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Green Building & Energy Efficiency

Shane TedjaratiHoneywell China and India President & CEOSep 18, 2008

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Country Energy Efficiency (2005)Country Energy Efficiency (2005)

China’s Energy Inefficiency Challenge

*Energy Intensity - total primary energy consumption per dollar of GDP (Btu per 2000 U.S. dollars using market exchange rates)

Source: IMF, US Energy Information Administration:” International Energy Annual 2005”

One of the World’s Least Energy Efficient Economies

U.S.

Russia

China

JapanUnited Kingdom

South Africa

IndiaThailand

Canada

South Korea

AustraliaMexicoNorway

France

SwitzerlandHong Kong Germany

Singapore

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

GDP (2005 US bn)

Ener

gy In

tens

ity *

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Big Challenges Ahead to Meet Energy & Emission Target

Gov’t Commitment to Energy Efficiency

1.461.22

0.98

0

0.51

1.5

2

2000 2005 2010

*TCE index: ton coal equivalent per RMB10k of GDPCOD: chemical oxygen demand; SO2: sulphur dioxideSource: China Energy Statistical Yearbook

• 20% energy consumption reduction target from 2005 to 2010 (11th 5 Year Plan)- Up till 1Q2008, down only 7.22%

Energy Efficiency Target Emission Target

• Emission control target: COD down 10%,SO2 down 10% China (11th 5 Year Plan)

- China missed pre-set target in ’06- SO2 down 4.66% and COD down

3.14% in ’07, first time decrease

“Energy saving is a priority and one of the basic principles the government should follow in the future”

- President Hu

TCE index*

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China’s Major Energy Users

•Local government mandates emerging

•Large energy users include steel, cement, building materials, metallurgy facilities

•Local government mandates emerging

•Large energy users include steel, cement, building materials, metallurgy facilities

•Fastest growing energy consumption (expected to reach 33% in 2010)

•Half of all new building construction will be in China (World Bank estimate)

•15% energy consumed in commercial, 85% in residential

•Fastest growing energy consumption (expected to reach 33% in 2010)

•Half of all new building construction will be in China (World Bank estimate)

•15% energy consumed in commercial, 85% in residential

Agriculture5%

Transportation10%

Building23%

Industrial62%

Building SectorIndustrial Sector

85% of Energy Consumed by Industrial, Building Sectors

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Integrated Approach to Energy ManagementIntegrated Approach to Energy Management

Innovative Solutions

Advanced Products

Right Business Models

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Building Energy Solutions

Honeywell Enterprise Buildings Integratora complete and customizable solution managing HVAC, lighting and energy systems, security, digital video, life safety and asset tracking applications

Honeywell Energy Manager advanced energy information application that automatically control equipment on-off times and manage energy utilization across entire enterprise

Honeywell Atrium an innovative, web-based energy analysis service that can collect and analyze internal meter data, define potential savings and provide recommendations

Energy Management Demand Response Service

Energy saving through shifting load from peak to off-peak hours

• Synchronize utility suppliers’ needs with those of residential and small commercial customers

Honeywell has been a pioneer in the demand response market since the 1990s

• Installed more than 950,000 load control devices

SolutionsSolutions

Applying Smart Technologies in A Smart Way

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Industrial Energy Solutions

Manufacturing Execution Systems (MES)Single system to track and report multiple sources of energy usage information against targets

Advanced Process Control Minimize fuel and other energy costs associated with production as well as improve efficiency by maximizing throughput and yields

Simulation TechnologyModel industrial complex energy circuit, heat integration systems and boiler feed water circuits

Energy Solutions for Utility and Industrial PowerAnalyze, optimize and diagnose plant performance to minimize fuel consumption and emissions, increase heat rates

Emissions Monitoring Optimize and streamline environmental reporting, track emission credits/allowances

SolutionsSolutions

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Energy Related Product Offerings

Building Automation Controllers

Energy-efficient Lighting

Lighting Controllers

Thermostats

Foam Insulation Materials

PV Shielding Materials

Sensors Variable Frequency

Drivers

Combustion Controllers

Valves

Manufacturing Process

Controllers

~50% of Honeywell's product portfolio delivers energy

savings and efficiency

ProductsProducts

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Energy Performance Contract Model

• Simple concept : leverage money saved on energy and operating costs to pay for building improvements

• Honeywell is the recognized global leader and pioneer in the guaranteed energy savings concept- Early 1980s – initiated guaranteed energy savings concept- Thousands of energy services contracts in force today

