Glass Manufacturing

1. Glass Manufacturing Tim Neal Environment, Energy & Risk O-I V4 20 Oct 2007 O-I UK

2. Introduction • What does sustainability mean? • How sustainable is glass packaging? • How can this be improved? • What we can do • What you can do to help O-I UK

3. Finland United Kingdom Estonia Denmark Canada Ireland Poland Netherlands Germany Germany Czech France Hungary Portugal USA Japan Italy Greece China Spain Korea Dominican Republic U.A.E. Puerto Rico Mexico Vietnam Costa Rica Guatemala Thailand Venezuela Colombia Malaysia Nigeria Ecuador Indonesia Brazil Peru Bolivia Australia Chile South Africa New Zealand 50-100% Stake Licensee O-I: Glass Container Operations • 80 factories • 178 furnaces • 491 machines • Glass sales: $6.2 bn • 27,300 employees O-I UK

4. O-I: European Plant Network Schiedam, Netherlands Karhula, Finland Alloa, United Kingdom Leerdam, Netherlands Jarvakandi, Estonia Germany Achern Bernsdorf Holzminden Rinteln Harlow, United Kingdom Antoninek, Poland Maastricht, Netherlands France Béziers Gironcourt Labégude Puy-Guillaume Reims (2 plants) Vayres Veauche Wingles Jaroslaw, Poland Teplice, Czech Republic Sokolov, Czech Republic Oroshaza, Hungary Italy Asti Bari Bologna Milan Napoli Pordenone Rome Trento Treviso Seville, Spain Barcelona Spain BSN Technical Center Lyon, France O-I UK

5. O-I: Global Recycled Glass (Cullet) Use Canada – 204,000 Europe – 2,815,000 USA – 843,500 China – 226,000 Venezuela – 88,817 Colombia – 151,324 Ecuador – 17,379 Indonesia – 35,000 Peru – 27,810 Brazil – 96,300 Australia – 272,000 New Zealand – 80,000 • 4.9 million Tonnes = Approx. 18 billion Recycled Containers O-I UK

6. Sustainability: Definition • Much abused term. • Most commonly used definition: • “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” • Brundtland report, Our Common Future, 1987. O-I UK

7. Sustainability: UK Govt Indices O-I UK

8. Sustainability Environmental Impact O-I UK

9. is not just about CO2 Greenhouse Gases Sustainability Environmental Impact O-I UK

10. Nutrition Environmental Impact O-I UK

11. is not just about Calories Nutrition Environmental Impact O-I UK

12. Glass Sustainability • Raw Materials • Unlike many packaging materials glass can, under the right conditions, be recycled endlessly. • Closed loop product par excellence. • Unlike many packaging materials, where raw materials have to be used there is no threat of resource exhaustion. • Energy • UK Glass industry met all milestone targets since Climate Change Agreement scheme established. • Major achievement was through investment in more efficient technology & production output improvements. (Often ahead of schedule) O-I UK

13. Glass Sustainability • Air Emissions. • EU regulation has meant that Particulates and SOx emissions will be significantly reduced by most container glass manufacturers in the next few years. • €60m+ Programme for O-I in EU. • Greenhouse Gases • Some studies suggest that glass production emits more greenhouse gases than production of other types of packaging product. • No conclusive agreement. • Dutch Eco Tax research puts Glass and Polyethylene Terephthalate at same level. (comparing functional unit) • Initial Wal-Mart scorecards in the USA put glass ahead for GHG emissions O-I UK

14. Glass Sustainability • Water Emissions • Generally to the sewer system rather than straight to river • Under normal conditions emissions very low. • Transportation. • Bulk Raw materials sourced reasonably locally. • Glass generally manufactured close to where it is used in bottling halls. O-I UK

15. Glass Sustainability • Product Use • Products often have longer shelf life in glass than in other packaging products. • Reduced food waste • Glass is essentially chemically inert - will release nothing into the product. • The only packaging material to be recognised by the U.S. Food & Drug Administration as generally recognisedas safe (GRAS). • Waste • If glass reaches landfill it is essentially chemically inert so it will do no harm. O-I UK

16. Glass Sustainability • Economics • A product is only sustainable if there is a market for it. • Consumers consistently show a preference for glass packaging compared to other packaging materials. • A long term trend which is unlikely to change any time soon. • But this should not be taken for granted. O-I UK

17. Consumers Prefer Glass In a survey consumer respondents rated which packaging options best addressed the following qualities for non-alcoholic beverage products: Source: Datamonitor, January 2007, 1002 respondents O-I UK

18. Glass Sustainability: Conclusion • Glass is a good option – Now • But it can become even more so. • How? O-I UK

19. Furnace: Efficiency • Industry can improve the efficiency of its furnaces • Can only make significant design changes at full repair (15-20 years apart) • But no matter how efficient the process becomes a certain amount of energy will be required. • And we are reliant on fossil fuels • This issue is too big for glass industry to solve alone. • On site generation has been actively pursued but has not been possible for several reasons. • Combined Heat & Power - glass industry generally has no need for the heat. • Wind Turbines – insufficient space to generate sufficient energy economically. O-I UK

