A global clean and sustainable energy future

1. A global clean and sustainable energy future JUCCCE Kickoff Document July 18-19, 2007, Beijing

2. 264 BVA-262622-705-20070703-GE3-v6 The US and China are 2 top energy users and generators of emission End-use energy demand* by region QBTU CO2 intensity by region Billion tonnes * * * * Rest of world Rest of world * * Middle east * * Japan * * * * *** Northwestern Europe** * * China * U.S. * * * * Share of the U.S. and China Percent 40 43 36 38 * Transformation losses (power generation. refining) allocated to end-use segments ** Belgium, France, Germany, Island, Ireland, Luxemburg, the Netherlands, Norway, Switzerland, and the United Kingdom Source: MGI Global Energy Demand Model

3. 264 BVA-262622-705-20070703-GE3-v6 The US and China are among the largest energy consuming countries End-use energy demand* by region QBTU CAGR, 2003 - 20 Percent * 2.2 2.0 * 4.5 Rest of world 0.6 * * 0.9 * * * *** 1.1 * 4.4 * * * Share of the U.S. and China Percent 36 38 * Transformation losses (power generation. refining) allocated to end-use segments ** Belgium, France, Germany, Island, Ireland, Luxemburg, the Netherlands, Norway, Switzerland, and the United Kingdom Source: MGI Global Energy Demand Model

4. BVA-262622-705-20070703-GE3-v6 At per capita level, the US remains the highest, while China is likely to exceed world average in the next decade End use energy per capita Million BTU CAGR, 2003 - 20 Percent 2003 2020 0.2 * US * North Western Europe 0.7 * * 0.7 * Japan * 3.5 China 3.4 Middle East Global average 1.2 82 67 Source: MGI Global Energy Demand Model

5. 134 US China US XX% BVA-262622-705-20070703-GE3-v6 Security of energy supply is increasingly critical in both countries … Domestic supply Domestic demand Imbalance as % of total demand Energy gap between demand and supply QBTU, 2003 and 2030 19% 33% 27% 9% 2003 2030 2003 2030 Source: IEA “World energy outlook”, MGI Global Energy Demand Model

6. 3.7 US China BVA-262622-705-20070703-GE3-v6 … and investment required to build up energy infrastructure is likely to soar IEA 2003 forecast IEA 2005 forecast IEA 2006 forecast Forecast changes of investment to energy infrastructure* in 2005 - 30 USD trillions * * * Investment is needed to expand supply capacity, and to replace exhausted and obsolete supply facilities Source: IEA “World energy outlook”; McKinsey analysis

7. 4.3 BVA-262622-705-20070703-GE3-v6 Although the CO2 emission per capita is small in China today … CO2 intensity per capita Tonnes per capita CAGR, 2003 - 20 Percent 2003 2020 0.2 US * * 0.4 Japan * * North Western Europe 1.5 * * 4.0 China * * 2.1 Middle East * * Global average 1.3 3.8 4.7 Source: MGI Global Energy Demand Model

8. 6.7 BVA-262622-705-20070703-GE3-v6 China will become the largest country of CO2 emission in 2020 CO2 intensity by region Billion tonnes CAGR, 2003-20 Percent * 2.3 1.9 * Rest of world 4.2 0.0 * Middle east 1.5 Japan * * Northwestern Europe 4.5 * China 1.2 U.S. * * Share of U.S. and China Percent 40 43 Source: MGI Global Energy Demand Model

9. 100 Unit CO2 emissions for heating tCO2/Million BTU BVA-262622-705-20070703-GE3-v6 China's dependency on coal is one of the major drivers of CO2 emission increase Primary energy source by fuel QBTU; percent; 2003 * * * * * * * * NG * * * * * * * * * * * * * * * * * * Oil * * * * * Coal * * * Coal was the highest CO2 emission level among major energy sources * * * North-western Europe * * Source: IEA, MGI Global Energy Demand Model

10. 61 BVA-262622-705-20070703-GE3-v6 The balance of different energy sources in the US may stay stable, while China may move towards more coal Primary energy source by fuel QBTUs; Percent CAGR Percent CAGR Percent * * * * * * -2.7 1.0 * * * 1.5 * * * * * 0.4 * 1.0 * 0.2 * * 1.4 * * * 4.6 4.7 * * * 0.4 * * * * 3.5 1.0 * * 0.9 * * 3.3 2003 * * * U.S. China Source: IEA, MGI Global Energy Demand Model

11. 540 Atmospheric carbon dioxide ppm BVA-262622-705-20070703-GE3-v6 CO2 needs to be capped soon at 450 ppm to avoid severe environmental consequences Climate changes from 1900 Degree centigrade Possible scenarios ! • Glacier dissolution in Peru which lead to shortage of drinkable water • 50% decrease of tropical rain forest in Queensland +* ! ! • Dying of shelf coral, starting from Indian Ocean • Glacier dissolution in Greenland 540-* ! +* ! • Threat of drinkable water for 1.0 - 2.8 billion people • 12 - 200 million people will be under starvation threat +* ! ! • Annihilation of northern forest in China • Permanently frozen ground dissolution and desertification in Tibet +* ! * * * *E ! • Dengue fever threats 50 - 60% of world population • Destabilization of West Antarctica ice-sheet +* ! "The temperature limit implies that CO2 exceeding 450 ppm is almost surely dangerous, and the ceiling may be even lower" - Mariko Sato, Columbia univ., co-author with James Hansen Base temperature in 1900 2005 Est. 2016 Est. 2050 Est. 2100 Est. Source: IPCC, Hansen-Sato’s research, NASA, UN University, lit search

12. 457 BVA-262622-705-20070703-GE3-v6 There may be significant imbalance between supply and demand in 2050 Global energy supply and demand gap in 2050 QBTU "Theoretical" supply/demand balance in 2050 with CO2 capped at 450 ppm • Supply • To avoid severe environmental damage from CO2 emission, CO2 has to be maintained at below 450 ppm, which limits the consumption of carbon related fossil fuel • Carbon-free renewables supply also has a limit • Biomass: 209 ~ 299 QBTU, requiring 10 - 15% of total land area in the earth • Nuclear: ~ 239 QBTU, implying buildup of 8000 new reactors (1 gig each). • Solar: ~ 99 QBTU, which requires PV land area as large as 1.5% of the total area of the U.S. • Wind: ~ 63 QBTU, if every site on the globe with class 3 wind or greater were occupied with windmills • Hydro: 21~ 60 QBTU, if dams were placed on every untapped river on the earth • Demand • Total population reaches 9 billion in 2050 • 1,357 QBTU total energy consumption in the aggressive case, assuming worldwide people all reach the current level of Western Europe GDP per capita • 896 QBTU total energy consumption in the conservative case, assuming worldwide people all live at the current level of Equatorial Guinea 896 ~ 1,357 Up to 20% 1,088 - 1,217 631~ 760 * Carbon-free renewables Fossil fuel * * (est.) * (est.) Global energy supply Global energy demand Source: Nocera-Lewis research; IEA; EIA; MGI Global Energy Demand Model