Carbon Product Innovation October 5, 2017 - C O N F I D E N T I A L - - PowerPoint PPT Presentation

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October 5, 2017 Carbon Product Innovation

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Slowing the rate of new CO2 emissions is no longer sufficient to combat climate change; the state of climate change demands a further reduction in atmospheric CO2 levels using market-based solutions

INTRODUCTION

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250 300 350 400

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Atmospheric CO2 Levels

ATMOSPHERIC CARBON IS STILL INCREASING

Despite the continued focus on reducing incremental emissions, the collective “industrial legacy” of carbon continues to be ignored

CO2 PPM (Parts Per Million) Thousands of Years Before Today Today: 404 PPM “Pre-Industrial” Level

Industrial Legacy

“INDUSTRIAL LEGACY” CO2

+ 1 PPM / Year 104 PPM

∼ 800 GT ∼ 7 GT / Year

NET IMBALANCE CO2

Release +468 GT / Year Human impact, microbial respiration, plant respiration Intake

• 461 GT / Year

Plants / biomass , Oceans, Soil / land

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+0°C +1°C +2°C +3°C +4°C +5°C +6°C

Global GDP Food Water Coast Ecosystems Extreme Weather Events

Without significant CO2 reduction, severe negative impacts from rising average temperatures and increasing climate volatility are guaranteed

Falling crop yields in many areas, particularly developing regions Small glaciers disappear 1.0-3.2B people impacted with increased water stress Extensive damage to coral reefs 20-30% species face extinction Rising intensity of storms, forest fires, droughts, flooding, heatwaves Increased damage from storms $50-100B US property under water Global extinctions

• 30% coastal wetlands
• $20T
• $44T
• $72T

Temp Δ relative to pre-industrial levels

CREATING SEVERE LONG-TERM IMPACTS

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OPTIONS TO COMBAT CLIMATE CHANGE

Electricity

(30%)

Industry

(21%)

Transportation

(26%)

Renewable Energy Electric Vehicles Energy Efficiency, CCS Technology Land Management Geo- Engineering

“Adapt” Reduce Emissions Remove CO2 from Atmosphere

Necessary Carbon-to- Value Severe Marginal, Long Long Unpredictable

Carbon-to-Value technology is the only economically viable option within the necessary timeframe at the required scale

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SOLUTION: CONVERT CO2 INTO PRODUCTS

CO2 Direct from the Air CO2 Into “Carbon Negative” Materials CO2 Price Competitive Products CAPTURE CONVERT COMMERCIALIZE

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HOW IT WORKS

DIRECT AIR CAPTURE NATURAL GAS RENEWABLE ENERGY

CARBON FIBER CONCRETE INDUSTRIAL CHEMICALS TIRES STEEL FUELS

CO2 + (H2 or CH4) + e-

ELECTROLYSIS OR

ELECTRONICS

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CARBON FEEDS LARGE GLOBAL MARKETS

CO₂

Materials

$650B

Steel Concrete Fillers Coatings

Chemicals

$500B

Plastics Industrial Chemicals Fertilizers Carbonates

Fuels

$2,000B

Diesel Ethanol Methanol

Carbon is an important feedstock into materials ($650B), chemicals ($500B) and fuels ($2T), representing 18.8 GT / year sequestration potential

Carbon Uses Sequestration Potential

Very Long Short

Sequestration Duration

• 18.8 GT / Year

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Solid Carbon Materials End Markets Carbon Market Size1 Direct CO2 Impact2

Tire Filler $19.0 B .07 GT Other Fillers & Reinforcements $6.0 B .02 GT Coatings, Inks $2.0 B .01 GT Metal Replacement $250.0 B 7.7 GT Concrete Replacement $243.0 B 11.0 GT Carbon Fiber $2.6 B .003 GT Resin Reinforcement $16.0 B .05 GT Electronics, Energy Storage >$80.0 B .006 GT Biotech, Optics, Fabric, Other <.01 GT

$600-700 B 18.8 GT Carbon Black Nanotubes, fibers, graphene, structured materials

• 1. Based on incumbent/end product market price, weight and loading ratio of carbon in product
• 2. Direct sequestration in end product based on carbon loading plus effect of avoidance of incumbent product manufacturing

EXAMPLE: SOLID CARBON MATERIALS

For example, solid carbon materials markets are global, massive and leveraged to urbanization trends

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Unsubsidized Cost of Energy Comparison (US)

