1. Renewables: can they deliver? Jorgen Mads Clausen CEO of Danfoss Chairman of Danish Energy Industries Federation European Business Summit Greening The Economy New Energy For Business 21st February 2008

2. VISION - Meeting the Carbon Challenge We are on the edge of a new energy revolution. The coming decades will bring huge changes to energy systems throughout the world. The challenge will be to provide eight billion people with energy and, at the same time, protect resources and the environment. Technology will most certainly be fundamental in making it possible to meet the world’s growing energy needs in a socially and environmentally responsible way.

3. Tackling climate change is a pro-growth strategy Economic growth and welfare can be maintained without influencing the climate negatively This is what we have experienced in Denmark, and this is what we call "The Bright Green Strategy" Here technology has a central role to play A Bright Green Strategy

4. The case of Denmark: Wealth-creation at constant energy consumption Source: Danish Energy Authority The Danish gross domestic product (GDP) grew by 75 pct. from 1980 to 2006 (at constant prices). In the same period the consumption of energy in Denmark has been more or less constant. This means that each unit of GDP requires approximately 40 per cent less energy today than in 1980

5. The role of Technology

6. World Energy Consumption Source: Siemens -and the role of renewables <2% of total 31% 9% 5% Biomass/residues Wind Geothermal Other 5,5% of total Other 1% Geothermal 20% Wind 12% Biomass/residues 67 % 29.0 15.4 2000 2020 Other Renewables Hydro Nuclear Natural gas Oil Coal 2.8 %/a Solar 2% Power Generation 1000 TWh Renewables are only part of the answer

7. CO 2 e Emissions Population GDP / Population Energy / GDP CO 2 e / Energy X Influenceable with technological innovations = X X Demo- graphy Energy Intensity Carbon Intensity Wealth Difficult to influence May be Influenced by choice of technology Innovative solutions for reduction of CO 2 emissions Efficient energy generation  Highly efficient gas and steam turbines  Coal carbon capture storage (CCS)  Cogeneration  … Switch to renewables  Wind  Biomass  Solar  … Efficient energy distribution  Smart grid  High-voltage DC transmission systems  Distributed heating and cooling systems  … Efficient energy consumption  Fuel efficient vehicles  Building technology measures  Energy saving lighting  Distributed heating and cooling systems  … The Kaya Identity

8. Meeting the carbon challenge Source: Vattenfall, McKinsey Some comments: - All technologies, including renewables, must be in play in order reach the carbon goal - However, we need to fix the order of priority in order to reach the goal in an efficient manner - Energy efficiency has a vital role to play and must not be forgotten - Higher focus on energy efficiency will also ease the effort to reach the targets for renewables - Multiple business opportunities Making the right choices

9. Short term and long term Many future alternatives exits However, in the short term we need to focus on deploying existing, well proven and fully available technologies Especially technologies improving energy efficiency need to be in focus if we are going to reach the objectives of bringing down CO2- emissions Some of these technologies will also increase the share of renewables, especially district heating and cooling technologies

10. Meeting the carbon challenge Before 2020 District heating and cooling technology – the most energy efficient form of energy production (combined electricity and heating)District heating and cooling technology – the most energy efficient form of energy production (combined electricity and heating) Biomass heating technology – Co2 natural and attractive alternative to oil and gasBiomass heating technology – Co2 natural and attractive alternative to oil and gas Heat pump technology – high efficient heat pumps as the best alternative to individual oil and gas boilersHeat pump technology – high efficient heat pumps as the best alternative to individual oil and gas boilers Comfort controls technology – to reduce energy use for comfort heating and to increase human comfortComfort controls technology – to reduce energy use for comfort heating and to increase human comfort Energy audits and trimming – to reduce energy usageEnergy audits and trimming – to reduce energy usage All the above mentioned alternatives are based on existing, well proven and fully available technologies

11. District heating and cogeneration The sleeping giant Lower import dependency of 4.5 EJ… or the equivalent of Poland’s energy supply Giving a reduction of the primary energy supply of 2.1 EJ … or the equivalent of Sweden’s energy supply Reduction of 400 million tons CO2 per year … or the equivalent of the emissions from fuel combustion in France Higher share of renewables as district heating is a common carrier for renewables like wind, biomass, solar …. District Heating example: Increasing the District Heating share from its current 6% to 12% in Europe will have major effects

12. See more about Bright Green here: www.ei.di.dk Conclusion A Bright Green Future With climate change hard upon us, a new green movement is taking shape - one that embraces the concerns of environmentalism but rejects its worn-out answers. Renewables are part of the solution But, we all have an obligation to make sure that we use existing, well proven and fully available technologies to secure immediately improvements of energy efficiency and CO2 reductions This is a Bright Green Strategy