“THE WHY AND HOW OF ENERGY BASELINES: THE UTC EXPERIENCE” JUDITH BAYER DIRECTOR, ENVIRONMENTAL GOVERNMENT AFFAIRS PEW CENTER ON GLOBAL CLIMATE CHANGE EARLY ACTION CONFERENCE SEPTEMBER 14, 1999

UNITED TECHNOLOGIES CORPORATION UTC CORPORATE

UTC STATISTICS 43RD LARGEST U.S. CORPORATION $25.7 BILLION IN 1998 REVENUES 1,900 LOCATIONS IN 183 COUNTRIES 49% EMPLOYEES OUTSIDE U.S.

BASELINE BENEFITS MANAGEMENT TOOL –DETERMINE MAGNITUDE –IDENTIFY KEY SOURCES –REVEAL OPPORTUNITIES LEARN BY DOING “NO REGRETS”

BASELINE USES BENCHMARKING CREDIT FOR EARLY ACTION EMISSIONS TRADING

VALUE OF VOLUNTARY BASELINE EFFORT ABILITY TO TAILOR INVENTORY TO COMPANY NEEDS PERMIT EXPERIMENTATION & INNOVATION GAIN COMPETITIVE ADVANTAGE HELP SHAPE FUTURE REGULATORY PROGRAMS

UTC 1996 ENVIRONMENT, HEALTH & SAFETY POLICY “Conserve natural resources in the design, manufacture, use and disposal of products and delivery of services.”

JULY, 1998 STATEMENT OF UTC CHAIRMAN GEORGE DAVID “We along with many others, recognize the substantial ambiguities and open questions in research on global climate change. But we believe also that the prudent course is to work to reduce greenhouse emissions.”

UTC BASELINE CORNERSTONE FOR VOLUNTARY ENERGY CONSERVATION PROGRAM CREATED IN COUNTRIES INVOLVED

1997 UTC BASELINE SUMMARY 229 MANUFACTURING AND KEY NON- MANUFACTURING SITES EMPLOYEE TRAVEL & CORPORATE AIRCRAFT 37.5 TRILLION BTUs CONSUMED 2.1 MILLION METRIC TONS OF CO 2 EMISSIONS 1,522 BTU’S USED TO GENERATE $1 SALES

UTC RESOURCE CONSERVATION GOALS 25% REDUCTION IN ENERGY AND WATER USE BY BASELINE GOAL NORMALIZED BY SALES $ ELIMINATE 381 BTUs FOR EVERY SALES DOLLAR

DESIGN ISSUES HISTORICAL VERSUS CURRENT BASELINE DOMESTIC VERSUS INTERNATIONAL OPERATIONS VERSUS PRODUCT CO 2 VERSUS BTU

MORE DESIGN ISSUES OWNERSHIP ADJUSTMENTS METRICS FUEL TYPES MATERIALITY FLEXIBILITY

OWNERSHIP UTC USES MANY ORGANIZATIONAL STRUCTURES WITH CONSTANT CHANGES ALL ENTITIES WHERE UTC HAS AT LEAST 50% OWNERSHIP INCLUDED IN CURRENT BASELINE POLICY BEING REVIEWED WITH POTENTIAL CHANGE TO “EFFECTIVE MANAGEMENT CONTROL” CRITERIA

BASELINE ADJUSTMENTS IF/WHEN TO ALTER BASELINE –ACQUISITION –DIVESTITURE –INCREASE/DECREASE IN OUTPUT –CHANGE IN PRODUCT MIX –OUTSOURCING –INSOURCING –WEATHER

UTC APPROACH NO BASELINE ADJUSTMENTS SINCE USING RATE-BASED SYSTEM IDEALLY SALES AND ENERGY DATA RELATED TO ACQUISITION AND DIVESTITURE REPORTED IN SAME YEAR POLICY ALLOWS 2 YEAR DELAY IN REPORTING ENERGY USE, BUT IS UNDER REVIEW INTERNAL ANALYSIS TO DETERMINE PERFORMANCE VS NON-PERFORMANCE FACTORS

ENERGY SOURCES ELECTRICITY GASOLINE PROPANE DIESEL NATURAL GAS COAL BUTANE JET FUEL OIL

SCOPE ALL MANUFACTURING SITES NON-MFGR SITES WITH $100,000 ENERGY & WATER COSTS TRAVEL AND CORPORATE AIRCRAFT

FLEXIBILITY BALANCE NEED FOR CONSISTENCY WITH FLEXIBILITY INTERNAL CAPABILITY TO TRACK ENERGY USE PER EMPLOYEE/SQ FEET/EARNED HOURS, ETC.

DATA QUALITY TRAINING MANAGEMENT COMMITMENT USER FRIENDLY AUTOMATION CONSTANT IMPROVEMENT SEVERAL YEARS REPORTING EXPERIENCE NEEDED TO INSTILL CONFIDENCE AND “DE-BUG” SYSTEMS

LESSONS LEARNED MANAGEMENT SUPPORT IS ESSENTIAL CREATE BOUNDARIES THAT ARE RELEVANT AND APPROPRIATE TO COMPANY NEEDS USE DATA SOURCES THAT ARE READILY AVAILABLE AND EASILY UNDERSTOOD MAXIMIZE AUTOMATION TO ENSURE DATA QUALITY PROVIDE ADEQUATE TRAINING ENSURE CONTINUOUS IMPROVEMENT USE CROSS FUNCTIONAL INPUT USE PILOT PROGRAM AS TEST LAB TAKE THE TIME TO DO IT RIGHT