Energy: Alcatel case IEF European Roundtable Energy Efficiency - Knowledge Management - Progress & Limits October 28-29, 2002

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Alcatel the enabler of global communications Complete portfolio of network solutions Alcatel’s Mission Global presence Integration capabilities for any network type

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel 99,000 employees (60,000 YE 2003) with over 22,000 engineers in R&D active in 130 countries 99,000 employees (60,000 YE 2003) with over 22,000 engineers in R&D active in 130 countries Billion euros in sales 11.3% invested in R&D Billion euros in sales 11.3% invested in R&D 2001 Facts and Figures

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Sales by Segments and Geography ROW 17% USA 19% Europe 51% Asia 13% 2001 € Billion Optics 29% e-Business 14% Space and Components 12% Carrier Networking 45%

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Mobile operators Backbone SPs Carriers ISPs Service Providers We Serve All Types of Customers MLEsSMEs Mobile Phones Enterprises Consumers

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel AmericasEuropeAsia And Serve Our Customers Worldwide These are just a few of our customers...

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Energy Efficiency: Drivers

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Energy Issue in the Telco sector: Drivers > Regulatory > Sustainable Development Reporting: 1 - Financial 2 - Social 3 - Environmental (of which Energy...) > Rating Agencies > Emission trading > “Carbon Disclosure Project” linked with Climate Change NewNew

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Alcatel’s Shared Values (Reminder) > Four core values: customer commitment: the first priority for all of us innovation: goes beyond technology teamwork: behaving as a member of a single corporation accountability: we all share the destiny of Alcatel > Through Alcatel values, we promote: best business practices corporate citizenship environmental conscious … for sustainable development NewNew

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Energy - CO2 emissions > Scope 1*: Direct Emissions Fossil fuel (gas) for buildings heating – easy to monitor, but not directly linked with processes > Scope 2*: Indirect Emissions from imported Energy Electricity only – easy to measure, but very little direct influence on production > Scope 3*: Other Sources Product Life Cycle Supply Chain Goods Transportation Business Travel & Employees commuting – almost impossible to monitor and report (*) WBCSD & WRI Guidelines used for Carbon Disclosure Project

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel The “Phase Perspective” (Ericsson) Life Cycle CO2 divided by Products’ by Products’ life cycle phases Life Cycle CO2 divided by Products’ by Products’ life cycle phases

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel > ISDN*-subscriber board evolution ( ) ISDN-subscriber ISTC ISTD (new)Delta  Amount of boards %  Mass electronics731 kg503 kg -31%  Silicon area0,90 m²0,52 m²-42%  Power consumption (typical)6,6 kW 3,8 kW (at 0,05 Erl) -42% ISDN-subscriber ISTC ISTD (new)Delta  Amount of boards %  Mass electronics731 kg503 kg -31%  Silicon area0,90 m²0,52 m²-42%  Power consumption (typical)6,6 kW 3,8 kW (at 0,05 Erl) -42% Product Design Example 1: Subscriber Board evolution (*) Integrated Service Digital Network

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Product Design Example 2: Mobile Phones > Energy consumption of mobile phones during the use phase represents a great part of their global environmental impact approx. 70 to 80 % > Mobile phones energy consumption (Chargers) can be split in two parts : charge phase ( 5 to 10 % of time) sleep mode ( 90 to 95 % of time) > Talk and stand by time are also indicators of mobile phone energy efficiency

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel > energy consumption while charging depends on battery specs and charger type > sleep energy consumption is decreasing (Voluntary Agreement on chargers energy efficiency signed by Alcatel in 2000) Example 2: Mobile Phones charger power consumption

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Stand by (hours) Weight (gr) Stand by (hours) Weight (gr) Example 2: Mobile Phone “dematerialization” > Battery weight x stand by-time

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Opinion

DAGRI/RES – October 2002 All rights reserved © 2002, Alcatel Energy and the Telco sector > Current trend requesting Telco sector to report and monitor energy consumption and CO2 emissions is not “pertinent” 70% of emissions are coming from the use phase (over several years) which is not under direct control All Manufacturing activities are out-sourced to Contract Electronic Manufacturers (CEM), from which it is difficult to obtain relevant emissions data (risk of double counting) the supply chain (inc. CEM) is playing an important role in the total account (25%) > Environmental Conscious Design is key We will communicate on this specific point in our First Sustainable Development Report due April 2003 Most of our competitors are already doing so...