1. Global Climate Change: What Every Executive Should Know Global Energy Services May 2005

2. Copyright 2005 Global Insight, Inc. 2 Summary of Major Points  Global Climate Change is a major business and policy issue  Convergence for much of the scientific evidence; controversy still remains on some aspects  “No regrets policy” to implement mitigation programs needed  Viable options are available to address the problem using current technologies  Carefully developed programs can be implemented with minimal economic impacts

3. Copyright 2005 Global Insight, Inc. 3 Contrary to previous beliefs, there are reasonable mitigation options that can be adopted now without harming the world economy. While some aspects of the science remain uncertain, the consequences of doing nothing could be severe. It is clearly prudent to adopt a cost- effective set of carbon reducing measures now. We are at a Turning Point 3Copyright 2005 Global Insight, Inc.

4. 4 What Study Will Provide:  An integrated framework to structure the problem and potential solutions  An update on the state of the art in science  A policy assessment model that enables sensitivity analysis for every key assumption  Assessment of costs and effects of viable mitigation options  Time-phased cost effectiveness curves  Well-defined public policy options 4Copyright 2005 Global Insight, Inc. Global Climate Change:

5. Copyright 2005 Global Insight, Inc. 5 Every Executive Needs: Benefits of Participation  Participate in the public policy debate  Anticipate regulatory changes  Develop enterprise strategies and plans 5Copyright 2005 Global Insight, Inc.

6. 6 To Do This, Executives Must Be Fully Informed Copyright 2005 Global Insight, Inc. 6 About…  Emission Trends, Forecasts, and Drivers  The State of the Science  The Effects and Costs of Mitigation Options  Policy Alternatives

7. Copyright 2005 Global Insight, Inc. 7 The Problem is Not Intractable Viable Options for Reducing Carbon Emissions Based on: S. Pacala and R. Socolow, “Stabilization Wedges: Solving the Climate Problem, with Technologies Available Today,” Science, 305, August, 2004, pp 968-972

8. Copyright 2005 Global Insight, Inc. 8 Transition Targets Must be Established, Such as…  A declining schedule of carbon dioxide emissions  An increasing carbon dioxide tax  An increasing schedule of auto efficiency standards  An increasing schedule of appliance and building efficiency standards Initial inaction will prevent the attainment of longer-term goals at reasonable costs 8Copyright 2005 Global Insight, Inc.

9. 9 Long-term Gains at Reasonable Costs Cost Effectiveness Curves Over time: Significant reductions can be achieved in the long run at reasonable costs, but not in the short run. Steps must be taken now to achieve these long-term reductions.

10. Copyright 2005 Global Insight, Inc. 10 Analytic Framework

11. Copyright 2005 Global Insight, Inc. 11 Analysis Will Be Conducted on a Regional Basis 11Copyright 2005 Global Insight, Inc. Using IEA’s World Energy Model Regions US and Canada Mexico Brazil Other Latin America OECD Europe Russia Other Transition Economies Africa Middle East China India Other South Asia OECD Asia Indonesia Other East Asia OECD Oceania

12. Copyright 2005 Global Insight, Inc. 12 Possible solutions Population * Leisure * Efficiency * Fuel switching and carbon sequestration Overview of Policy Assessment Model (Illustrates a single region) Base case forecast of CO 2 emissions (Pop growth) * (GNP/Capita) * (Energy/GNP) * (CO 2 /Energy) Target level of CO 2 concentration in atmosphere Science * Politics * Technical Feasibility

13. Copyright 2005 Global Insight, Inc. 13 Workshops and Agendas

14. Copyright 2005 Global Insight, Inc. 14 Interactive Workshops with Key Stakeholders Workshops will bring together key stakeholders from a diverse group of companies and organizations  Industrial and Manufacturing  Utilities and Energy  Technology Providers  Policy Makers  Financial There will be three parallel workshop tracks The material for each regional workshop will be available to all groups. Regional workshops will only be held if minimum attendance requirements are met.  Europe  North America  Asia 14Copyright 2005 Global Insight, Inc.

15. 15 Deliverables Four Workshops:  Global Insight Presentations  Discussions with Participants and Experts Working Papers:  Preparatory Materials for Workshop Participation  Summaries of Workshop Discussions Policy Assessment Model:  Forecasting Base Cases  Forecasting the Effects of Alternative Portfolio of Options Cost-effectiveness Curves Public Policy Alternatives Executive Summary Report

16. Copyright 2005 Global Insight, Inc. 16 The Project Team

17. Copyright 2005 Global Insight, Inc. 17 2004-2005 – Multiple studies on the Impact of the EU Emissions Trading Scheme on Participating Industries 2003 – The Economic Impact on Italy of Implementing the Kyoto Protocol 2002 – The Economic Impact of Greenhouse Gas Reductions on Selected EU Countries 2000 – Global Warming: Capital Stock Constraints on Meeting Near-term Targets 1999 – The Kyoto Protocol: Can Annex B Countries Meet Their Commitments? 1998 – The Impact of Meeting the Kyoto Protocol on Energy Marketing and the Economy 1998 – Global Warming: The High Cost of the Kyoto Protocol National and State Impacts 1997 - Global Warming: The Economic Cost of Early Action Drawing from Years of Experience on This Issue

18. Copyright 2005 Global Insight, Inc. 18 We Practically Invented the Industry Consistently Named Among the Top Economic Forecasters in the World

19. Copyright 2005 Global Insight, Inc. 19 Expertise Built Upon a Solid Foundation

20. Copyright 2005, Global Insight20

21. Copyright 2005 Global Insight, Inc. 21 For Additional Information … Gil Rodgers, Senior Director Global Insight, Lexington, MA 781-301-9142 gil.rodgers@globalinsight.com Peter Seager, Principal Global Insight, London +44 20 8544 7924 peter.seager@globalinsight.com