OSRAM Developing Country Initiatives

OSRAM Initiatives in
Developing Countries

Christian Merz
Director Sustainability

OSRAM at a Glance*

• OSRAM: one of the world's two leading lighting
manufacturers (headquarters: Munich)
• Trademark registration: on April 17, 1906 at the
then Imperial Patent Office in Berlin
• Founded on July 1, 1919 by the merger of the
incandescent lamp manufacturing activities of
AEG, Siemens & Halske AG and Deutsche The art project SEVEN SCREENS at OSRAM headquarters
in Munich – a project developed in cooperation with OSRAM
Gasglühlicht-Anstalt (Auer-Gesellschaft) Light Consulting - shows that the OSRAM brand is 102 years
young. 700,000 high-power RGB LEDs (16 mio different
colours possible) have been installed on the masts and can
be controlled via fiber optic cable from a central computer
room.

• Employees: • Production: • Turnover: • Group profit: • R&D:
More than 46 factories in EUR 4.6 EUR 401 6 % of sales
43,500 17 countries billion million

*Status: FY2008

Christian Merz | OSRAM Initiatives in Developing Countries
Conference: "The Future of Sustainable Products and Services" Sept 28th, 2009 | Page 2

Agenda

1. OSRAM and Sustainability
2. Extended Producer Responsibility
3. Global Market Transformation Project
4. CDM
5. Off-Grid Lighting


Sustainability Lifecycle:
R&D / Production / Peripheral Proc. / Use / End of Life
We will consider the sustainability of our
entire value added chain, including suppliers,
R&D, production, logistics and recycling

• Life-Cycle-Analyses for typical
products are a major consideration

Modern production facilities in Russia


The Impact of Lighting on a Global Scale
Lighting consumes a significant amount of energy
Primary Energy Electricity

• Lighting accounts for 19% of the
81%
global electricity consumption.
2 651 TWh were used globally for
12,4%
lighting in 2005 ~ 2/3 of the electricity
consumption of the United States
19%
• Nearly 70% of electricity is used by 87,6%

lamps for which a better alternative is available. Lighting = 2651 TWh

Electricity Use by Lamp Type

X
Efficient
technology

Technology w/
improvement
potential

The Impact of Lighting on a Global Scale
Lighting consumes a significant amount of energy
Primary Energy Electricity

• Lighting accounts for 19% of the
81%
global electricity consumption.
2 651 TWh were used globally for
12,4%
lighting in 2005 ~ 2/3 of the electricity
consumption of the United States
19%
• Nearly 70% of electricity is used by 87,6%

lamps for which a better alternative is available. Lighting = 2651 TWh

• Over 1/3 of the electricity for lighting could realistically be
saved – nearly 900 billion kWh - this corresponds to half of
China’s electricity consumption! As a result, 450 million
tons of CO2 would not be emitted into the atmosphere* – a
similar effect as planting a forest the size of Sweden.


Energy Savings in Different Lighting Applications
Application in Energy saving through innovative lamp technologies ~savings /
general lighting lamp / year*

High-pressure 220 kWh /
Street lighting Mercury vapor ~40% sodium lamp 110 kg CO2
Fluorescent lp. w. New T5 fluorescent
Office & Industry 180 kWh /
Lighting
halophosphate ~65% w/ electronic control
90 kg CO2
phosphor & light management
3 Standard Halogen New Ceramic metal 500 kWh /
Shop lighting lamps ~80% halide lamps 250 kg CO2
Dichroic Halogen
Hospitality Low voltage halogen 60 kWh /
Spotlighting reflector ~30% lamp with infrared coating
30 kg CO2
technology
50 kWh /
~80% Compact fluorescent
25 kg CO2
Household Standard
lighting (private) Incandescent
Halogen 18 kWh /
~30% Energy-Saver 9 kg CO2

Low voltage halogen White LED Module 45 kWh /
Lighting design reflector ~50% COINlight OSTAR 22 kg CO2

* For typical usage / Energy-Mix 0,5 kg CO2/kWh

Sustainability @ OSRAM – A Global Approach

Sustainability is the basis for profitable growth
for OSRAM based on the 'Triple Bottom Line'

• Sustainability shapes all aspects of the entire life-cycle at
OSRAM, including R&D, our supply chain, product design,
production, logistics, recycling in a holistic approach -
worldwide for all markets.
• Historically, OSRAM was strongest in 'developed' markets.
However, this neglected a significant part of the world –
Potential customers in developing countries did not profit from
efficient, affordable quality lighting.
• Thus, it was only logical for OSRAM to broaden its strategy by
including developing countries.