20. Cullet: Environmental Advantages • Takes less energy to melt cullet than to melt raw materials. • Takes 1.1 to 1.2 tonnes of raw material to make one tonne of glass. Only takes 1 tonne of cullet to produce 1 tonne of new glass. • Some of the raw materials used to make glass release CO2 when melted (Limestone, Dolomite and Soda Ash). • Reduced impact from collecting / processing raw materials before they reach factory. O-I UK

21. Cullet: Environmental Disadvantages • Greater impact from transporting collecting & delivering cullet vs delivering raw materials. • Contaminated cullet reduces production efficiency. • If Pyrex or Ceramics enters the furnace it creates what is known as stones. (in other words - unmelted bits in the glass) • Generally takes 24 hours for raw material to exit furnace; problem can go undetected for long time. • 1 or 2 contamination issues can undo environmental benefit of using cullet through the rest of the year. • Contaminated cullet can reduce the life of a furnace. • Metals can “drill” bottom of furnace. Reduces thickness of furnace floor and thermal efficiency. • Worst case scenario - can cause molten glass leak. (Not fun!) O-I UK

22. Cullet: Colour Consistency • Easier to use raw materials than cullet to make glass because it is a homogenous product. • Especially effects colour consistency. • Do brands really need such tight colour specifications? • Especially dark coloured products in clear glass. • With industry consensus, cullet percentage for these products could be increased. O-I UK

23. Cullet: Excess Supply? • No such thing as excess cullet (green or otherwise) • There is distribution imbalance of cullet vs glass production globally. Excess green cullet in UK. • This can be corrected by sensible exportation. • Recent study showed that it was better environmentally to export cullet to mainland Europe than to use it in any other activity within the UK (Aggregate, filtration etc) • Glass manufacturing industry has been slow to react to this imbalance. This is changing especially as key companies becoming multinational. O-I UK

24. Cullet: Alternative Uses • The best activity to use recycled cullet environmentally is to make another glass container. • This loop can occur endlessly with no loss of quality. • Cullet is suitable for other uses but despite the good intentions it is just a temporary step before landfill. • “Being Less Bad is no good….Most recycling is actually downcycling; it reduces the quality of a material over time.” • Cradle to Cradle, McDononough & Braungart O-I UK

25. Cullet: Conclusion • Glass makers want to use more cullet because it is more economic to use than raw materials. • Economic advantage of cullet over raw materials has narrowed significantly due to reduced cullet quality. • In 2007 O-I in the UK has dropped the cullet percentage for at least part of the year in each of its furnaces. O-I UK

26. Product Design: Lightweighting • There are many bottles out there which are heavier than they could be. • Redesign stage is the moment to change this. Brand owners and design agencies control this process. • Design generally finalised before glass manufacturer involvement. • Lighter bottles can be beautiful. • Lighter bottles may even be cheaper! O-I UK

27. Product Design: Lightweighting • 33 percent lighter bottle • Adnams reduced 500ml ale bottle from 450g to 300g via new design and narrow neck press and blow manufacturing process • Benefits include reduction in energy, waste, emissions and use of raw materials • Adopted by WRAP as “Best in Class” for 500ml beer bottles O-I UK

28. Bulk Shipping • Growing trend • O-I willing to supply bottles wherever customer wants bottles (when profitable!) • But, bear in mind furnace efficiency of the product • A bottle made in Australia on an efficient furnace, filled in Australia and shipped to UK may have less impact than a bottle made in the UK on an inefficient furnace, filled in the UK with wine shipped in bulk from Australia. O-I UK

29. Re-Use: History? • Glass one of few packaging products that can be reused • Out of favour in UK • O-I has no position on reusable glass products vs non reusable containers. Will make bottles for whatever purpose customer wants (when profitable!) • Question of environmental benefits of one system vs other not clear cut • existing research tends to favour returnable system. • Whether practical now in UK a different question! • Anything that threatens the glass industry will reduce the possibility of a return to reusable system in the long run. O-I UK

30. Conclusion • Glass good option in terms of sustainability now. But it can become even more so: • Improve furnace design at repair. • Support moves towards renewable energy • Increase cullet % until it becomes environmentally / economically unviable. • Quality key • Flexible product colour specification could help • Export excess cullet better than other options. • Produce lighter bottles. • Brand managers key • Bulk Shipping. • Overall performance should still be calculated. • Long Term – Re-use? O-I UK

31. Glass Manufacturing Tim Neal Environment, Energy & Risk O-I tim.neal@eu.o-i.com +44 (0)7921 941 708 V4 20 Oct 2007 O-I UK