For internal use only / Copyright © Siemens AG All rights reserved. CRC Energy Efficiency Scheme A business perspective

For internal use only / Copyright © Siemens AG All rights reserved. Eddie Orchard CEng MIET CEnv MIEMA Environmental Risk Manager Siemens plc Corporate Information Technology/Global Shared Services UK

Page 3 For internal use only / Copyright © Siemens AG All rights reserved. Siemens  Siemens has been at the forefront of technological change and social progress in the UK since 1843  Its founder, Sir William Siemens, was a pioneering environmentalist, concerned about waste & pollution, clean air and pure water  Siemens UK early successes included: laying the first undersea telegraph cable between Ireland & USA installation of the first electric street lighting (Godalming, Surrey) first electric lighting in a UK theatre (Savoy, London) development of the first water meter construction of the first public electric railway (Volks, Brighton)

Page 4 For internal use only / Copyright © Siemens AG All rights reserved. Siemens Today  Energy sector  Fossil Power Generation  Renewable Energy  Oil & Gas  Power Transmission  Power Distribution  Energy Service  Industry sector  Industry Automation  Drive Technologies  Building Technologies  OSRAM  Industry Solutions  Mobility  Healthcare sector  Imaging and IT*  Workflow and Solutions*  Diagnostics  Magnet technologies  Hearing solutions *Marketed as Siemens Healthcare UK  Cross-sector businesses  Siemens IT Solutions & Services  Siemens Financial Services  Other operations  Siemens Real Estate  CIT/Global Shared Services UK

Page 5 For internal use only / Copyright © Siemens AG All rights reserved. Carbon Reduction Commitment Energy Efficiency Scheme (CRC) The CRC is a mandatory emissions trading regime for the UK  Its aim is to improve energy efficiency and cut emissions in large public and private sector organisations  It is designed to tackle CO 2 emissions not already covered by: Climate Change Agreements (CCAs) or the EU Emissions Trading Scheme  Qualifying organisations are responsible for around 10% of the UK’s CO 2 emissions  Qualifying organisations have to fully embrace the scheme or face financial and reputational penalties

Page 6 For internal use only / Copyright © Siemens AG All rights reserved. Main Drivers for Energy Efficiency Improvements  Cost of allowances, which will not be “recycled” – adds approximately 10% to energy costs  Annual performance League Table ranks participants on energy efficiency performance – impacts on reputation  League Table based on key measures  Automatic metering (Early Action Metric – years 1-3 only)  Carbon Trust Standard or equivalent (Early Action Metric)  Growth of business (year 2 onward)  Absolute energy reduction (year 2 onward – 75% from year 4)

Page 7 For internal use only / Copyright © Siemens AG All rights reserved. Early Action Metrics

Page 8 For internal use only / Copyright © Siemens AG All rights reserved. Qualification Requirements  All organisations that had (at the time of registration) at least one settled half-hourly electricity meter qualified for participation  Organisations that consumed more than 6,000 megawatt-hours (MWh) per year of half hourly metered electricity during 2008 qualified for full participation  Qualifying organisations that consumed less than 6,000 MWh during 2008 simply had to make an information disclosure of their 2008 half hourly electricity consumption  Organisations include industry, commerce, supermarkets, water companies, banks, local authorities, schools, universities, hospitals, central Government Departments, etc.

Page 9 For internal use only / Copyright © Siemens AG All rights reserved. Qualifying Organisations  The CRC scheme started in April 2008 (the qualifying year)  Organisations had to register by the end of September 2010  Organisations had to report the total electricity they consumed through half hourly meters in 2008  Qualifying organisations had to identify any subsidiaries that consumed over 6,000 MWh in their own right Significant Group Undertakings (SGUs)  Qualifying organisations were encouraged to implement Early Action Metrics in order to score well on the performance league table

Page 10 For internal use only / Copyright © Siemens AG All rights reserved. CRC Registrations  Full participants – 2,764  Organisations required to make information disclosure – 12,500  Full participants by sector:  Manufacturing – 30.1%  General business activities, real estate, etc. – 24.7%  Councils – 6.8%  Health sector – 5.6%  Wholesale and retail trade, etc. – 5.4%  State education – 3.9%  Trust, co-operatives, etc. – 3.9%  Finance – 3.6%  Central Government, etc. – 3.4%

