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Technology Transfer in EmergingEconomies: Role of Business

Preeti Malhotra,Power & Environmental Policies, Alstom

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 2

Agenda

About Alstom

Conditions for business investment & collaboration

Tech transfer: enabling policies & funding

Tech transfer: UN mechanism

Role of business: working models of Tech transfer

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 3

Alstom Group

in high

& very highspeed

in

urban transport(metros & trams)

N1

integratedpower plants

air qualitycontrol

systems

hydro power* services forelectricity

utilities

* through Alstom Hydro, a 50/50 joint venture between Alstom and Bouygues set up in 2006

N1 N2

worldwide

worldwide

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 4

Efficiency: Plantoptimisation &

retrofit

First CO2 capturedemo plant in theworld

Alstom is the world leader in clean integrated solutions

Alstom CO2 strategy

Wind, solar and

geothermal

N1 nuclear(conventional

islands)& biomass

N1 hydro

Emissions CO2(Gt/y)

2005 Ref 20301000 ppm

+6oC

Stabilizeemissions550 ppm

+30C

Neededpath

450ppm+20C max

TechnologyMix

Efficiency

CCS

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 5

Scale of funds

IEA (Blue Map scenario 2010) estimates additionalglobal investment of $46 trillion will be needed by 2050in order to keep within 450 ppm scenario.

Indias Solar mission of 20 GW by 2020 at estimated

cost of ~950 million USD.

Massive levels of funding will be needed

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 6

Role of Business: Conditions for investment

Understanding of what technologies might be needed inindividual country/regional circumstances

Absorptive capacity in the country/region

Existence of free markets (e.g. no imposition of perverse

subsidies or trade tariffs)

Protection for intellectual property

Carbon markets help to meet some of these conditions

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 7

Drivers for collaboration (e.g. R&D)

For Alstom: To perform world-class R&D To drive innovation

To identify and secure the recruitment pipeline

For universities:

perform real, industrially relevant research Easier access to government funding Route to secure employment for their graduates Income

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 8

Policies: National

Capacity building & skills development

Carbon markets-Cap and trade

Targets and product standards

Infrastructure development

Regulations requiring use of BAT

Feed-in tariffs

Portfolio standards

IPR protection

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 9

Policies: National

Govt. funding demonstration projects

Public-private partnerships to share RD&D risk e.g. CoEs

Govt. sponsored RD&D

Tax credits to invest in RD&D

Needs assessment e.g. The Expert Group on Low Carbonstrategies for Inclusive Growth (Interim report, May 2011)

Govt of India to fund the countrys first 700 degree C800 MW steam plant

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 10

Carbon market-a policy option for enablingTech transfer & investments

Help create demand

Provide long term price signal

Facilitate the appropriate regulatory environment e.g.Amendments to Indias Energy Conservation Act, 2001 toaccommodate ESCerts

Give boost to innovative financial instruments (e.g. Venture

capital, Partial risk guarantee)-e.g. Indias ESCerts

Facilitate Public-Private Partnerships

Need to expand global carbon markets by linking regional cap& trade systems

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P&EP Alstom - 17/06/2011 - P 11

Putting a price on carbon

Options: taxes or emission trading

Carbon taxes likely to operate nationally

Emission trading systems can be applied nationally &

globally

Strict GHG reduction targets required

Trading periods should be long enough

A strong, stable and predictable carbon price is the best way of attracting lowcarbon investment

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 12

Pricing carbon-Indias recent marketinitiatives

Levy on coal ESCerts under NMEE RECs

All developments post March 2010

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 13

Indias Carbon tax

levy on domestic and imported coal$1 per tonne

NCEF (National Clean Energy Fund)Announced in Annual budget 2010-11In operation since July 2010To support innovation in low carbon technologiesGuidelines announced in April 11

Generated ~500 million USD in Year 1

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 15

NMEE

Framework for Energy-Efficient Economic Development (FEED)Providing comfort to lenders by provision of Risk Guarantee for performance contract-Partial Risk Guarantee

