Christian Merz Osram Initiatives In Developing Countries Sep09

OSRAM Initiatives in Developing Countries

Christian MerzDirector Sustainability

OSRAM at a Glance*

• OSRAM: one of the world's two leading lighting manufacturers (headquarters: Munich)

• Trademark registration: on April 17, 1906 at thethen Imperial Patent Office in Berlin

• Founded on July 1, 1919 by the merger of the incandescent lamp manufacturing activities of

Christian Merz | OSRAM Initiatives in Developing Co untriesConference: "The Future of Sustainable Products and Services" Sept 28th, 2009 |

• Employees:More than 43,500

incandescent lamp manufacturing activities of AEG, Siemens & Halske AG and Deutsche Gasglühlicht-Anstalt (Auer-Gesellschaft)

• Production:46 factories in 17 countries

• Turnover:EUR 4.6 billion

• Group profit:EUR 401 million

• R&D:6 % of sales

The art project SEVEN SCREENS at OSRAM headquarters in Munich – a project developed in cooperation with OSRAM Light Consulting - shows that the OSRAM brand is 102 years young. 700,000 high-power RGB LEDs (16 mio different colours possible) have been installed on the masts and can be controlled via fiber optic cable from a central computer room.

*Status: FY2008

Agenda

1. OSRAM and Sustainability

2. Extended Producer Responsibility

3. Global Market Transformation Project

4. CDM


4. CDM

5. Off-Grid Lighting

Sustainability Lifecycle: R&D / Production / Peripheral Proc. / Use / End of Life

We will consider the sustainability of our entire value added chain, including suppliers, R&D, production, logistics and recycling

• Life-Cycle-Analyses for typical products are a major consideration


Modern production facilities in Russia

The Impact of Lighting on a Global Scale

• Lighting accounts for 19% of the global electricity consumption.2 651 TWh were used globally for lighting in 2005 ~ 2/3 of the electricity consumption of the United States

12,4%

81%

Primary Energy Electricity

Lighting consumes a significant amount of energy


consumption of the United States

• Nearly 70% of electricity is used by lamps for which a better alternative is available.

87,6%19%

Lighting = 2651 TWh

Electricity Use by Lamp Type

Efficienttechnology

Technology w/improvement

potential

X

The Impact of Lighting on a Global Scale

• Lighting accounts for 19% of the global electricity consumption.2 651 TWh were used globally for lighting in 2005 ~ 2/3 of the electricity consumption of the United States

12,4%

81%

Primary Energy Electricity

Lighting consumes a significant amount of energy


consumption of the United States

• Nearly 70% of electricity is used by lamps for which a better alternative is available.

• Over 1/3 of the electricity for lighting could realistically be saved – nearly 900 billion kWh - this corresponds to half of China’s electricity consumption! As a result, 450 million tons of CO2 would not be emitted into the atmosphere* – a similar effect as planting a forest the size of Sweden.

87,6%19%

Lighting = 2651 TWh

Application in general lighting Energy saving through innovative lamp technologies ~savings /

lamp / year*

Street lighting220 kWh /

110 kg CO 2

Office & Industry Lighting

180 kWh /90 kg CO 2

Shop lighting500 kWh /

Mercury vapor High-pressure sodium lamp

Fluorescent lp. w.halophosphatephosphor

New T5 fluorescent w/ electronic control& light management

3 Standard Halogen New Ceramic metal

~40%

~65%

~80%

Energy Savings in Different Lighting Applications


Shop lighting500 kWh /

250 kg CO 2

HospitalitySpotlighting

60 kWh / 30 kg CO 2

Householdlighting (private)

50 kWh /25 kg CO 2

18 kWh / 9 kg CO 2

Lighting design45 kWh /

22 kg CO 2

StandardIncandescent

Low voltage halogenreflector

Dichroic Halogenlamp with infrared coatingtechnology

3 Standard Halogenlamps

New Ceramic metal halide lamps

Compact fluorescent ~80%

~30%

~80%

Halogen Energy-Saver ~30%

White LED ModuleCOINlight OSTAR

Low voltage halogen reflector ~50%

* For typical usage / Energy-Mix 0,5 kg CO2/kWh

Sustainability @ OSRAM – A Global Approach

• Sustainability shapes all aspects of the entire life-cycle at OSRAM, including R&D, our supply chain, product design, production, logistics, recycling in a holistic approach -

Sustainability is the basis for profitable growth for OSRAM based on the 'Triple Bottom Line'


production, logistics, recycling in a holistic approach -worldwide for all markets.

• Historically, OSRAM was strongest in 'developed' markets. However, this neglected a significant part of the world –Potential customers in developing countries did not profit from efficient, affordable quality lighting.

• Thus, it was only logical for OSRAM to broaden its strategy by including developing countries.

Strategy for developing countries

Our strategy aims at leaving no country behind, and has produced the following initiatives:

OSRAM developed strategic initiatives for markets p reviously not addressed

• Support for Extended Producer Responsibilities on a global scale

• OSRAM became the first industry signatory of the UNEP/GEF Global Market Transformation Project for Efficient Lighting


Global Market Transformation Project for Efficient Lighting

• Innovative financing solutions using mechanisms offered by the Kyoto Protocol – CDM / Emission Trading

• Sustainable solutions for people without grid-based electricity – the OSRAM Off-Grid Project in line with the UN Millennium Goals

Agenda




4. CDM


4. CDM


Extended Producer Responsibility – Global

OSRAM supports the setup of industry systems that manage the environmental friendly

and efficient retraction of lamps and initiates the dialogue with authorities to shape

legislation facilitating this effort.

