Integrated Energy Efficiency Management Driving results through integrated systems & cultural change Chistopher Smith Global Practice Leader CIS Sustainable Energy Forum June 2, 2011

Topics Energy Efficiency Approach Key Sustainability & Energy Efficiency “Drivers” Proven Energy Efficiency Methods & Approaches Energy Efficiency Results In the next few minutes I’ll: describe how DuPont approaches energy efficiency share our understanding of Russia’s energy challenges outline the global and regional key trends and conditions that are driving the need for energy efficiency discuss proven methods and approaches to energy efficiency and share some results

Corporate Approach to Strategic Issues Recognize strategic value & drive from the top Line accountability Appropriate support resources Integrated Management System Consistent implementation approach across entire operations portfolio Rigorous performance management Prioritize no-capital & low-capital improvement

Simplified Energy Cost Flow Sourcing Efficiency Energy cost is a function of pricing, consumption, GHG credits/options, and incentives Pricing is driven by market dynamics, but is negotiable Efficiency efforts are focused on minimizing waste Improvements to efficiency: Core Technology, capital-driven Energy System improvements, low capital/cost Changing behaviors – minimal investment Core Manufacturing Process Energy Input Improvements… Modifications to core technology, mostly capital investment driven (new technologies, heat integration, etc) Improvements to the energy systems, low capital/cost investment (ie pump efficiency) Changing the behaviors to operate with discipline around reducing energy waste, minimal investment Energy Systems Energy Source Mix Energy Pricing Energy Culture Energy Waste

External Drivers are pressuring companies to improve Energy Efficiency Volatility, magnitude and escalation of energy costs are increasing the urgency to drive improvements in energy efficiency. 1. Volatility of resource costs Governments and global institutions are introducing new energy management regulations and policies, pressuring companies & societies to re-think energy consumption. 2. Public policy The Investment community is increasing the weight of a company’s energy efficiency commitments and capabilities when making investment choices. 3. Access to capital These are the key drivers that are pressuring companies around the world to improve their energy position. Of the five drivers, four seem particularly relevant to the objectives in Russia. Let’s start with volatility of resource costs and public policy. According to the June 2010 wiiw report, the government’s intent is to increase oil production exports by 10% and gas exports by 40%, while constraining domestic gas consumption through tariff hikes. Russia must free up energy carriers for export to keep its domestic energy costs low. Reducing energy consumption is critical to achieving this. Behavioral changes will take the form of tightening technical energy requirements for various types of equipment to increase efficiencies and (over time) moving energy users from gas to coal and nuclear through increased tariffs. [KEY CONNECTIONS: NEEDED MANAGEMENT SYSTEMS, PRIORIZATION OF INITIATIVES, CULTURAL CHANGE MODELS] Improvements in energy efficiency will require facility, equipment and infrastructure upgrades which, in turn requires attracting increased investment. Investors will be more willing to invest if companies can show that they can be more responsible and capable of reducing their energy consumptions and controlling their costs. And finally, reduced energy demand will lower the cost of goods which increases the region’s competitiveness. [KEY CONNECTIONS: SELECTING HIGH GAIN LOWEST COST INITIATIVES, QUICK WINS THAT CAN BE SHOWCASED TO ESTABLISH TRUST, GOOD WILL AND ATTRACT INVESTMENTS, LOWER CONSUMPTIONS LEADING TO LOWER COSTS TO BETTER COMPETE] It’s clear that Russia’s economic success relies on reducing energy intensity across its economy. Based on Russia’s Energy Strategy, a large portion of the reductions will need to come from energy intensive industry. The reductions in these industries are expected to come from both capital projects requiring increased investments as well as no, or low capital initiatives. A combination of energy policy, technology and behavioral solutions will be needed to achieve the aggressive goals set forth in the Energy Plan. ADDITIONAL [Access to Capital: The ‘Energy Strategy until 2030’ (approved Aug. 2009), which appears to be in line with the government’s announced programme of modernization and innovation will require significant investment. Investment needed for the development of oil and gas deposits alone is estimated at 1 – 3 Trillion USD through 2030. When combined with investments in infrastructure upgrades, the need goes well beyond the current investment trajectory.] [BACKGROUND FROM wiiw Report: The prospects of the Russian energy sector are to be seen against the background of the government’s plans to reduce the energy intensity of economy. The idea behind it is to boost the international competitiveness of Russian products (particularly in the energy-intensive industrial branches) and to free up additional volumes of energy carriers for exports. Indeed, despite the recent impressive progress Russia still has one of the most energy-intensive economies in the world. As demonstrated by Figure 11, in order to produce one unit of GDP, the Russian economy consumes twice as much energy as the United States or the world on average, and three times as much as e.g. Austria or the EU -27. This is partly a consequence of using the old Soviet-era energy-intensive technologies, but also reflects the structural backwardness and the energy-wasting behaviour of economic agents.] [The government’s target is to increase, by the year 2030, oil production by 10% and gas production by some 40%, with half of the latter to be provided by the so-called ‘independent’ (from Gazprom) producers. The increase in the oil output would be largely channelled to domestic consumption, while crude exports should stay flat and those of oil products rise only marginally. At the same time, the planned tax reforms should facilitate a shift in the structure of the Russian energy export mix away from crude oil towards higher value-added oil products. In contrast to oil, half of the additionally produced gas should be exported: gas exports are to rise by about 50%. In turn, the rise in domestic gas consumption will be constrained by the planned tariff hikes, which should facilitate the substitution of gas by coal and nuclear energy, and induce energy-saving behaviour. The announced target is to lower the energy intensity of the economy by about three times and bring it close to the levels observed in developed countries with similar climatic conditions. Domestic gas savings resulting from higher energy efficiency, but also reduced flaring and leakages.] Companies are expected to publish energy improvement goals and are being held accountable for delivering results. 4. Public accountability Energy efficiency is being used as a powerful strategy to lower the cost of goods and attract customers at every level. 5. Competition

