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HFC Workshop India Tom Catania Vice President Government Relations

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1 HFC Workshop India Tom Catania Vice President Government Relations
Whirlpool Corporation February 2011

2 Why is Whirlpool still using HFCs in USA?
Cost of transition Energy efficiency advantages of HFC 245fa trumps GWP impact Cheapest and least consumer utility compromise for achieving high efficiency HFCs can be used responsibly and recovered HCs still are subject to VOC emissions rules Even modest litigation risk in USA when using isobutane refrigerant in a no-frost refrigerator can not be taken lightly in the US litigation, class action environment Most importantly, new chemicals/technologies on short term horizon that may have positive characteristics of HFCs without the negatives of HCs or HFCs “RETOOLING FATIGUE”

3 Simple Message: TEWI (Total Environmental Warming Impact)
The “Use” Phase of a long lived residential refrigerator and the power plant emissions associated with that use has a more significant environmental impact than the manufacturing phase or end of life—especially if the refrigerants and blowing agents are responsibly managed and recovered. The ideal combination of refrigerants and blowing agents in residential refrigerators would have zero ODP, very low GWP, low toxicity, be safe AND BE ABLE TO DELIVER THE HIGHEST POSSIBLE LEVEL OF ENERGY EFFICIENCY AT THE LOWEST POSSIBLE COST OR COMPROMISE OF CONSUMER UTILITY HYDROCARBON FOAM INSULATION AND BLOWING AGENTS MAY NOT BE THE BEST/LAST ANSWER Refrigeration manufacturers have “retooling fatigue.” - CFCs-HCFCs-HFCs-HCs-HFOs-? - continuous retoolings steal capital from investment in new environmental breakthroughs in the important areas of energy efficiency and smart products on smart grids, for example

ODP GWP ENERGY EFFICIENCY CFC HFO CFC HFC HCFC HCFC HFO HCFC CFC HFC HC HC HC HFC HFO GWP Energy Zero High Low High Worst Best Showing ideal case scenario Highlighting HFC usage in relation to GWP impact HFO highlight Ideal Equation for longer run would be 0 ODP , Low GWP , High Energy Efficiency Foaming agents used today have element’s of all 3 , but not all the best characteristics Managing proper disposal & usage of VOC’s ( Hydrocarbons ) during service , transport etc HFC’s have been used extensively , however have a high GWP impacting the environment HFO’s to provide the best new solution moving forward for energy & environmental benefits Ideal Opportunity

Refrigerators are a ~6.2 mn units industry, growing aggressively YOY Currently, only 14% of the market is penetrated, expected to grow to 25% by 2015 Most of the Indian market is Direct Cool (78%) DC market is growing faster than the Frost Free market, driving refrigerator penetration in India Potential Equation India’s Economic Prosperity CAGR 11.5% CAGR 8% + Indian Consumer’s buying potential = Higher sales of refrigerators ( e.g. DC ) products on the market 78% of the consumer in India purchases a DC product with GDP growth , better purchasing power more products to be sold ( 11% growth expected in the next few yrs) DC consumer is very price sensitive , and buys a ref for primarly cooling food items Need to be sure we are providing the best foam & energy benefits to assist with the Indian govt’s initiatives under energy & environmental Need to make the right selection of Blowing Agents and refrigerants with the broader & longer environmental picture in mind Growth of low income purchasers and total volume requires solutions that don’t drive the wrong behavior

6 Providing value to the masses
Entry-level consumers for both Direct Cool and No Frost are extremely price-conscious, seeking ‘value for money’ Energy efficiency / Eco moved up from 8th to 4th place in importance in purchasing an appliance (behind brand, price & color) HC’s significantly increase the GWP effect on the environment moving forward Early tests not in optimized refrigerator and assumes full venting of HFCs Direct Cool sales in INR No Frost sales in INR Most sales are lower price point Cost , Cost , Capacity are the most important factors while purchasing products Energy & environmental has picked up over the years but needs to be managed carefully to prevent any offset BULK SALES ON ENTRY LEVEL PRICES POINTS HFO HFC - 245 HC HFC - 134 Source : DuPont Consumers Understand Energy Efficiency, not GWP… Continue To Seek ‘Value’

7 Risk of converting too early?
HIGH ODP LOW GWP ZERO ODP ZERO ODP . LOW GWP , ENERGY EFFICIENCY HFC CFC HCFC HC HFO 3-4 years until mass production ( est / 15) BLENDS Ideal Opportunity Manufacturer’s globally as well as in India to comply with global regulations for material usage ( HFC etc ) Every step requires a large investment from a manufacturer that affects product cost , design etc Investments need to be recouped from sales resulting in possible price increases Unique situation in India as compared to mid 1990’s CFC phase out Energy Regulations are very stringent from 2012 – 2014 ( 60% jump ) Environmental regulations force manufacturers to comply for chemical phase out SHOULD NOT FORCE THE USE OF A CHEMICAL RATHER SUPPORT THE DEVELOPMENT OF THE RIGHT CHOICE FOR THE ENVIRONMENT

