Driving Market Penetration of Energy Efficient Appliances

1. Driving Market Penetration ofEnergy Efficient Appliances Henrik Sundström Vice President Environmental AffairsAB Electrolux

2. The Electrolux Group in brief Year 2004 • Sales EURm 13,200-Europe 47%-North America 39%-RoW 14% • Approx. 72,300 team members • 55 million products sold every year • Products in over 400 million homes • (for details see www.electrolux.com)

3. Electrolux environmental strategy • Lead the development of environmentally sound products and processes • Actively develop demand for these products ER 8100B, winner of the European competition Energy+ the most energy-efficient refrigerator/freezer in Europe 2001

4. 8% Decided CO2 emissions savings by EU at the Kyoto Conference 20-25% Total CO2 emissions caused by electricity used in white goods If the old white goods were changed into new energy efficient products the savings would represent 20 to 25% 4% Large saving potential by replacing old appliances Total CO2 emissions in Europe

5. Cold appliances • LabelingCouncil Directive 92/75 EEC of 22 September 1992 on the indication by labelling & standard product information on the consumption of energy & other resources by Household Appliances • Energy Efficiency (Sept. 1997)Directive 96/57/EC of the European Parliament and of the Council of 3 September 1996 on energy efficiency requirements for household electric refrigerators, freezers and combinations thereof • Unilateral Industrial Commitments (2002)CECED voluntary commitment on reducing energy consumption of household refrigerators, freezers and their combinations • Unilateral Industrial Commitments (2002)Code of Conduct for using A+ / A++ declaration • Labeling (2003)Directive 2003/66 EC to divide the existing energy efficiency class A into three new categories A, A+ and A++

6. E D C B A A+ A++ Cold appliances energy class development 60 EEI A 50 40 Market Penetration [%] 30 B 20 C 10 A+ D 0 1992 1994 1996 1998 2000 2002 2004 2006 Year

7. Electrolux fleet average 1998 - 2004 Reference year 1998 = 100% 110 1998 100 1999 90 2000 2001 80 2002 70 2003 60 2004 50 Dishwasher Laundry Refrigerator Freezer Ref/freez. Chest freez. 3.7%/year 3.8%/year 4.2%/year 4.3%/year 4.9%/year 1.7%/year

8. Average refrigerator performance 1992 1 Lowest Lifecycle Cost product 2 ERB 3105, Energy+ program (EEI = 32%) 3 Product Development 1 3 Consumer benefits Lowest Life Cycle Cost - LLCC 2 A+ A B C D E F Life cycle cost optimisation Life Cycle Cost - LCC A++ 25 50 75 100 Energy Efficiency Index - EEI [%]

9. The Energy+ (2000 - 2004) • A promotion program by the European Commission • and 13 national energy and environmental agencies. • Helping retailers and consumers to identify most efficient products- at least 25% better that energy class A • Promoting the development of ultra efficient appliances- competition to develop most efficient products • About 40% of the 866 products were produced by Electrolux • Electrolux winning four of the five Energy+ awards

10. Market mechanisms • Information campaigns • Labeling • Reduced VAT on energy efficient products • Green procurement • Rebate schemes for energy efficient products • White certificates • Tax incentives for producers

11. Energy class distribution- by country Cold appliances Q1 – Q2 2005 100% A+ >A+ 8% 80% A 60% 40% >A 66% 20% B C 0% EU(9) AT BE DE ES FR NL GB IT PT DM FI SWE

12. The untapped potential- outdated appliances Large household appliances Total634 m units Products older than 10 years Refrigerators 265 m units Washing machines163 m units Annual market 58 m units 188 m 88 m 40 m

13. D = -63% Environmental saving potential with best available product Comparison between refrigerator/freezer over 15 years 10 year old product, 582 kWh/year 5,000 ERB 3105, 194 kWh/year 4,000 3,000 GWP [kg CO2-eq.] 2,000 1,000 Electrolux ERB 3105 0 Energy winner Production Use End of Life Total

14. Cold appliances scenario EU(15) 15 years life time 120 100 ~ 22 TWh 80 ~ 6 TWh Energy Consumption [TWh/year] 60 Zero Progress 40 Realistic Scenario 20 Ambitious Scenario 0 1970 1980 1990 2000 2010 2020 MEEuP Report, Van Holsteijn en Kemna 2005

15. Environmental break-evenCED fridge-freezers CED - Cumulative Energy Demand 90,000 1980 80,000 1985 1990 70,000 1995 60,000 2000 2005 50,000 CED [MJ] 40,000 30,000 20,000 10,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ”Environmental and economicevaluation of the acceleratedreplacement of domesticappliances”, June 2005

16. Economic break-even pointsCumulated cost fridge-freezers 1,800 1980 1,600 1985 1990 1,400 1995 1,200 2000 2005 Cost [Euro] 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ”Environmental and economicevaluation of the acceleratedreplacement of domesticappliances”, June 2005

17. Electrolux sales of green range products Electrolux Green Range 2000-2004 25% 2000 2001 20% 2002 2003 15% 2004 10% 5% 0% Quantity Gross Profit Note! The Green Range is defined to include 10-20% of the Electrolux products with the best environmental performance. It is revised annually.

18. To conclude • The European household appliance industry has been successful with market transformation programs, i.e. the CECED Unilateral Industrial Programs (UIC) • UICs have had the objective to achieve a productions weighted average of the Lowest Life Cycle Cost (LLCC) • Necessary to involve all actors to promote energy efficient products • Incentives are necessary to promote products higher efficiency than LLCC • The largest environmental savings would be accomplished by replacing old, inefficient products with new, efficient products

19. For more information …. www.electrolux.com/environment