Fund (PRGF) Venture Capital Fund for EE Initial seed capital from Government

Performance, Achieve & Trade (PAT)Create market for EE through

Specific energy consumption (SEC) reduction targets for

industrial units (fixed % reduction of current SEC within sect oral

bandwidth) ESCerts can be traded and used for compliance purposes

1 ESCert = 1 Metric tonne of oil equivalent (MTOE)

Total saving objective = 10mMTOE

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 16

Sources of funding

Direct fiscal transfers from governments and throughmultilateral financing routes

Expansion of carbon markets and the flexiblemechanisms

Domestic investment by developing countrygovernments

The private sector, through Foreign Direct Investment

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 17

Funding options

Government: Research grants, Grants for pilots(Technology centre of excellence/innovation centre),Feed-in tariffs and other market measures to favour

cleaner technologies Multilateral lenders: Higher risk funds to support pilots,

Loans/finance to developing countries for large scale

deployment Carbon markets: CDM; international offsets to fundclean energy projects in emerging/developing countries(for large scale deployment)

Commercial finance: Equity; Debt

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P&EP Alstom - 17/06/2011 - P 18

Public funding for near commercial techs-Carbon Capture and Storage

Source: McKinsey& Company CCS

assessing theeconomics for thecost numbers; policyimplications drawnby ZEP

/ tonne CO2

Demo phase Early commercial phase Mature commercial phase

0

10

20

30

40

50

60

70

80

90

Public

funding

Estimatedcostsof

CCS

Indias answer: NCEF

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P&EP Alstom - 17/06/2011 - P 19

Policy uncertainty (e.g. Indias national solarprogramme)

Lack of clarity in policy beyond 2013

PPAs structure-?

States setting lower FiTs than Centre Cap on project size End customers (distribution utilities) dis-engaged Limited ground meteorological data (DNI, no. of cloudy

days) High interest rates for long term debt No non-recourse based project financing

Limited interest from big players

Off setting some risk: ADB guarantee, GoIs Payment Security Fund

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 20

Tech transfer & UN Tech mechs

Operating principles:- Build endogenous capacity of developing countries by linking govt,

business & research

Enable communities to develop their own solutions Take practical approach

Outputs:-

Help set right regulatory and market framework Assistance in planning & delivery of clean infrastructure Facilitation of PPPs

- Risk sharing (valley of death issues for new techs)- Access to multinationals expertise

-Help local firms compete in consortia

- Development of key supporting mechs (MRV, liability frameworks,training etc)

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P&EP Alstom - 17/06/2011 - P 21

What we can do

Bring tech expertise (to help with needs assessments) International business and management experience in

70 countries worldwide Experience of building presence in new markets and

developing regional manufacturing and export hubs

Bring an expert policy team well-versed in policy-makingas well as business Give feedback to governments on what works for

business and what doesn't-risks, incentives, market

sentiment

Business will provide the vast majority of the financial & human

resources needed to deliver clean energy

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ALSTOM 2009. All rights reserved. Information contained in this document is provided without liability for information purposes only and is subject to change without notice. No representation or warranty isgiven or to be implied as to the completeness of information or fitness for any particular purpose. Reproduction, use or disclosure to third parties, without express written authority, is strictly prohibited.

P&EP Alstom - 17/06/2011 - P 22

Alstoms Business Models in India

Partnership with Bharat Heavy Electricals Ltd (BHEL) - Thepartnership is based on a license and business co-operationagreement to provide BHEL with super-critical boiler technology,engineering expertise and components.

Joint Venture with Bharat Forge Ltd (BFL) - The JV involvessetting up two companies to design, engineer, manufacture anddeliver turbine and generator islands and their auxiliary equipment.

Alstom Global Technology Centre for hydroelectricity, Vadodara The Technology centre established in 2008 at an existing Alstommanufacturing site, this centre will develop highly innovative hydro

products and technologies, focused on the Indian market

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preeti.malhotra@power.alstom.com