Update on the Draft EC Regulation

1. Update on the Draft EC Regulation Presented by Pacific Scientific at the International Halon Replacement Working Group Meeting Bremen - May 2000

2. Update on the Draft Regulation • Background and Status • Halon • Controls • Critical Use • Import / Export • Impact for Aerospace • Airline Strategy Pacific Scientific Maidenhead UK

3. Background • New Regulation first seen in draft form in Aug 1998. • Proposes controls on the production, use, sale, import, export and recovery of ODS’s, including Halon. • Includes Halons, CFCs HCFCs etc. • Will replace regulation 3093/94, which prohibited production of Halon and other ODS’s. Pacific Scientific Maidenhead UK

4. Current Status • 2nd reading of the EU Parliament Dec 99 • Some outstanding issues on HCFCs • Halon aspects are agreed. • Could be adopted June 2000. Pacific Scientific Maidenhead UK

5. Current Status - Entry into Force • Probable date is 1st October 2000. • UK and others suggested 1st Jan 2001 to allow time for national ratification. • Will supersede current national legislation in those countries which already have local controls (e.g. Germany) Pacific Scientific Maidenhead UK

6. Halon Controls (Article 4) • Prohibits sale or use of Halons after entry into force, except as allowed below: • Use and sale of recovered/reclaimed Halons in existing systems until 31 Dec 2002 • All systems and extinguishers must be de-commissioned by 31 Dec 2003. • Exceptions for critical uses which are listed in Annex VII of the regulation. Pacific Scientific Maidenhead UK

7. Critical Uses of Halons (Aircraft) • Halon 1301 • “In Aircraft for the protection of crew compartments, engine nacelles,cargo bays and dry bays.” • Halon 1211 • “In hand-held fire extinguishers and fixed extinguisher equipment for engines for use on board aircraft” • “In Aircraft for the protection of crew compartments, engine nacelles, cargo bays and dry bays” Pacific Scientific Maidenhead UK

8. Import Controls (Articles 6 & 7) • Import Licensing • The restrictions are similar to those in 3093/94. • An Import Licence issued by the Commission is required for bulk imports. There will be quantitative limits. • Affects both Free Circulation and IPR imports. • Free Circulation import only permitted for essential or critical use or destruction. • In the event of a Halon shortage, obtaining an import Quota/Licence is likely to be a protracted process. • No restrictions on products for critical uses. Pacific Scientific Maidenhead UK

9. Export Controls (Articles 11 & 12) • Export of products and equipment containing Halon will be permitted for Critical Uses • It is understood that bulk export of Halon will not be permitted, even for Critical Uses • Applies from Entry into Force date. • Export Licences issued annually with quantity limits and stated destinations. • Applications will need the support of the national enforcement agency. Pacific Scientific Maidenhead UK

10. Impact for Aviation • Users need to secure supplies before phase-out date. • Affects non-EC users that are dependant on EC Service Providers. • Airline is the Critical User, not Service Provider. • Service Providers are unlikely to accept the full risk of Investment / Destruction Costs. • US shortage of Halon could affect new aircraft deliveries ? • Waste Bin Extinguisher not a Critical Use? Pacific Scientific Maidenhead UK

11. Factors Affecting Future Needs • Unknown existing stocks (Banked or Installed) • Unknown end dates for each application. • Fleet growth • New regulation (D to C, etc.) • Consumption ( Fires, False Warnings, Hydrostatic Testing) • Economics, Feasibility and Timescale for a changeout on existing aircraft. • Emergence of new technologies. Pacific Scientific Maidenhead UK

12. Airline / Airframe Mfr Strategy • Forecast of Future Needs is a priority. • Strategy for continued availability. • Airline Halon Bank • Contracted Halon Bank or Contracted Supplies. • Plan should consider the risk of a US Shortage • Possible need to source the Halon needed for new aircraft. • Regular purchases during Phase-out • Minimise Financial Impact/Availability risks. Pacific Scientific Maidenhead UK

13. Support from Service Providers • Provider/Repair Station probably can: • Assist with the Airlines requirements forecast. • Assist with the sourcing of Halon before Phase-out. • Provide recovery and banking facilities. • Provide ongoing Overhaul and Recharging facilities. • Provider/Repair Station probably won’t/can’t : • Provide or guarantee the needs of the industry from their own resources. • Take the risk of subsequent destruction costs unaided. • Stabilise Halon prices - now a commodity. Pacific Scientific Maidenhead UK

14. Conclusion • Airlines and Manufacturers need: • A forecast of future Halon requirements, which includes a “What if” analysis. • A plan on how this will be provided. • The plan should be reviewed regularly to take account of changing availability and alternatives progress. • Active management of their Halon source, either through an Airline Bank, a Contracted Bank or a Supply agreement. • Waste Bin Extinguisher replacement ? Pacific Scientific Maidenhead UK

15. Finally • If an Airline is going to rely on a Supplier agreement alone: • They need to be pretty confident the supplier will still be in business and able to supply when Halon is needed. • They are gambling on the Airline’s future, because the Halon price could be nothing, or a fortune. Pacific Scientific Maidenhead UK