$0 $10 $20 $30 $40 $50 $60 $70 $80 2015 2020 2025 2030 2035 2040

$/MWh GAS COAL SOLAR

“CARBON NEGATIVE” INFLECTION POINT

Carbon Neutral Carbon Negative

Renewable electricity sources <$40/MWh (solar is <$30/MWh in many US markets) enables materials to be both “carbon negative” and price competitive

Source: EIA, BNEF, Lazard Estimates

UTILITY-SCALE SOLAR

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Type Stage Technology & Development Management Team, Capital Need

Capture Seed / Growth

• CO₂ from ambient air
• Demonstration unit operating
• Strong mgmt. team, Bill Gates is lead backer
• Needs $20M anchor for $75M project round

Capture Seed / Growth

• CO₂ from ambient air, flue gas
• Lower cost than CEI at scale
• Mgmt. team lacks commercial & dev’t capability
• $20M invested, Edgar Bronfman is lead backer

Capture Seed / Growth

• CO₂ from ambient air, distributed application
• Finalists in Virgin Earth Challenge
• Based in Zurich
• Funded by Swiss Institute of Technology

Conversion Growth / Project

• Low cost net-negative CO2 technology
• Converts CO2 to carbon black, graphene,

nanotubes

• Strong technical team, lacks mgmt. and

commercial/financial capability

• Exxon considering licensing partnership

Application Growth / Project

• Cellular graphene, diversified applications
• incl. ultra-high strength composites
• Pilot manufacturing plant operating
• Strong technical and management team
• Needs $10M in growth capital to scale

manufacturing, develop stage II applications Application Seed / Growth

• Solid Carbon to Batteries
• 5x performance of Tesla battery
• Strong technical team, weak mgmt. team
• Needs $3M to complete commercial prototype of

10 kWh battery, $5M to scale Application Growth / Project

• Solid carbon to diversified applications

(electronics, carbon black, wearables)

• Strong technical and management team
• Needs $15M in growth capital to scale platform

TECHNOLOGY IS VIABLE

Several carbon-to-value technologies are available and ready to scale

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THE OPPORTUNITY TO BE FIRST

Emissions Source Zero Carbon Products Technology Investment ‘00–17 Power Plants Hydro, Solar / Wind + Batteries $35B+ Transportation Electric Vehicles $12B+ “Industry” Materials, Chemicals, Fuels <$100M

To date, less than $100M has been invested in the emerging carbon-to-value sector

Source: CB Insights

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INDUSTRY “INTEGRATOR” IS NEEDED

Siloed carbon-to-value technology development must be transformed into a cohesive, well-capitalized commercial industry

ACTIVITIES PEOPLE

Project Development Private equity investors

(Energy/renewables)

Technology Integration Engineers & business development executives Regulatory Evaluation Policy experts Application Analysis Industry analysts Technology Investment Venture capital investors

(Early-stage)

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PRIOR EXPERIENCE: SOLAR RESERVE

Summary Vertical: Renewable Power Technology: Concentrated solar thermal with molten salt storage Stage: Development Locations: Worldwide Scale: 100 – 400 MW (reference plant) Date of Investment: January 2008 Capital Committed/ Invested: $53 million / $53 million Ownership %: 36% (fully diluted)

Problem / Opportunity

► Large US-based industrial took control of CSP technology via acquisition of rocket

engine business

► $100M of R&D from DoE, major US utility and several other federal agencies ► In order to move technology into commercial phase, a commercial scale facility needed

to be developed, financed and constructed

► Senior management of industrial (1) was unwilling to take necessary balance sheet risk

(project guarantees), (2) lacked the in-house project development skills (site development and contracting) and (3) did not understand project finance

► As a result, the technology languished inside the subsidiary for 8 years

McDermott / Green Role

► Negotiated worldwide, exclusive license for 20 years (plus 10 year extension) to use and

sell molten salt storage equipment manufactured by UTC

► Spun-out engineering team and other team members ► Located and hired additional senior management to lead development and financing of

first project

► Raised additional $140M of corporate and project equity

Investment Status / Results

► Negotiated worldwide, exclusive license for 20 years (plus 10 years) ► Formed Solar Reserve, LLC to transfer technology outside of UTC ► Funded first $8M ► 110MW Crescent Dunes ($1.2 billion cost) operational ► SolarReserve is world’s largest CSP company with storage ► Development and operating assets in US, South Africa, Chile, China and AU

