Markets

BIODIESEL MARKET For every 10 gallons of biodiesel produced, one gallon of waste glycerol is produced For every 10 lbs. of glycerol, Virent can generate 1 lb. of hydrogen Total production in U.S. is expected to grow from 70 million gallons in 2004 to 200-250 million gallons (more than 160 million lbs. of glycerol by-product) in 2006

The flexibility of the APR process allows it to be used in a number of near-term markets. Today, Virent has a device that can generate 300 sccm of laboratory-grade hydrogen that can be used either for analytical applications or as a safe hydrogen source for small PEM fuel cells. Virent is currently developing a larger reforming system for the purpose of generating hydrogen-rich fuel gas from renewable and carbon-neutral feedstocks such as glycerol and sorbitol.

This reforming system is designed to be integrated with power generating technologies such as an internal combustion engine driven generator, a gas-fired turbine, or a solid-oxide fuel cell. In each of these applications, we will extract the necessary process heat for our low-temperature reforming technology from the high-temperature waste heat from these established power generating technologies.

We believe the first implementation will be for industrial use and generator sets. A number of industries, including float glass, semiconductor, ammonia and methanol production, use hydrogen in varying degrees. Localized APR production for small to medium end users should offer operational advantages and attractive economics.

Likewise, another near term application will be to use the APR system with an ICE engine modified to run on hydrogen or hydrogen with natural gas for stationary power generation. The system will offer a number of advantages, including quieter operation, competitive economics and carbon neutral power generation. This system is ripe for early adoption in remote areas in need of localized energy production.