The DuPont Energy Challenges DuPont has addressed similar energy challenges on a continuous basis since 1989 Our motivations: Recognized energy cost is a significant part of our total operating cost Experienced supply disruptions and cost was increasing rapidly Energy efficiency would provide the greatest cost savings among global warming initiatives Saw this as a way to outperform competitors Overall, the health and welfare of the organization and its product lines would be at risk if we didn’t act.

Achieving cost reductions and security of supply through efficiency and improved operating team capabilities Energy Efficiency Rooting effective energy management system in leadership enablement, clear organizational goals, effective staffing and training, and specific processes and actions Integrating energy efficiency management into the strategy and execution of the ongoing business processes (capital, cost, resources, etc.) Designing a practical and enduring energy management process to sustain and build on achieved goals – customized at each level of the organization Emissions Resources Supply Chain Energy People Management Culture Achieving Energy Efficiency success requires a rigorous systems approach. The components of the system are strong leadership, an appropriate organizational structure that follows focused processes and actions. At DuPont, we had strong Corporate Leadership at the Executive Level. A Senior V.P. sponsored our energy initiatives and appointed a corporate committee that had the power to develop a plan and guide change. At the Business level, an Energy Champion is assigned to lead the Energy Center of Competence. The Champion developed the performance metrics. corporate and business level goals and defined and led the managing process. The Staff Level is strongly linked to the business goals and managing processes The Plant Level is staffed and trained to ensure that the right people with the right technical skills are capable of following the processes and executing the actions that will deliver energy savings. Success relies on transforming the culture to understand, perform and deliver to the goals, objectives and metrics defined by the managing systems. Quality Reliability Maintenance Safety

Energy Planning Process Recognize the Energy Challenge Develop an Energy Plan Energy Goals Workshop Assess Process Energy use Identify Opportunities Develop Capital Projects Appropriate Capital Funds Internal Capital External Funds (Performance Contracting) Energy Plan Template Plant Energy Assessment Template Energy-related Six Sigma Projects Virtual Workshops “Top Ten” Energy Projects Initiative The strength of our methodologies lies in the ability to communicate and operationalize a strong set of process phases and steps. These have been customized to hundreds of different operations across DuPont. The approach has been tested, fine tuned and proven in a variety of situations. Briefly describe process steps and outcomes.

DuPont Sustainability Results Goal achieve 5% ($50 Million USD) annual decrease in energy use, consistent with sustainability goals DuPont Results 1990 - 2009 19% decrease in energy use 20% increase in production $5B in cost savings * TRI = Toxic Release Inventory Sources: DuPont Global Reporting Initiative (GRI) report, Yahoo Finance DuPont Reduction 1990 - 2009 Air Carcinogens 92% U.S. TRI* “Releases” 77% Air Toxics 75% Energy Efficiency Initiatives Examples Integrated load controls Utilize Vented H2 in CB Boiler Improve Condensate Return Reduce Liquid Nitrogen Usage Steam Trap Maintenance Cooling Tower Water Temperatures Monitoring & Targeting Mindset and Behaviors… 1990 1995 2000 2005 2009 Energy By implementing and integrating these rigorous management systems, DuPont has been able to realize outstanding results. (Call audiences attention to the significant decreases even in light of increasing production. Additional successes… Industry recognition: “Laggard” to “Leader” 425th consecutive quarter dividend Renewable energy saves more than $10 million per year Waste reduced = product sold Capitalizing on hidden capactiy saves millions in reduced and deferred investment Greenhouse gas credits can be sold in carbon markets

