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1 Overview of the World Economic Forum & Energy Industries Community Overview of the World Economic Forum & Energy Industries CERN 16 June 2014

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ENERGY INDUSTRIES TEAM Roberto Bocca Senior Director, Head of Energy Industries Pedro G. Gomez Pensado Senior Community Manager, Head, GLF Oil & Gas Industry (OG) World Economic Forum's Oil & Gas Industry comprises of more than 20 world's largest oil & gas producers. It gathers International, National and Independent oil & gas companies diversified across all regions of the world. Energy Utilities (EU) Ramya Krishnaswamy Associate Director, Head Energy Technologies (ET) Bosco Astarloa Senior Community Manager, Head, GLF World Economic Forums Energy Technology community is composed of manufacturers of technologies across the electricity value chain, from generation, to T&D and end use devices. World Economic Forums Energy Utilities community is composed of leaders in the energy utility industry. Espen Mehlum Director, Head Maciej Kolaczkowski Community Manager Aurlie Ricard Team Coordinator Delphine Angelloz-Nicoud Senior Team Coordinator Knowledge Management and Integration Katherine Avgerinos Senior Community Associate Shamima Holland-La Camera Team Coordinator (Last update: 27.05.2014)

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3 Contents Overview of the World Economic Forum and Industry Partnership Program The Energy Industries Community The Energy Industries Projects

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4 The World Economic Forum is a non-profit organization committed to improving the state of the world Our Mission and Background Non profit organization founded by Professor Klaus Schwab in 1971. Committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Impartial: tied to no political, partisan or national interests. Global: based in Geneva, with offices in New York, Beijing and Tokyo Brings together leaders in business with government, NGOs, international organizations, academics and civil society on a neutral platform Multi-stakeholder Creates dialogues, insights and actions on critical global issues posing a risk to business and society Long-term issues Holds high-level events in all the key regions throughout the year, based on the long-standing, strong networks with the governments Global Reach Convenes CEOs and senior executives from over 1,000 global companies from 20 industries Cross-industry Unique and unmatched value to the participants

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For multi-stakeholder collaboration, Partners interact with leaders from government, civil society and academia GovernmentsHeads of State/Government and Ministers International Organizations OPEC, IEA, WHO, ILO, UN, World Bank, etc. Young Global Leaders/Global Shapers New generation of leaders under 40 from politics, business, society and arts Civil SocietyMajor NGOs, women leaders Thought LeadersWorld-class experts and faculty, Nobel Prize laureates Technology PioneersCutting edge innovators MediaLeaders from all types of media Social EntrepreneursOrganisations addressing problems related to social and economic inequality

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6 The Forums Business Engagement Team structure Energy Basic & Infrastructure Mobility Healthcare Infrastructure & Urban Develop Chemicals Mining & Metals Energy Utilities Energy Technologies Oil & Gas Aviation, travel & Tourism Automotive Logistics & Transportation Global Health & Healthcare Financial Services Investors ITC Media & Entertainment Professional Services Banking & Capital Markets Insurance & Asset Management Private Investors Institutional Investors, Sovereign Funds Information Technology Telecommunications Consumer Agriculture, Food & Beverage Retail & Consumer Goods Media, Entertainment & Information Professional Services A cross-industry network of CEO/Chairmen from over 1,000 global companies engage with the Forum on a year-round basis

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7 Contents Overview of the World Economic Forum and Industry Partnership Program The Energy Industries Community The Energy Industries Projects

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Partners of the Energy Utilities and Energy Technologies Communities ABB Ariston Thermo Fluor General Electric Hanwha Solarone Johnson Controls Mitsubishi Acciona Bioenergy Corporation Centrica DONG Energy DTEK EN+ Eskom GDF Suez Energy Utilities Community Energy Technologies Community Hindustan Powerprojects Pvt Ltd Iberdrola Marubeni Renova Group Rushydro RWE Statkraft Vattenfall Veolia Environnement Royal Philips Electronics Showa Shell Sekiyu KK Siemens Suzlon Energy Trina Solar Vestas

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BP p.l.c. Chevron Corporation ENI S.p.A. Gazprom Neft NNPC Petrleos Mexicanos (Pemex) Petrleo Brasileiro (Petrobras) National Oil Companies Oil Majors Players along the value chain PTT Public Company Limited Saudi Aramco SOCAR Statoil ASA Lukoil Royal Dutch Shell plc Suncor Total S.A. Reliance Industries Limited Sasol Limited SK Group The Dow Chemical Company Essar Group IHS CERA NEXEN Bridas Corporation Dana Gas Dangote Group EnQuest Plc Indepen- dents Gunvor Group Mercuria Energy Group Nigeria LNG Novatek Oando Plc Partners of the Oil & Gas Community

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In terms of regional distribution, the Oil and Gas Community is the most global community, followed by Energy Technologies Community

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4 of the 5 leading wind turbine manufacturers 29 million barrels of oil produced/ day 400+ GW generation capacity 3.5 million Employees USD 3+ trillion in Revenue 1.5 times the population of Paris 34% of the global supply 42% of the global manufacturing capacity More than GDP of France or UK 10% of the global or (equivalent of 40% of total US installed capacity) Partners engaged in the Energy Industries are market leaders providing over 34% of global oil supply and generating over 10% of global power, while generating over USD 3 trillion in revenues and employing over 3.5 million people