Before Program Term

Utility Budget-Lights-Air Conditioning- Compressed Air

OperatingFunds

OperatingFunds

Utility Budget-Lights-Air Conditioning- Compressed Air

Investment-Modernization-Energy Retrofits

Operating Budget

OperatingFunds

Utility Budget-Lights-Air Conditioning- Heating

Investment-Modernization-Energy Retrofits

Savings

During Program Term

OperatingFunds

Utility Budget-Lights-Air Conditioning- Compressed Air

After Program Term

OperatingFunds

Continued Savings

Savings

Business Model

Business Model

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• Boiler Plant Improvements• Chiller Plant Improvements• Building Automation Systems• HVAC• Lighting Improvements• Building Envelope Modifications• CHW, HW, and Steam Distribution

Systems• Electric Motors and Drives• Refrigeration• Distributed Generation• Renewable Energy Systems• Energy/Utility Distribution Systems• Water and Sewer Conservation Systems• Electrical Peak Shaving/Load Shifting• Energy Cost Reduction through Rate

Adjust.• Energy Related Process Improvements• Energy Surveys

• Boiler Plant Improvements• Chiller Plant Improvements• Building Automation Systems• HVAC• Lighting Improvements• Building Envelope Modifications• CHW, HW, and Steam Distribution

Systems• Electric Motors and Drives• Refrigeration• Distributed Generation• Renewable Energy Systems• Energy/Utility Distribution Systems• Water and Sewer Conservation Systems• Electrical Peak Shaving/Load Shifting• Energy Cost Reduction through Rate

Adjust.• Energy Related Process Improvements• Energy Surveys

• Installation of a Energy Information System that will enable PWBC to monitor, manage and control facilities from a central command post

• Peak shaving and natural gas procurement• Installation of a new natural gas

distribution system expanding the limited underground existing natural gas distribution system

• Installation of new natural gas-fired steam and hot water boilers to replace existing outdated central steam plant

• Installation of a comprehensive metering program

• Energy saving lighting upgrade• Water conservation measures post wide• Optimization or removal of central plants

• Installation of a Energy Information System that will enable PWBC to monitor, manage and control facilities from a central command post

• Peak shaving and natural gas procurement• Installation of a new natural gas

distribution system expanding the limited underground existing natural gas distribution system

• Installation of new natural gas-fired steam and hot water boilers to replace existing outdated central steam plant

• Installation of a comprehensive metering program

• Energy saving lighting upgrade• Water conservation measures post wide• Optimization or removal of central plants

Fort Bragg, North Carolina(The home of > 45,000 troops)

Total Contract Amount$ 100 mn up to date

Annual Energy Spending $36 mn

Annual Energy Savings$ 9.5mn per year, equal to 26% saving rate

Project Term10 years

Facility Size> 30,000,000 sq. ft.

Number of Buildings> 7,500

EPC TechnologiesProject Content

Program Highlights

HON Cases - Total Energy Solution

Note: EPC Energy Performance Contract

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HON Cases in China – Tsingtao Beer

Shenzhen Tsingtao Beer Asahi upgraded facilities with Honeywell’s Energy Performance Contracting model

• No direct investment by Tsingtao Beer• 5-year contract term

The program included a centralized control system to optimize energy management across the facilities:

• Heat recovery • Cooling and HVAC system• Motor controller

Exceeded contract guarantee and achieved >RMB 3 mn (17%) energy savings

A Successful Case of Win-Win EPC Model in China

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Honeywell & Energy Efficiency

~50% Honeywell products can improve energy efficiency

10-25% less energy globally by using existing Honeywell technologies

20-30% less energy in commercial buildings by using Honeywell EPC*

Honeywell has completed > 5,000 energy-efficiency projectsand saved > $3bn in energy and operating costs globally

* Energy Performance Contract

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The Way Forward

• Enhance systematic monitoring of key energy consumption metrics - Create a baseline for tracking and keep measuring progress

• Continue to develop advanced longer-term technologies …- Breakthrough technologies, e.g. affordable hydrogen fuel cells, that would clearly revolutionize

industry/society

• …but meanwhile push for ubiquitous application of existing technologies- Our experience has repeatedly demonstrated that systematically applying simple, readily-available

technologies/solutions can usually reduce energy consumption in the order of 20%

• Drive to retrofit old factories, buildings, homes - Immediate results by adopting the latest energy saving technologies

• Rigorously drive enforcement by government- Positive reinforcement: Offer tax rebate incentives and financing support - Negative reinforcement: Monitor and publicize the biggest offenders

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Key Enablers

• Well-accepted industry standards - Establish criteria of rating building energy efficiency

• Broad public awareness programs and campaigns- Promote Green Building & Energy Efficiency concept- Create positive public pull towards certified green buildings- Strong focus on youth/school programs to develop life-long habits

• Government as role-model in the application of energy conservation practices- Start with programs to upgrade and certify all government buildings as energy efficient- Actively share goals, timeframes and results with industry and the public

• Forums to continually bring companies and industry together- e.g. MHC Green Building Conference

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Thank YouThank You