Green Power for Business – The Way Forward?

Tom Crotty - Group Director, INEOS

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Outline of Presentation

An introduction to INEOS

INEOS Power Demand & Issues

Renewable solutions

INEOS Overview

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INEOS Background

2009 Sales $28.6bn

15,000 employees*

4,500 employee shareholders

60 manufacturing sites worldwide*

40 million tonnes of chemicals capacity

20 million tonnes of refinery products (400,000 bbls/day)

A leading global chemical company

• Largest refinery in Southern France

• Largest refinery in Northern Britain

• Largest Olefin producer in Europe * excl. joint ventures

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Global Chemical Companies (Top 20)

12.4

12.6

12.8

13.1

14.0

15.3

16.7

19.5

19.9

20.5

23.0

24.5

25.4

25.9

26.8

28.6

31.3

44.9

54.8

19.3

Toray Ind.

LG Chem

Mitsui Chem

Sumitomo Chem

Evonik

Air Liquide

Mitsubishi Chem

Akzo-Nobel

Bayer

LyondellBasell

Total

SABIC

Shell

Formosa Plastics

DuPont

Exxon

INEOS

Sinopec

DOW

BASF

Sales in 2009 (US$ bn)

Source: Chemical & Engineering News

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Manufacturing Locations 60 Manufacturing Sites in 13 Countries

South Houston4.1 mtes

North America

16 sites: 8.4 mtes

Mobile0.8 mtes

Asia

7 sites: 0.3 mtes

Grangemouth11.9 mtes

Runcorn4.0 mtes

Antwerp2.4 mtes

Lavéra11.0 mtes

Wilhelmshaven1.0 mtes

Ruhr1.4 mtes

Europe

37 sites: 48.3 mtes

Köln5.5 mtes

Rafnes2.3 mtes

INEOS Power Demand & Issues

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INEOS Total Power Consumption

50 million MWh of Energy

A mixture of electricity, steam & gas

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INEOS ChlorVinyls – Our Major UK Power User

Second largest chlorine plant in Europe

Competitive on-site power stationand world scale chemical plants

Only UK chlorine producer

Critical supplier to the UK chemical industry

Completed £400m investment programme at Runcorn in 2006

Chlorine & PVC. Acquired from ICI in 2001. Based at Runcorn, Cheshire

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Our Energy Position in Runcorn

Electricity is a raw material

Power consumption at Runcorn site is the same as the city of Liverpool

We purchase gas, which is toll converted through a highly efficient CCGT station on-site

Energy is 80% of the cost of making our products

We compete with all other major European producers of PVC

Totally dependent on competitive UK gas prices

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Wholesale Gas Price Differentials 2002-2007

Source: P Heren – European Gas Markets/EIUG

Wholesale Forward Gas Price (pence/therm)

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Other Issues Impacting Energy Competitiveness

Multiple policy instruments creating a cumulative burdenAll stick & no carrot & overly complex

EUETSClimate Change LevyCarbon Reduction CommitmentRenewables Obligation

Renewable Heat Incentive UK offers limited exemptions compared to other EU States

Energy intensive industry cannot afford to lose current exemptionsEnergy intensive industry must be exempt from new energy taxesFuture changes to CCL must retain exemption for electrolysis

The best result for CO2 emissions is to manufacture energy intensive products in low carbon economies

PVC production in China results in 5 times the CO2 emissions of European production (IFEU Dec 2008)

Renewable Power Options

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A full move to renewables?

INEOS demand is 50 million MWh

To source that CO2 free via…

Biodiesel – would require an oilseed rape acreage the size of

Switzerland

Wind – would require a wind farm larger than Luxembourg

Nuclear – would require 4 new nuclear stations

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Viable Renewable Options for INEOS Runcorn

Involvement in new nuclear build

Energy from Waste

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New Nuclear

Runcorn electrolysis provides an ideal baseload demand

Steady offtake 365 days per year

‘Exeltium’ model in France works well

Investment by energy intensive industry in a ‘virtual’ nuclear plant, delivering power now

CO2 free, low cost, predictable energy source

Cash from consortium allows EdF to invest in next generation reactors

Done without infringing EU state aid rules

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Runcorn Energy from Waste

A very significant energy from waste investment

£400m project covers 25% of Runcorn’s energy

No other renewable technologies can deliver energy at sustainable cost today

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Runcorn Energy From Waste Project

Why Runcorn?

• Good location

– Central within region

– Transport links

– Brown field site

– Next to Runcorn Site

• CHP benefits

• Ineos benefits

– Source of energy not reliant on natural gas

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Runcorn CHP Energy from Waste Facility

Phase 1• Financial close 2009 – PFI-funded• Operation late 2012 / early 2013• 425,000 tonnes of refuse derived fuel per annum

Phase 2• Contracts agreed 2010 – merchant facility• Operation 2014• 425,000 tonnes of refuse derived fuel per annum

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Opportunities

Electricity at less than market priceFunding via PFI lendersGovernment CHP incentivesWell-located brownfield land

Merseyside

GreaterManchester

Runcorn

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Progress to date

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Conclusions

Need to diversify energy base away from gas dependency

Energy source needs to be cost competitive and reliable

Two primary options are nuclear and EfW

France provides an excellent model for new nuclear

EfW provides an excellent CHP option for those who need both heat and power

All investments are long term and require a stable planning & regulatory framework from government to allow us to develop leadership in green manufacturing technologies