Example: Oil & Gas Client Project Objectives Possible Results Goal: 10% Energy Reduction by 2015 Objectives: Leadership commitment and cultural change that leads to a sustainable corporate best practice Energy Management process Performance management process and the metrics necessary for managing the activities and projects Pilot of new Energy Management System at a Refinery Estimated benefits from an Energy Efficiency Improvement Program Without investment: 3 – 5% With Capex <1000K$ 8 – 12% With Capex >1000K$ 16 – 24% World-Class Refineries consume ~25% less than average Example of Oil and Gas client’s objectives, our actions and the anticipated results.

Example: Oil & Gas Approach Corporate Energy Management System Corporate & Site Assessment/Survey Implementation Plan Development Management System & KPI Development The Oil and gas approach timelines and activity steps Corporate Rollout Plan Development Organizational Development & Training Process Assessment & Continuous Improvement Plan 1/1/10 6/1/10 11/1/11

Example: Oil & Gas Approach Corporate Energy Management System Corporate & Site Assessment/Survey Implementation Plan Development Management System & KPI Development Corporate Rollout Plan Development Organizational Development & Training Process Assessment & Continuous Improvement Plan Site Pilot Over $1.5 MM in direct benefit in less than 1 year Corporate system designed for sustainability Process, energy system, and culture opportunities identified and implemented Energy Culture Survey Technical Review Management System Technical Assessment Leadership Alignment Solution Design KPI Development 1/1/10 6/1/10 11/1/11

DuPont’s Energy Efficiency Approach Driving performance results through integrated energy systems & cultural change Identifying and elevating energy cost as a strategic business issue Implementing a vertically integrated management approach to drive results Developing skills and capabilities of people in the organization Identifying and executing the right projects to drive highest gain results Identifying and elevating energy cost as a strategic business issue Understanding business implications of energy consumption and escalating costs Understanding implications of energy cost variability on portfolio profitability Benchmarking and quantifying the total opportunity value Implementing a vertically integrated management approach to drive results Driving leadership and management commitment to breakout performance Instituting organizational structures and accountabilities to drive results Designing and implementing managing processes to sustain results Developing skills and capabilities of the people in the organization Identifying and executing the right projects to drive highest gain results Prioritizing highest gain / lowest investment opportunities Utilizing leading methods for improvement opportunity execution (six sigma, lean, etc) Bringing deep technical expertise, in both energy systems & core processes

Global Practice Leader Christopher Smith Global Practice Leader Christopher.A.Smith@usa.dupont.com +1.415.846.2993

May be used as the first two slides to introduce DuPont and DSS Introductory Slides May be used as the first two slides to introduce DuPont and DSS

Founded in 1802 DuPont A Fortune Top 100 Science Company Recognized for experience and success in operational excellence Active Leader in environmental sustainability since 1989 – “Laggard to Leader” (Name, Title), I’m with DuPont -- a Fortune top 100 science company, recognized for their experience and success in operational management. DuPont has been a very active leader in environmental sustainability since 1989. In fact, we’ve developed rigorous managing systems that have allowed us to transform our organization from laggard to leader so much so that today, we are taking those systems and learnings to the marketplace in the form of consulting services.

DuPont Consulting, Technology, & Training Services: DuPont Sustainable Solutions Global Safety Consultants Since 1998* Clean Technologies Training Solutions Sustainable Operations Environment, Energy, Sustainable Assets DuPont has developed a strong set of consulting, technology, and licensing services as part of its diverse portfolio. This is managed by our Sustainable Solutions business. Our safety services are perhaps best known. We’ve been consulting in this space for over 35 years but the fact is, we’ve been building our knowledge, experience and managing systems in safety since our founding – over 200 years ago. These services have evolved from employee safety to include process safety and most recently, contractor safety. Clean technologies (fill-in per audience’s interest) Sustainable Operations focuses on Energy Efficiency, Environmental Management and Sustainable Assets. Our knowledge and practical practicality runs deep in these areas. The approaches, methodologies and managing systems that we’ve developed as owner/operators have allowed is to free up large amounts of capital and improve performance at multiple levels across our organization while increasing shareholder and stakeholder value. Improve Performance, Release Capital…Increase Shareholder & Stakeholder Value *Has existed as a safety services business since the early 1970's.