• OSRAM is the driving force in the lighting industry activities to develop, establish and continuously improve the sustainable and efficient producer retraction schemes

The necessity and challenge of environmentally frie ndly lamp disposal


and continuously improve the sustainable and efficient producer retraction schemes in the European Union according to the WEEE* regulation

• OSRAM will proactively support authorities all over the world to define proper legislation for lamp recycling

Lamps are special among electrical equipment

• Fragility and Hazardous waste content

• Low weight (ca. 2% of total WEEE waste) but high volume (ca. 900 million WEEE relevant lamps per year) put on the market (ca. 70% of WEEE Waste)

• Collection and recycling costs are considerable in relation to product prices.

*WEEE: Waste Electrical and Electronic Equipment

A Level Playing Field –Requirements for a proper regulation

1. Lamps-specific

2. In force and effectively enforcedthroughout the national territory

3. Providing for a financing obligation calculated on the basis of the current

To fit to the specific requirements for lamps, legi slation needs to be

Legal and regulatoryscenarios

Finance and control

scenariosGovernance

scenarios


calculated on the basis of the current market share of all lamp producers

4. Creating a mandatory on-charging of the EPR costs through the supply chain in a visible manner

5. Implemented and run via one national scheme controlled by producers (tax or market driven)

Informationflow and reportingscenarios

Operationsand

infrastructurescenarios

Stakeholdercommitment

scenarios

The optimal scenario for a country

Agenda




4. CDM


4. CDM


Market Transformation in Less Developed CountriesInitiative to create a PPP for efficient lighting i n LDC with GEF and UNEP


Market Transformation in Less Developed Countries

• The agreement is an important first step

• Over a six year period, OSRAM is putting up more than 6 million dollars to further this cause

• We ask all stakeholders in lighting to participate in this initiative, and to

With the GEF/UNEP Market Transformation Project, go od lighting will no longer be limited to the privileged few


• We ask all stakeholders in lighting to participate in this initiative, and to support it both financially and with their respective know-how

Help make efficient, quality, lighting an affordabl e commodity all over the world – of benefit both to society and the environment !

Agenda




4. CDM


4. CDM


CDM mechanism for reducing CO 2 emissions

• Based on the Kyoto Protocol it replaces millions of incandescent light bulbs by energy-saving lamps

• This is because the target group comprises house-holds – mainly in Africa and Asia – that could not

OSRAM became the world’s first lighting manufacture r to receive approval from the United Nations for a “Clean Development Mec hanism” (CDM) for reducing CO2 emissions in developing countries


holds – mainly in Africa and Asia – that could not normally otherwise afford to buy energy-saving lamps

• The tools for refinancing this investment are the CO2 certificates generated from the CDM project

• Together with RWE, the largest German power generating company, OSRAM is launching their first CDM energy efficiency project in India. High-quality OSRAM energy-saving lamps will be distributed to around 700,000 households in the Vishakhapatnam region. In all, this project may save up to 400,000 tonnes of CO2

CDM - DetailsThe calculation of the CERs was approved by the UNF CCC

∆ in kWh · ( Grid Emission Factor in g CO 2/ kWh) · 10 years = CER’s ($$)


Product Requirement: 2 Million DULUX EL Longlife

Details: The Project Area


� Geographical boundary of project area has to be clearly defined

� No other CDM project is registered in the project area

� All participating households must be registered customers of the utility company

Details: Training

Detailed training of distribution team is mandatory

Lamp exchange simulations and Training material provide a practical and easy learning process

Bilingual Training ensures that contains have been fully understood.


Details: Distribution of LampsThe correct distribution & exchange of lamps is the key issue for a successful project :

● The distribution of the lamps will be done by the local utility company in collaboration with Self-Help-Groups in the urban as well as the rural areas

● OSRAM will intensively train all section leaders of the local utiliy as well as the NGOs

● OSRAM will temporarily hire additional staff to assure a qualified training & distribution


Details: Distribution of Lamps


Agenda




4. CDM


4. CDM


OSRAM is addressing 1.6 bn people dependant on “fuel -based lighting”

Off Grid Lighting

These people account for a large share of kerosene consumption and CO 2 emission.

Annual fuel consumption for lighting:About 20 billion gallons of kerosene

Annual emission of carbon dioxide:

1/4 of the world's population relies on kerosene or candle light for illumination

24%1.6 billionpeople


Annual emission of carbon dioxide: About 190 million tons of CO 276%

5.0 billion people

people

The present price for 20 billion gallons of kerosene amounts to:

>50 billion $

For its users, kerosene is dangerous, expensive and unhealthy while offering low quality light

BUT: it can be bought in small portions, and thus allows for low and irregular incomes

OSRAM has developed an innovative off-grid concept “beyond the product” where

light can be bought in small portions, providing an inexpensive solution.

Off Grid Lighting – The Lake Victoria Project


Off Grid Lighting – The Lake Victoria ProjectA pilot project with "Energy Hubs" on Lake Victoria has been startedThe concept is simple – Lanterns and batteries are charged at a solar-powered "Energy Hub". An innovative financing ensures energy and lighting at affordable costs for the BoP


Lake Victoria

The first three energy hubs have been built on the shores on Lake Victoria. Providing Light without kerosene is especially important here:

• The fishermen spend up to 70% of their income for kerosene – they profit from the lower price of light, with the OSRAM solution up to 40%

• Kerosene spills are avoided, and much less CO2 is emitted

• The pilot projects (OSRAM invests approx. 2Mio €) serve to test the viability of an exciting new business model.

Off Grid Project - Mbita


Off Grid Project – Technical Details


A special tip from OSRAM on saving energy

When the music's over –

There is further saving potential even with the mos t efficient lighting


turn out the lights.

Christian Merz Osram Initiatives In Developing Countries Sep09

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