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12 Contents Overview of the World Economic Forum and Industry Partnership Program The Energy Industries Community The Energy Industries Projects

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13 A GROWING SET OF CHALLENGES REQUIRE A TRANSFORMATION IN THE WAY WE PRODUCE, DELIVER & CONSUME ENERGY IN RESPONSE WE DEVELOPED THE NEW ENERGY ARCHITECTURE INITIATIVE 6 major reports released Economic growth & development Rising cost of supply $37 trillion investment required in energy supply infrastructure between 2012 and 2035 300% increase in the World Banks energy price index between 1999 and 2012 Environmental sustainability Climate change 3.6C expected global temperature rise based on current emissions trajectory $523 billion cost of fossil fuel consumption subsidies in 2011 in comparison to $88 billion invested in renewable energy Energy access & security Resource scarcity 35% estimated increase in energy demand between 2010 and 2035 64% estimated share of energy demand from non-OECD countries in 2035, up from 55% in 2010 30+ workshops in 18 countries across 5 continents 3 country partnerships completed with extensive stakeholder engagement with industry and academia Since 2011 Accenture and the World Economic Forum have been working to understand how nations can effectively manage the transition to a New Energy Architecture New Energy Architecture

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14 The Oil and Gas industry is facing significant difficulty in the delivery of Capital Projects and in managing the Human Capital challenge Industry DriversScopeWorkstreams New frontiers of exploration and production Greater project scale Capital Project complexity Increasing technical complexity and diverse geophysical issues Human Capital challenge Geopolitical and regulatory uncertainty Negative societal perception and increasing exposure Organisational and contracting inefficiencies Physical and cyber security threat Difficulty of attracting, developing and retaining talent for critical roles Supply shortage of graduates and experienced professionals Lack of developed accreditation systems New and changing regulatory requirements Inadequate Organisational HR planning and development

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15 Source: World Economic Forum The Future of Electricity project aims to frame and understand how to make the electricity sector more investable What drivers have the greatest potential to impact the future of the electricity industry? CEO Survey at 2014 Davos Annual Meeting Increase of R.E. in the generation mix Evolving role of the end user driven by Demand Side Management technologies Flattening of the electricity demand Distributed energy resources and model decentralization Others The electricity industry is undergoing disruptive changes which are challenging the traditional utility business model Across all major regions, the transition of electricity systems comes with energy policy uncertainties and market design complexities Consequently parts of the electricity industry are uninvestable in many regions Project aim is to engage relevant stakeholders to define options for making the electricity sector more sustainable for general society by increasing investability

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16 1.Implications of increase in centralised renewables on the traditional business model of utilities, market regulation and grid operators, investors and society 2.New business models to capture emerging value pools 3.Portfolio choices of generation mix 1.Implications for traditional utility business models, and grid operators of: Decentralisation of generation Smart grid Energy efficiency Demand side management 2.New business models to capture emerging value pools 3.Collaboration with the Forums ICT community Future of Electricity - The Working Group(s) will focus on two areas Topics: Impact and implications of centralised renewables on a range of market types Impact and implications of changing demand and delivery on a range of markets Key deliverables: Reshaping electricity delivery Redefining centralized generation Workstreams: Implications for market design: 1.Policy and regulatory challenges to be solved across electricity markets (liberalised to national monopoly) 2.Options for addressing challanges 3.Possible policy measures to optimise affordability, environmental impact and security of supply across range of market types (liberalised to national monopoly) 4.Design of future investment models in collaboration with investment community

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Networking & Convening Facilitating Informal safe space Peer level/ prestige Information Taking Knowledge host Global issues Trusted advisor Information Making Contribute Shape policy agenda Media presence/ visibility Corporate Citizenship Enable Catalyze Scale Personal/ Org. Development Leadership grooming Change/ shape mindset Access to talent Through a year-round partnership that includes both meetings and initiatives, the Forum offers various value levers for partners

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19 Understanding the environment 1 Enable collaborative models 3 Quantifying impact 2 What is the scale and nature of complexities and challenges? How has the industry responded to the rise in complexities and challenges? What are the industry trends? What are the implications of complexities and challenges on financial, operational and social value creation? What level of control does the industry have over areas of high impact? What are the short and longer term solutions to areas of high impact, but over which the industry has limited control? Which industry choke points could be better tackled through these new models collaboration? To address these complexities and challenges, the Forum is working with the industry to develop collaborative solutions

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20 Major drivers of uninvestability Policy instability creating high risk premiums for long payback period electricity investments Risk of unintended consequences of policy design Policy Potential impact of decentralised generation on grid economics New investment unattractive under current market mechanisms: - Conventional: Low load factors and spark spreads - Renewables: Low wholesale prices and low / declining levels of subsidy (varies by geography) Transmission and distribution Generation Supply and end use Lack of incentives for investments, e.g. energy efficiency, DSM, smart grids Economics of existing conventional assets reducing utility profits, cash-flow and ability to re- invest in generation capacity Supply chain unreliability Flat or declining demand Overall 5 6 3 1 2 4 7 8