1. Energy and Industry Trends Dave Molin VP & General Manager Honeywell Building Control Systems

2. 2 The Current and Future Energy Outlook Economy and Market Changes Business Opportunities Agenda

3. 3 Rising Energy Prices Energy Prices | 1980 – 2035 (2008 Dollars Per Million Btu) Electricity Coal Natural Gas Crude Oil SOURCE: U. S. Energy Information Administration Independent Statistics and Analysis (December/2009) Global Issues

4. 4 U.S. Energy Consumption Building automation can control 66% of energy in homes and buildings and can monitor 100% US DOE Buildings Handbook, 2008 Industry (gas) 32% Transportation (oil) 28% Buildings (electricity) 40% Residential 22% Commercial 18% Lights 26% Heating 14% Cooling 13% Water Heat 7% Ventilation 6% Office Equipment 6% Refrigeration 4% Computers 3% Cooking 2% Other 13% Heating 31% Water Heat 12% Cooling 12% Lights 11% Refrigeration 8% Electronics 7% Wet Clean 5% Cooking 5% Computers 1% Other 4%

5. 5 Current Situation Energy – the catalyst that helped tip us into the recession –It’s in the news everyday –We have the ability to provide relevant, robust and lasting solutions for building owners and end users If you’ve been around long enough to have experienced past energy disruptions, you know they didn’t have any real lasting impact –This time it’s different and commercial building controls today can address a large enough portion of the energy consumed in commercial building facilities We can mitigate uncertainty and risk by reducing the impact of energy volatility on our building owner customers –Demand Response Implementations –Real Time Pricing –Critical Peak Pricing –Eventuality of some sort of cap and trade implementation, etc.

6. 6 Is this time really different? Energy awareness, cost and volatility Shift from new construction toward retrofits and renovation Non-traditional competitors challenging the space Legislative incentives and mandates Standards and code development Elevated social conscience Capturing savings potential is complex and difficult Creates Opportunity to Increase Building Performance

7. 7 Federal Policy and Legislation Source: US Dept of Energy Energy Efficiency and Renewable Energy DOE Supplier Summit January 2010

8. 8 State Energy Activity States ranked for energy efficiency efforts

9. 9 Air Traffic Modernization BiofuelsGreen BuildingsReduced Emissions Industrial Process Efficiency Energy Efficiency, Demand Response & Smart Grid Energy Performance Contracts Fuel Efficiency Energy Is Our Business 60% of Honeywell ACS Products & Services Related to Energy Efficiency & Consumption

10. So, what’s a Smart Grid anyway

11. 11 Payback PeriodBenefits Availability Coal10-15 Years2-3 Years Nuclear20+ Years5+ Years RenewablesExceeds Useful Life of Asset Varies Energy Efficiency2-5 YearsImmediate Energy Efficiency & Conservation are the Cheapest Sources of Power Honeywell Products Leverage Existing Infrastructure in Homes, Buildings and Industrial Plants to manage peak and base-load demand Economics of Electricity Efficiency and Conservation are the Best Options

12. 12 The Smart Grid More than Smart Meters Control of energy from and to the end user Reduce energy and reduce the load on an over extended infrastructure Optimize the Energy Infrastructure Smart Production, Delivery, and Use of Energy Source: 2009 Electric Power Research Institute, Inc.

13. 13 Automated Demand Response

14. 14 The Current and Future Energy Outlook Economy and Market Changes Business Opportunities Agenda

15. 15 Non-Residential Growth Forecast Non-Residential Construction to improve, but stay below peak levels for some time

16. 16 Vertical Market Growth Forecast Office Facilities Commercial Facilities Educational Facilities

17. 17 Office Buildings Source: ITR 2012

18. 18 Commercial Properties Source: ITR 2012

19. 19 Educational Facilities Source: ITR 2012

20. 20 The Current and Future Energy Outlook Economy and Market Changes Business Opportunities Agenda

21. 21 Increasingly, facilities are viewed as strategic resources, rather than as an expense The facility manager is being elevated to the role of asset manager, supporting the organization's overall business goals Facility Management Today

22. 22 Business Challenges faced by FMs Increase efficiency & reduce costs –Multiple user interfaces & redundant system applications/workstations –Requires significant time to train users –Primary building equipment can be large energy users –Energy supply and demand cannot be optimized without measurement, analysis and appropriate response Minimize system downtime & disruptions –Difficult to implement routine maintenance & cleaning –Too many systems, not enough time/expertise Improve decision making –Hard to get at information when you need it –Information exists within different systems –Limited reporting & trending capabilities

23. 23 Industry Technology Trends Our world is becoming instrumented –Ability to measure, sense & see exact conditions of everything Our world is becoming interconnected –In 2011 we are 10 X more instrumented & connected then in 2006 –New ways for people, systems & objects to communicate –Use of the Internet in our daily lives is increasing Cisco predicts 15 Billion devices by 2015 and 3 Billion users (40 percent of world population) –It was approx 5 Billion in 2010 Customer data presentation expectations are changing –People want to see and use data and information the way they do everything else in their daily lives

24. 24 Summary Energy is expensive and prices are volatile – and there’s no end in sight Measuring energy is the first step in improving energy performance Independent forecast creates optimism for construction and retrofit opportunities, but the migration from new construction to retrofit is paramount Smart BAS Systems can optimize business performance for building owners