Temima

1
Global Energy Security November 2005 Simon
Littlewood CEO
2
About London Asia

• Asian focused merchant banking group
• Private equity investment of own third party
  funds
• Over 35 investments made since 2002
• Focus on education, financial services, TMT, and
  Energy Environment
• Corporate finance advisory services
• MA Fund raising Capital market transactions
• Fund management
• Manage the 50 million UK listed London Asia
  Chinese Private Equity Fund
• Structured finance
• Listed on UKs AIM Stock Market since 2002
• Over 50 owned by UK institutional shareholders
• International network of offices and joint
  ventures
• China (32 offices) London New York Hong Kong
• Germany Singapore Mongolia
• Malaysia Canada Vietnam

3
Existing EE Investments

• Management team track record of over 10 years in
  the EE sector
• made first energy investment in China in 1996
• Raised over 500 million for projects in Europe
  and North America
• Current Asian investments
• China New Energy (UK PLUS listed) ethanol
  equipment
• Asia Wind wind technology projects in Asia
• Asia Water (Spore listed) water supply
  treatment
• China Solar - solar thermal
• Devotion Ecothermal Technology (Spore listed)
• Energy efficient heating equipment
• Green Coke other clean coal/oil technology
• Asia Power (Spore listed) renewable power
  generation in China
• China Climate Exchange leading Chinese CDM
  consulting business
• Coal mines coal bed methane

4
Energy Security - The Problems

• Rising demand
• Dwindling supplies of fossil fuels
• Environment sacrificed for energy security
• Limited alternative strategies
• Existing infrastructure cant cope with demand
• Short term solutions delay the inevitable

5
Rising Demand to continue

• IEA estimates 53 increase in energy consumption
  by 2030
• Demand growth 3.7 pa for non OECD countries
• Driven mainly by India and China India 3.6 -
  3.9
• Indias Energy consumption up 208 from 1980-2001
  5.4 pa
• China up 130 - 4.3 pa
• Indias Production consumption
• 11th biggest energy producer (2.4 of world
  production)
• 6th biggest consumer (3.3 of consumption)

6
Supply Shortages

• Increasing reliance on a smaller number of source
  countries
• IEA estimates non OPEC crude oil production will
  peak by 2015
• Rush to secure the last remaining supplies
• Economic, political military conflict
• Compromising long term stability and principles
  for short term solutions
• Rising costs
• biggest hit are developing countries without
  adequate natural resources cut backs on
  education health to fund it

Source Shell
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Indias Position

• Coal
• 90 billion tons reserves 10 of world total
• 200 years worth at current consumption
• 3rd largest coal producer in the world 8.5 of
  world production
• 3rd largest coal consumer 9 of global
  consumption
• Responsible for over 50 of Indias energy
• 70 of electricity production
• Demand 50 greater than 10 years ago
• Oil
• Proven reserves 5 billion barrels of oil 4.5
  of world total
• Potentially up to 11 billion barrels
• 25th largest producer of oil 1 of world output
• 6th largest oil consumer 2.9 of world
  consumption
• 30 of Indias energy from oil
• 60 of it imported
• Estimated consumption of 3 million bpd by 2010
• 75 increase in consumption in last 10 years

8
Indias Energy Position

• Gas
• Reserves 0.5 of world total
• Consumption growing 4.8 pa
• Hydro
• 6th largest producer in the world 3.7 of world
  total
• Another 30,000 MW under construction
• Indias energy consumption per unit of GDP
  0.19kg oil equivalent per dollar
• World average 0.21

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Indias Position (contd)

• 6th biggest generator of electricity 4 of
  world total
• 6th biggest electricity consumer 3.5 of world
  total
• Electricity consumption generation up 64 in
  last decade
• Projected 8-10 pa increase till 2020

Indias Primary Energy Resources and energy use
(2006)
10
Environment Sacrificed

• Environmental cost accelerating
• Healthcare
• Agriculture
• Climate related damage
• Decreasing quality of supplies increased use
  more pollution
• IEA estimates 55 increase in CO2 emissions by
  2030
• China India produce 21 of global CO2 emissions
• Expected to rise to 36
• US 23
• Rest of G7 16
• Indias carbon dioxide emissions per capita 1
  tonne
• World average 4 tonnes
• Developed nations up to 19,000 tonnes
• Public opinion
• Civil unrest

11
Alternatives Expensive

• Coal, gas and oil relatively cheap efficient
• Energy efficient and renewable technology
  relatively expensive
• government incentives and legislation required
• Those countries which can least afford more
  expensive forms of energy production are those
  showing the largest energy growth
• Production (and related energy use and pollution
  generation) is shifting to the lowest cost
  countries
• Increasing pressure from consuming countries to
  reduce production cost

12
Infrastructure Needs Upgrading

• IEA estimates US20 trillion investment required
  in energy supply and infrastructure from
  2005-2030
• Infrastructure needs upgrading to reduce risk
• Oil reserves storage
• Gas pipelines
• Development of new resources in undeveloped
  countries
• Legacy systems expensive to replace

13
Existing Solutions

• Reduce, reuse, recycle
• Use more Coal
• Adequate resources for several hundred years in
  India China
• Dirty difficult to enforce pollution control
• Massive damage to agriculture water supply
• Clean coal technology unproven
• Nuclear
• Cost current and future
• Supply of raw material
• Public concern
• Risk

14
Existing Solutions

• Biofuels
• Planting opportunities in India
• India has 540m tonnes of crop plantation
  residue
• 150m tonnes economic in current environment
  19,500MW
• 537MW under commission, 536MW under construction
• 1 of global road transport fuel currently
• On current trends, IEA projects 4 by 2030
• IEA optimistic scenario is 7 by 2030
• Currently needs subsidies in most countries
• Competes with food production
• Technology needs to be developed to take fibrous
  feedstock
• Carbon capture/sequestration

15
Existing Solutions

• Wind
• 4.4MW installed in India end 2005
• Up 48 in 2005
• Growth of 1.5-1.8MX pa planned - another 5MW
  planned by 2010
• Tax breaks speedy approval process
• Technology needs further development
• Efficiency
• Cost
• Low speed turbines
• Solar
• 250-300 sunny days a year in India
• Large program already in place
• 83MW installed PV
• 3 million m2 solar thermal systems 15m litres
  per day hot water
• Manufacture in India China India a net
  exporter of modules
• Technology still inefficient and expensive
• Need a technology breakthrough to progress
• Silicon supply shortages

16
Whats Required Long Term

• Encouragement of energy efficiency
• Education
• Cheaper Technology
• Flexibility on intellectual property
• Government investment in RD
• Mass manufacturing
• Favourable legislation
• Long term incentives
• Target the consumer, not the producer
• Low energy consumer products eg LEDs, Light
  bulbs
• Quicker planning process
• True costing of existing fossil fuel resources
• Carbon credits
• International co-operation

17
India-EU Co-Operation

• EU-India Summit in 2005 covered energy
• Created EU-India Energy Panel, with working
  groups on
• Energy efficiency renewables
• Coal clean coal conversion
• Fusion energy
• India a huge market for EE solutions
• Europe has leading EE technology and operational
  know-how
• Joint ventures
• Licensing
• Outsourcing manufacturing

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India-China Co-operation

• January 2006 India-China Co-operation agreement
  on hydrocarbons
• Work together on various topics including
• Sourcing supplies
• Refining
• RD
• China has low cost manufacturing capability
• Outsource manufacturing
• China a large market for EE goods

19
Contact Details

• Simon Littlewood
• London Asia Capital plc
• www.londonasia.com
• www.londoansiafunds.com
• www.envirofinance.com