10 of 1 percent.!
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Copyright 2012 Renewable Energy Group

California---Low Carbon Fuel Standard is Market Driver!

LCFS requires a10% reduction in carbon intensity (CI) by 2020! ~ 20 billion gallon market (16B gasoline, 4B diesel)!

10% reduction creates demand for equivalent of ~ 2 billion gallons

of zero carbon fuel! Low carbon biodiesel poised to make a major contribution to carbon reduction goals! Low CI score biodiesel worth $.25-$.30/gallon.!
6.00 5.00 MMT CO2e 4.00 3.00 2.00 1.00 0.00 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Carbon ReducUon from Biodiesel Blends (relaUve to diesel)

16 Diesel Carbon ReducUon Requirement

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Biodiesel State Incentives 2013!

!

Minnesota ! Illinois ! Iowa ! Oregon ! Washington ! Pennsylvania ! Texas ! Louisiana ! New York ! Rhode Island! South Dakota Kentucky ! North Carolina North Dakota!

!B5 Mandate effective May 2009! !Tax abatement on B11 biodiesel blends 6.25%! !$0.045/gallon tax income tax credit for B5! !B5 Mandate effective April 1st 2011! !B2 Mandate effective December 2008! !B2 mandate effective January 2010 ! !$0.20/gallon tax abatement on B100! !B2 Mandate once 15 mgy of production capacity! !B2 Heating Oil mandate !! !Biodiesel is exempt from excise taxes! !Reduced road tax rate for biodiesel blends! !Income tax credit of $ 1.00/gall of biodiesel blends! !Biodiesel is exempt form state sales and use tax! !Fuel suppliers entitled to a $0.05/gal credit for B5 !

Source: REG analysis 17

Copyright 2012 Renewable Energy Group

Texas Blending Economics

Value of $.20/gallon Tax Abatement on B100 in Texas!

! !

Texas Rack Price #2 ULSD ! Texas Excise Tax Abatement (B20) REG Houston FOB Price ! Transportation! ! ! FOB Travel Center Cost ! RINS Value ($0.50/RIN) ! FOB Travel Center Less RINS ! Blending Economics ! !

!$3.05! !$0.04/B20 Gallon Sold! !$3.35/gallon! !$0.10/gallon! !$3.45/gallon! !$0.75/biodiesel gallon! !$2.70/biodiesel gallon! !$0.35/biodiesel gallon! B20 Biodiesel Blend

Total Diesel Gallons/Month

! Biodiesel Gallons/Month

400,000 80,000 $16,000 $0.35 $28,000 $44,000

Copyright 2012 Renewable Energy Group

Texas Excise Abatement (.04/gal of B20) RINS Value/B100 Gallon Biodiesel Blending Value/Month

! Total Value/Month including State IncenUve ! !

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Blending Economics if No State Incentives!

! !

Rack Price #2 ULSD! ! REG FOB Plant Price (10C) ! Transportation ! ! FOB Travel Center Biodiesel Price RINS Value ($0.50) ! ! FOB Biodiesel Price Less RINS Diesel gallons/month! !

!$3.05! !$3.15! !$0.20! !$3.35! !$0.75/biodiesel gallon! !$2.60/biodiesel gallon! !500,000!

B20 Biodiesel Blend

! Total Diesel Gallons/Month

500,000 100,000 $0.45 $45,000

Copyright 2012 Renewable Energy Group

Biodiesel Gallons/Month Biodiesel Blending Economics/Gallon Biodiesel Blending Prot/Month

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! ! !

Renewable Energy Group, Inc.!

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Copyright 2011. Renewable Energy Group

Copyright 2012 Renewable Energy Group

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Nations Leading Biodiesel Producer and Marketer!

RFS2 is in Place and Supporting Demand for Biodiesel Company Founded in 1996 and is Largest Producer of Biodiesel in U.S. Margin Advantage Due to Lower Cost Feedstock Production Capabilities Experienced Management Team with Significant Risk Management Expertise Proven Track Record of Effective Acquisition Integration Sales and Marketing Leadership of Premium Quality Biodiesel Established Strategic Relationships
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National Distribution!

REG Plants (in production) REG Plants (partially constructed) REG Terminals Headquarters San Francisco office
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REG Experience with Travel Center Industry!

REG selling biodiesel direct to National Travel Center Chains and Independents since 2007.!
Pilot Travel Centers 29% of Sales in 2010! Pilot Travel Centers 23% of Sales in 2011!

RINS values and state Incentives have acted as economic engine to incent Travel Centers to blend biodiesel! Travel Centers supporting RFS-2 Federal compliance by serving as an additional source supplying RINS to obligated parties!
Copyright 2012 Renewable Energy Group

REG Network of Biodiesel Production!

REG Albert Lea - Minnesota
High Low

REG Danville - Illinois

High Low

REG Newton - Iowa

High Low

30 MMGY, Startup: 3/2005

45 MMGY, Startup: 11/2008

30 MMGY, Startup: 05/2007

REG New Boston - Texas

High Low

REG Seneca - Illinois

High Low

REG Houston - Texas

Low

15 MMGY, Acquired: 10/2012

60 MMGY, Acquired: 04/2010

35 MMGY, Startup: 08/2008

REG Ralston - Iowa

Low

REG owns and operates a network of stateof-the-art, commercial-scale biodiesel production facilities

12 MMGY, Startup: 03/2003

High High free fatty acid feedstock conversion Low Low free fatty acid feedstock conversion

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REG Network of Biodiesel Production!

REG Atlanta - Georgia
High Low

REG Clovis - New Mexico

High Low PC

15 MMGY Acquired: 11/2012 Startup: TBD

15 MMGY 40% complete Acquired: 09/2010 Startup: TBD (Currently operating as terminal)

REG Emporia - Kansas

High Low PC

REG New Orleans - Louisiana

High Low PC

60 MMGY 20% complete Startup: TBD

60 MMGY 45% complete Startup: TBD

High

High free fatty acid feedstock conversion

Low

Low free fatty acid feedstock conversion

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PC

Partially completed

Copyright 2012 Renewable Energy Group

BQ-9000 Certied Producer!

To become a BQ 9000 certied producer, an internal quality assurance program must be written and implemented.! This quality system and the plant is reviewed for compliance by an external auditor.! Plants must also conduct internal audits and regular quality management review meetings.! Plant must be in production for at least 6 months before the external audit can be completed.! BQ 9000 status ensures that the producer or marketer is following best practices.!

Doesnt guarantee that the product being marketed meets product specications because the entities may not be following BQ 9000 requirements all the time.!

! www.bq-9000.org! !

Copyright 2012 Renewable Energy Group

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REG-9000 Biodiesel !
REG-9000 Biodiesel Advantages Marketed based on fuel characteristics, not the type of feedstock

Positioned as premium quality product Competitive Advantages

REG-9000 Advertising

Ability to produce from a wide range of lower cost raw materials enables pricing flexibility Reliability as an off-take customer for key suppliers of contract-manufactured fuel Ability to meet stringent customer specifications Preferred supplier to key customers and trading partners
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Note: REG-9000 is a trademark of REG

Contact Information!
REG Biodiesel Sales Representatives! ! Brian Wierson! Brian.Wierson@REGI.com! 515-239-8075! ! Tom Schroeder! Tom.Schroeder@REGI.com! 515-239-8144!

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Copyright 2012 Renewable Energy Group

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