1. The Energy Productivity Opportunity Jason BlumbergMcKinsey & Company April 9, 2008

2. Global energy demand growth will accelerate to 2020 • There are large, economic opportunities to curb demand growth through higher energy productivity

3. 57 GLOBAL END-USE ENERGY DEMAND MAP:US AND CHINA ARE THE LARGEST ENERGY USERS End-use energy demand by sector Percent; QBTUs • 100% = • 422 • 82 • 86 • 20 • 60 • 7 • Transportation • 18 • 20 • 21 • 28 • 36 • Residential • and • commercial • 35 • 33 • 35 • 37 • 57 • Industry • 47 • 46 • 45 • 35 • Global • U.S. • Europe • Middle East • China

4. 180 GLOBAL ENERGY DEMAND GROWTH WILL ACCELERATE TO 2.2 PERCENT ANNUALLY TO 2020 • 2003-2020 • CAGR • % • 2.2 • 613 • Up from 1.7% 1986-2003 • 17 • 3.6 • QBTU • 63 • 2.2 • 95 • 2.2 • 422 • Air transport • 9 • 43 • Commercial • 2.4 • 158 • 66 • Road transport • 11 • Residential • 1.9 • 29 • 106 • Pulp and paper • 3.1 • 60 • 8 • 17 • Steel • 3.1 • 36 • Chemicals • 1.6 • 180 • 137 • Other industrial • 2003 • 2020 Source: MGI Global Energy Demand Model

5. 64 DEVELOPING REGIONS, PARTICULARLY CHINA AND THE MIDDLE EAST, WILL DRIVE 85% OF GROWTH TO 2020 Regions End-use energy demand growth by region, 2003-20 QBTUs • Developed • Developing • 191 • 21 • 29 • 2 • 2 • 7 • 8 • 15 • 15 • 17 • 18 • 162 • 22 • China • Middle East • U.S. • Other Europe* • Other Asia** • Latin • America • India • North-western Europe • Canada • Japan • ROW • Total * Includes Baltic/Eastern and Mediterranean Europe and North Africa. ** Includes Australia and Korea. *** Includes South America and Mexico. Source: MGI Global Energy Demand Model

6. 27 GDP GROWTH, NOT OIL PRICE, MAIN SOURCES OF UNCERTAINTY • Scenarios • GDP* • Energy productivity*** • Oil price** • 720 • 670 • 2020 base case demand = 613 QBTU • 613 • 606 • 565 • Global demand growth to 2020 • Percent • 480 • High • 2.8 • 2.2 • 3.2 • Low • 1.7 • 2.1 • 0.7 *  2% for China and India,  1% for other developing regions, and  0.5% for developed economies ** 30, 50, 70 $/bbl crude oil respectively Source: BP; MGI Global Energy Demand Model

7. 27 GDP GROWTH, NOT OIL PRICE, MAIN SOURCES OF UNCERTAINTY – BUT ENERGY PRODUCTIVITY MATTERS MOST • Energy productivity*** • Scenarios • GDP* • Oil price** • 720 • 670 • 2020 base case demand = 613 QBTU • 613 • 606 • 565 • Global demand growth to 2020 • Percent • 480 • High • 2.8 • 2.2 • 3.2 • Low • 1.7 • 2.1 • 0.7 *  2% for China and India,  1% for other developing regions, and  0.5% for developed economies ** 30, 50, 70 $/bbl crude oil respectively *** 107 QBTU of additional demand in a “frozen technology” case without energy productivity improvements Source: BP; MGI Global Energy Demand Model

8. Global energy demand growth will accelerate to 2020 • There are large, economic opportunities to curb demand growth through higher energy productivity

9. 25 LARGE OPPORTUNITIES FOR GLOBAL ENERGY PRODUCTIVITY IMPROVEMENTS ACROSS SECTORS • Potential demand reduction in 2020 through enhanced energy productivity • QBTU • Percent of total opportunity • 2020 base • demand • 613 • 23 • Residential • 32 • 10 • Commercial • 13 • Transportation • 13 • 10 Industrial • 38 • 42-61 • 19 • Transformation • 25 • Capturing 135 QBTU would cut global energy demand growth from 2.2.% to 0.7% p.a. • 2020 • 478 Source: McKinsey Global Institute

