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

2. UNITED TECHNOLOGIES CORPORATION UTC CORPORATE

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

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

5. BASELINE USES BENCHMARKING CREDIT FOR EARLY ACTION EMISSIONS TRADING

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

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

8. 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.”

9. UTC BASELINE CORNERSTONE FOR VOLUNTARY ENERGY CONSERVATION PROGRAM CREATED IN 1997 36 COUNTRIES INVOLVED

10. 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

11. UTC RESOURCE CONSERVATION GOALS 25% REDUCTION IN ENERGY AND WATER USE BY 2007 1997 BASELINE GOAL NORMALIZED BY SALES $ ELIMINATE 381 BTUs FOR EVERY SALES DOLLAR

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

13. MORE DESIGN ISSUES OWNERSHIP ADJUSTMENTS METRICS FUEL TYPES MATERIALITY FLEXIBILITY

14. 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

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

16. 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

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

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

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

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

21. 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