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Danfoss EnVisioneering Symposium addresses challenges, opportunities

December 2nd, 2008

Carlsbad, Calif. — On November 14, more than 40 leaders in industry, finance, research, and policy convened in Carlsbad for the Danfoss EnVisioneeringSM Symposium to discuss critical issues and opportunities for the HVAC&R industry – including climate change, energy efficiency, refrigerants and pending federal legislation.

Robert Wilkins, president of Danfoss in North America, set the stage for the event by welcoming the participants and stating “never before has the HVAC&R industry been at the forefront of so many critical global issues as it is at this moment. The economic trends we currently face are influencing collective business decisions today that will shape decades to come.”

The symposium opened with two speakers describing climate change bills that are currently in Congress, and how the legislation, if passed, would significantly impact the HVAC&R industry, increasing energy efficiency demands, and dramatically reducing the use of HFC refrigerants.

Kevin Fay, president of Alcalde & Fay, a leading government relations and public affairs firm focusing on atmospheric and energy policy issues, opened the symposium by describing the political environment in Washington today with Democrats gaining control of both houses of Congress and the White House. Fay projected that energy, energy security and “green” jobs should be high on the Obama administration’s agenda, and they will likely be part of an economic stimulus bill in early 2009.

He projected that climate change legislation would not pass before late 2009 or 2010, but pointed out that 2008 bills in both the Senate and House of Representatives had common approaches that could become the foundation for new legislation in the next Congress. For example, both Senate and House bills separate HFC refrigerants from other greenhouse gases, and establish a specific target to reduce HFC global-warming contribution by nearly 80% over the next four decades.

David McIntosh, who served as Senator Joseph Lieberman’s counsel and legislative assistant for energy and the environment from April 2006 through September 2008, followed Fay’s discussion with a specific focus on the implications legislation could have on the HVAC&R industry as it mandates a phase-down of HFC refrigerants. According to McIntosh, both the Senate and House committees authoring 2008 climate change bills recognized the important role HFC refrigerants play in today’s high-efficiency air-conditioning and refrigeration equipment.

Looking forward, McIntosh projected that future energy legislation could include “mandates on new energy-efficiency standards among manufacturers as well as subsidies and tax incentives for the manufacturers and the purchasers of the equipment,” suggesting the Congress and administration could look to state initiatives as possible models for legislation, as well as previous federal initiatives. He also expects the Obama administration would enunciate a basic plan for climate change, outlining principles such as “cap and trade”, targets and timetables. Specific objectives could be outlined for industries such as transportation, electric utilities and HVAC&R. With such an outline, Congress could then begin work on specific portions of the agenda, without having to write a comprehensive bill that addresses all aspects.

In addition to the Senate Energy and Natural Resources Committee and the House Energy and Commerce Committee that produced bills in 2008, McIntosh suggested that the financial dimensions of the climate change issue would draw the House Ways and Means Committee and the Senate Finance Committee into the issue. Senior staff from the Environmental Protection Agency (EPA) and the Department of Energy (DOE) are also expected to recommend input to legislation. He urged the HVAC&R industry to closely follow these committees and agencies.

Following the climate change presentations by Fay and McIntosh, symposium participants engaged in an energetic discussion on the challenges and issues they anticipate arising under the new administration; and they shared ideas on how their various sectors of the industry would address these issues.

The second half of the EnVisioneering symposium focused on energy efficiency, and the issues and business opportunities that are surfacing. The speakers and audience discussed how meeting the nation’s growing energy needs with domestically produced, environmentally responsible energy is simply unfeasible. As the gap between domestic supply and demand continues to grow, the HVAC&R industry will be forced to find solutions and new market opportunities for energy savings.

The discussion on energy efficiency was led by Kateri Callahan, president of the Alliance to Save Energy, a non-government organization, whose mission is to advance energy efficiency worldwide to achieve a healthier economy, a cleaner environment, and greater energy security. Callahan focused on the opportunities for growth in a new energy focused economy. Highlights of her presentation included:
• Energy efficiency has been powering a major portion of the U.S. economy for more than 30 years and must play an even larger role in the nation’s energy future. Nevertheless representing only about 4.5% of the world’s population, the United States is the world’s largest energy producer and consumer, with consumption outpacing production, resulting in the need for significant energy imports.
• By capturing the potential energy savings available from existing technologies, global energy demand growth could be cut by half or more in the next 15 years.
• Better and more strongly enforced building codes must be part of the solution. She added that, according to the Energy Information Administration, the carbon dioxide emissions of the U.S. building sector are almost equal to the total CO2 emissions of India and Japan combined.

The next speaker, John Christmas, is senior vice president of Hannon Armstrong Capital, a privately held financial services firm headquartered in Annapolis, MD. Christmas’ presentation focused on emerging techniques being used to finance energy efficiency in commercial buildings. He stressed that energy savings enhances building financial performance, mitigates risk, improves comfort and productivity, and in doing these things, is demonstrated to increase property values.

The fifth and final speaker, Joseph Turk, is president of PWI Energy Inc., a Johnson Controls energy service company based in Philadelphia. The company specializes in providing energy and sustainability solutions for global corporations. Turk’s two key messages were change and selflessness.

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