Page 11 For internal use only / Copyright © Siemens AG All rights reserved. CRC Registrations by Sector

Page 12 For internal use only / Copyright © Siemens AG All rights reserved. Evidence Pack  Required to be maintained for regulatory audit  Must include the following information  Company structure and changes to structure  Energy consumption  Significant events  Verifiable records  Signed records of audits of the Evidence Pack  Organisations need to keep track of  Mergers, acquisitions and divestments  Changes in plant and equipment  Failures of meters or systems  Replacement or addition of meters  Changes in energy supply

Page 13 For internal use only / Copyright © Siemens AG All rights reserved. Scope of Qualifying Organisations  Organisations must identify their top level parent organisation  Top level parent organisation can be based anywhere in the world  All UK organisations and subsidiaries that are ultimately majority owned by the top level parent organisation are within scope  The scope of an overseas owned organisation may include many disparate organisations that have no logical UK grouping or control  For Siemens the top level parent organisation is Siemens AG  Siemens Holdings plc must report the energy consumption for all Siemens AG majority owned businesses purchasing and using energy in the UK

Page 14 For internal use only / Copyright © Siemens AG All rights reserved. Siemens CRC Compliance Strategy  Cross business team created  CIT/GSS UK – Environmental specialists  Siemens Real Estate (SRE)  Corporate Purchasing – Energy contracts  Facilities Management sub-contractor  CRC Manager appointed with responsibility to achieve cost effective and timely compliance  Engaged with Siemens AG, UK Company Secretary and others to determine structure of Siemens in the UK  Engaged with SRE and all identified Siemens UK businesses to determine UK estate portfolio and energy supply footprint

Page 15 For internal use only / Copyright © Siemens AG All rights reserved. Scope of Siemens in the UK  Siemens Holdings plc must report the energy consumption for all Siemens AG majority owned businesses purchasing and using energy in the UK  Siemens in the UK is made up of over 30 subsidiaries  Siemens plc is the largest, with over 20 separate businesses  Siemens operates out of approximately 150 sites in the UK  Siemens has 47 half hourly electricity meters across 43 sites 14 subsidiaries have half hourly electricity meters 3 subsidiaries used over 6,000 MWh in 2008 – SGUs

Page 16 For internal use only / Copyright © Siemens AG All rights reserved. Siemens CRC Improvement Strategy Early Actions  Achieve Carbon Trust Standard  Improve automatic metering/sub-metering coverage  Develop and formalise Evidence Pack Long Term Strategy  Reduce energy consumption year-on-year  Minimise costs  Maximise position in the Performance League Table

Page 17 For internal use only / Copyright © Siemens AG All rights reserved. Energy Reduction Project with Siemens Building Technology  Energy Efficiency Programme – sponsored by Siemens AG  Project for five manufacturing sites (Phase 1) Additional sites to be addressed in Phases 2 and 3  Siemens Building Technology guarantee carbon/energy savings Other actions  Siemens Industrial Solutions are to look at energy reductions in the production environment  Improve centralisation of energy purchase process Energy Reduction and Cost Minimisation Strategy

Page 18 For internal use only / Copyright © Siemens AG All rights reserved. Proposed Timeline Phase 1  Qualification year – 2008  Registration – Between April and September 2010  Annual Report and Footprint Report – 29 th July 2011  Annual Report and Purchase of Allowances – 2012 (£12 / tonne)  Also 2013 and 2014 Phase 2  Qualification year – 2012/13  Registration – Between April and September 2013  Annual Report and Footprint Report – 2013/14  Annual Report and Surrender of Allowances – 2015 (price????)  Performance League Table published every year starting October 2011

Page 19 For internal use only / Copyright © Siemens AG All rights reserved. Timeline – Current and Proposed

Page 20 For internal use only / Copyright © Siemens AG All rights reserved. The CRC in a Nutshell  Basic requirement is to:  Register  Monitor  Report  Buy and Surrender Allowances  Maintain Evidence Pack  Ever decreasing cap on number of allowances (increasing costs)  Significant impact – Cost and reputation  Primary and secondary energy consumption only (gas, oil and electricity)  Liable to add approximately 10% to energy costs (increasing)