10. 327 WITHOUT A CHANGE, THE US WILL TO CONTINUE TO HAVE THE LOWEST ENERGY PRODUCTIVITY AMONG DEVELOPED REGIONS • Energy productivity • Billion real $ GDP /QBTU • 2003 • 2020 • Japan • North-Western Europe • United • States • China • Middle East • Global • Energyper capita • Million BTU /capita • Japan • North-Western Europe • United • States • China • Middle East • Global Source: MGI Global Energy Demand Model

11. 0.6 …. AND THE US WILL SEE THE LOWEST ENERGY EFFICIENCY IMPROVEMENTS ACROSS ALL SECTORS • Annual improvement of energy-efficiency indicators, 2003-2020 • SectorIndicator • ResidentialEnergy efficiency • CommercialEnergy efficiency • RoadFuel economy • SteelEnergy efficiency • 0.2 • 0.4 • 0.5 • 0.2 • U.S. • Europe • 1.0 • 0.6 • 0.8 • 0.3 • Japan • 1.5 • 0.4 • 0.8 • 0.3 • China • 2.0 • 1.5 • 0.7 • 0.6 Source: EIA, Lawrence Berkeley National Lab China Energy Group, MGI analysis

12. 27.3 PURSUING THE ENERGY PRODUCTIVITY OPPORTUNITY WOULD ALSO HAVE A BIG IMPACT ON CO2 EMISSIONS Potential CO2 emission reduction in 2020 through enhanced energy productivity Metric tons (billions) • Percent of total opportunity • 2020 base demand • 35.3 • 21 • Residential • 1.7 • 9 • Commercial • 0.7 • 11 • Transportation • 0.9 • 40 • 40 • Industrial • 3.2 • 19 • Transformation • 1.5 • 2020 • 27.3 • Capturing the energy productivity opportunity would cut global CO2 emissions from 2.4% to 0.8% p.a.

13. 50 • 0 • 5 • 10 • 15 • 20 • 25 • 30 • 35 • -50 • -100 • -150 • Marginal cost • Euros per tCO2e • 25-35 • 35-40 • 550 ppm • 450 ppm ENERGY DEMAND EFFICIENCY CAN BE AN ECONOMICALLY ATTRACTIVE WAY TO REDUCE GHG EMISSIONS • Global cost of abatement to 2030 • Euros per tCO2e • Abatement potential • GtCO2e per year

14. THE ENERGY PRODUCTIVITY OPPORTUNITY • US energy productivity today lags other developed regions • As a result, US industrial companies have a disadvantage in high energy price environment – a gap that will grow if GHG emission costs are introduced • Large potential to reduce energy costs through positive return energy efficiency investments… • … and for innovative companies to grow by creating new solutions and markets • If captured, a win-win for the economy (business and individuals) and the environment

15. Costs and Potential of Greenhouse Gas Abatement in Germany • Carbon Abatement Cost Curves For • Feb 2007 • Sep 2007 SELECT RELEVANT PUBLISHED MCKINSEY KNOWLEDGE • Abatement and Regulation • How companies think about climate change: A McKinsey global survey • Mar 2008 • Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? • Nov 2007 • A cost curve for greenhouse gas reduction • Feb 2007 • European Commission Directorate General for Environment: Report on International Competitiveness • Dec 2006 • European Commission Directorate General for Environment: Review of EU Emissions Trading Scheme • Nov 2005 • Energy Efficiency • The case for investing in energy productivity • Feb 2008 • Leapfrogging to Higher Energy Productivity in China • July 2007 • Wasted Energy: How the U.S. Can Reach Its Energy Productivity Potential • July 2007 • Curbing Global Energy Demand Growth: The Energy Productivity Opportunity • May 2007 • Meeting China's energy needs through liberalization • July 2006 • Growth Markets • The New Power Brokers: How Oil, Asia, Hedge Funds, and Private Equity Are Shaping Global Capital Markets • Sept 2007 • Betting on Biofuels • May 2007 • Global trends in energy • Mar 2007 • Positioning Brazil for biofuels success • Mar 2007 • Making the most of the world's energy resources • Jan 2007 • The Biofuel (Re-)Evolution • 2007 • Productivity of growing global energy demand: A micro-economic perspective • Nov 2006 • Smarter investing in energy commodities • Aug 2006 • Sustainability • July 2007 • Shaping the new rules of competition • May 2007 • Investing in sustainability: An interview with Al Gore and David Blood • May 2007 • Exploring Business's Social Contract: An Interview with Daniel Yankelovich • Mar 2007 • Business Value and the Socio-Political Environment - The 5-R Framework • 2007 • A new era for business Source: McKinsey Global Institute, McKinsey Quarterly, McKinsey Climate Change SI