8 Impact on the Indian energy grid
Analysis of the impact of energy standard changes on the overall energy consumption Today Note: Illustrative calculations only, qualitatively correct; Market penetration & growth have been factored in Consumer behavior needs to change….if not the impact of regulations would be negated on the grid & environment ! Currently, on average, India’s average buying is ~3.7 energy efficiency level If they move up by 20%, then overall energy consumption will come down (GREEN) If average buying behavior does not change due to cost, overall energy consumption will increase (RED) Need to Promote Energy Efficiency & Eco Conscious Lifestyle for the Indian Consumer

9 Conclusion – India should not rush into a sub-optimum solution that limits potential “use phase” emission reductions* *Or has the unintended consequence of consumers trading down to less expensive, but less efficient models Our Proposal for residential refrigerators: Modest delay (1-2 years) in HCFC phase out India could lead rest of the world in development and export of next generation solution

10 Thank you !

11 HFC Consumption Globally & India View
Source : EPA ( 79% of refrigeration / AC appliances consumed HFC’s in 2010 across the world Over Billion refrigeration appliances in global operation last year alone Each refrigerator possibly has 1.5 kg of refrigerant & foaming agents HFC have a high GWP ranging from 6-7% CAGR of refrigeration appliances in India ( Source : Euromonitor ) 85% of refrigerator sales were in the < 142 lt ( ~5 cu.ft ) category India’s growth lies in its masses with people purchasing refrigerator’s as a basic need Need to monitor & select right chemical for the environment as refrigerators last years

12 Synergy between Energy Efficiency & TEWI
KEY TAKEAWAY’S ENERGY EFFICIENCY ATMOSPHERIC EFFECTS ENERGY EFFICIENCY 20% JUMP IN 2012 40% JUMP IN 2014 RESPONSIBLE USE OF MATERIALS 2013 phase out for HCFC Overall goal by Montreal Protocol to reduce carbon emissions by 2030 -Overview of the situation in India over the next 2-4 years - Energy Efficiency & Environmental effects are two pieces of a puzzle that complement each other to get the best benefits under each space RIGHT BALANCE NEEDS TO BE ACHIEVED AND NOT MUTUALLY EXCLUSIVE INDIA FACED WITH CHALLENGES OVER THE NEXT FEW YEARS TO LOWER OVERALL ENERGY INTENSITY WHILE PHASING OUT HCFCS

Energy Benefits : Low Medium High No ideal BA found that has 0ODP , low GWP , and high energy benefits CFC Use of HFC’s growing however still has a high GWP Environmental Impact HCFC HFC HC HFO Swift changes in regulations leading to bandaid approach , that is not entirely benefiting the environment Innovative challenges under this space , have shown that with some more testing & development one could have the ideal BA Time Aim to drive right investment’s for an ideal blowing agent ! INNOVATION UNDER THIS SPACE TO PROVIDE MOST IDEAL BLOWING AGENT SOLUTION FOR THE ENVIRONMENT

14 Unique Issues to the Indian Market
Supply Base Impact if moved to a foam that impacted energy & environment: Use of High Efficiency components like VIP’s , VCC compressor’s to meet energy regulations Diminishing return’s and high cost’s could potentially lead to higher product cost Consumer’s forced to purchase lower energy efficient product These step’s would negate entire purpose of reducing energy & environmental impact in the country Lack of Incentives for higher energy rated & environmentally friendly products Lack of incentives by the govt to drive higher sales of energy & environmentally friendly products Manufacturers forced to comply to standards however unsure on consumer behavior Funding opportunities present in multiple regions like Mexico ( e.g. UNIDO funding ) Infrastructure Concerns Servicing of VOC’s Incremental increase in material costs & import duties - Issues that persist today & perceived in the future Other?

15 Opportunities for India
Infrastructure Government & Manufacturers partnership in developing low cost components for the “World” Foam ‘s , refrigerant’s , etc Providing incentives for manufacturers to assist in the Indian government’s goal to help reduce energy efficiency & carbon emissions part of the 11th five year plan Incentivize use of high cost components like VIP’s VCC’s etc Create an EPR framework for safe disposal of components Create awareness amongst Indian consumer for the need of supporting global cause Look for opportunities beyond regulatory landscape that would help make “India a leader in this space” Partner with key leader’s in technology development in new areas like Smart Grid Consumer Awareness Creating an awareness for the need & value to purchase energy & environmentally friendly products Promote the use of product’s with special consideration’s from govt & manufacturers Tax credit’s / rebates for energy & eco friendly product’s

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