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PRIOR EXPERIENCE: FULCRUM BIOENERGY

Summary Vertical: Low Carbon Fuels Technology: Advanced MSW Processing, Gasification, Fischer- Tropsch Stage: Development Locations: U.S. Focus Scale: 10-60 MGPY Date of Investment: July 2007 Capital Committed/ Invested: $90 million / $90 million Ownership %: 51.5% (fully diluted)

McDermott / Green Role

► Founded company, created business model, hired management team, provided initial

capitalization

► Negotiated first feedstock contract, technology licenses ► Provided strategic guidance and supported growth of the business as Chairman of the

Board

► Raised over $250MM corporate and project equity ► Supported $180M in successful Federal loan and grant awards

Investment Status / Results

► Formed Fulcrum to be a leading developer and operator of waste-to-fuels projects

globally

► Funded seed and growth capital 2007 – 2011 ► Fulcrum is the lowest cost producer of low carbon fuels from waste feedstocks

Problem / Opportunity

► More than 300MM tons of MSW are generated in the U.S. each year – convertible to

nearly 10 billion gallons of drop-in fuel annually

► Large development program based on long-term access to large volumes of zero-cost

waste

► Integrated demonstration of MSW-to-fuel technology ► Produce a drop-in fuel (syncrude, diesel & jet fuel) for less than $1.00 per gallon ► Secured significant private equity investments from large strategic investors (United

Airlines, Cathay Pacific, Waste Management, Barrick Goldstrike)

► Beginning gasification EPC work on first project in Q2 2017; operational in 2018

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TEAM

Jim McDermott, Ex. Chairman

Rusheen Capital Management, US Renewables Group, Fulcrum Bioenergy, SolarReserve, Common Assets, NanoH2O, Spoke.com, Archive and Stamps.com

Jeff Green, CEO

Rusheen Capital Management, Moleaer, NanoH2O, Archive and Stamps.com

Will Kain, CFO

Rusheen Capital Management, WindESCo, NanoH2O, Altra Biofuels and UBS

Mike McMahon, Senior Analyst

Rusheen Capital Management, Roth Capital Partners and Bloomberg, LP

Chief Technical Officer Director, Technical Diligence VP , Business Development & Government Relations Join at Close:

EXAMPLE

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C4 SCP

(Development Company)

C4 SCP: DAC-TO-SOLID CARBON

PILOT REACTOR: 600 TPY DEMO PLANT: 30,000 TPY COMMERCIAL PLANT 1: 100,000 TPY COMMERCIAL PLANT 2: 100,000 TPY COMMERCIAL PLANT 10: 100,000 TPY

► Capital ► Management ► Project Development ► Technology ► Know-how ► Team ► Technology ► Know-how

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C4 SCP: MARKETS

AEROSPACE INDUSTRIAL CHEMICALS AUTOMOTIVE DEFENSE

“Carbon Negative” Solid Carbon Materials Target Industries

C4 SCP to manufacture “carbon negative” solid carbon materials for the automotive, aerospace, chemical, plastics, electronics, and construction industries

ELECTRONICS CONSTRUCTION CARBON BLACK (CB) CARBON NANOTUBES / CARBON NANOFIBER (CNT / CNF)

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Carbon Black Market Price Range1

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000

$ / Ton Carbon Carbon Black Price ($/Ton)

First Commercial Plant

C4 SCP: PRODUCTS

Key Assumptions Utility Scale Solar Price

• $40.0 / MWh
• $40.0 / MWh
• $40.0 / MWh

Natural Gas Price (CH4)

• $3.00 / MMBTU
• $3.00 / MMBTU
• $3.00 / MMBTU

CO2 Capture Cost (Atmospheric)

• $299 / ton
• $140 / ton
• $140 / ton

Annual Volume (Carbon)

• 30,000 tons
• 100,000 tons
• 100,000 tons

Demo Plant

• 1. Range reflects price points for rubber and specialty carbon blacks

At current solar and carbon black pricing, projections for CO2-to-carbon black show the potential to be price competitive

First Commercial Plant with Carbon Price @ $100 / Ton CO2 $1,191 $741 $546

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CONTACT INFORMATION

jim.mcdermott@c4composites.com jeff.green@c4composites.com 2425 West Olympic Blvd., Suite 4000 West Santa Monica, CA 90404 (424) 252-4222