Strategy for developing countries
OSRAM developed strategic initiatives for markets previously not addressed

Our strategy aims at leaving no country behind, and has produced the following
initiatives:
• Support for Extended Producer Responsibilities on a global scale
• OSRAM became the first industry signatory of the UNEP/GEF
Global Market Transformation Project for Efficient Lighting
• Innovative financing solutions using mechanisms offered by the
Kyoto Protocol – CDM / Emission Trading
• Sustainable solutions for people without grid-based electricity
– the OSRAM Off-Grid Project in line with the UN Millennium Goals


Agenda

4. CDM


Extended Producer Responsibility – Global
The necessity and challenge of environmentally friendly lamp disposal

OSRAM supports the setup of industry systems that manage the environmental friendly
and efficient retraction of lamps and initiates the dialogue with authorities to shape
legislation facilitating this effort.
• OSRAM is the driving force in the lighting industry activities to develop, establish
and continuously improve the sustainable and efficient producer retraction schemes
in the European Union according to the WEEE* regulation
• OSRAM will proactively support authorities all over the world to define proper
legislation for lamp recycling

Lamps are special among electrical equipment
• Fragility and Hazardous waste content
• Low weight (ca. 2% of total WEEE waste) but high volume (ca. 900 million WEEE
relevant lamps per year) put on the market (ca. 70% of WEEE Waste)
• Collection and recycling costs are considerable in relation to product prices.

*WEEE: Waste Electrical and Electronic Equipment


A Level Playing Field –
Requirements for a proper regulation
To fit to the specific requirements for lamps, legislation needs to be

Legal and
regulatory 1. Lamps-specific
scenarios
2. In force and effectively enforced
Finance and throughout the national territory
Governance control
scenarios scenarios 3. Providing for a financing obligation
calculated on the basis of the current
Information market share of all lamp producers
Stakeholder
flow and
commitment 4. Creating a mandatory on-charging of
reporting
scenarios the EPR costs through the supply
scenarios
Operations
and chain in a visible manner
infrastructure
scenarios 5. Implemented and run via one national
scheme controlled by producers (tax
The optimal scenario for a or market driven)
country


Agenda

4. CDM


Market Transformation in Less Developed Countries
Initiative to create a PPP for efficient lighting in LDC with GEF and UNEP


Market Transformation in Less Developed Countries
With the GEF/UNEP Market Transformation Project, good lighting will no
longer be limited to the privileged few
• The agreement is an important first step
• Over a six year period, OSRAM is putting up more than 6 million dollars to
further this cause
• We ask all stakeholders in lighting to participate in this initiative, and to
support it both financially and with their respective know-how

Help make efficient, quality, lighting an affordable commodity all
over the world – of benefit both to society and the environment !

Agenda

4. CDM


CDM mechanism for reducing CO2 emissions
OSRAM became the world’s first lighting manufacturer to receive approval
from the United Nations for a “Clean Development Mechanism” (CDM) for
reducing CO2 emissions in developing countries

• Based on the Kyoto Protocol it replaces millions of
incandescent light bulbs by energy-saving lamps
• This is because the target group comprises house-
holds – mainly in Africa and Asia – that could not
normally otherwise afford to buy energy-saving lamps
• The tools for refinancing this investment are the
CO2 certificates generated from the CDM project
• Together with RWE, the largest German power
generating company, OSRAM is launching their first
CDM energy efficiency project in India. High-quality
OSRAM energy-saving lamps will be distributed to
around 700,000 households in the Vishakhapatnam
region. In all, this project may save up to 400,000
tonnes of CO2

CDM - Details
The calculation of the CERs was approved by the UNFCCC
∆ in kWh · ( Grid Emission Factor in g CO2/ kWh) · 10 years = CER’s ($$)

Product Requirement: 2 Million DULUX EL Longlife


Details: The Project Area

Geographical boundary of project area has to be clearly defined
No other CDM project is registered in the project area
All participating households must be registered customers of the utility company


Details: Training
Detailed training of distribution team is mandatory
Lamp exchange simulations and Training material provide a
practical and easy learning process
Bilingual Training ensures that contains have been fully
understood.


Details: Distribution of Lamps
The correct distribution & exchange of lamps is the key issue for a successful
project :

● The distribution of the lamps will be done by the local utility company in collaboration with Self-Help-
Groups in the urban as well as the rural areas
● OSRAM will intensively train all section leaders of the local utiliy as well as the NGOs
● OSRAM will temporarily hire additional staff to assure a qualified training & distribution


Details: Distribution of Lamps


Agenda

4. CDM


Off Grid Lighting
OSRAM is addressing 1.6 bn people dependant on “fuel-based lighting”
1/4 of the world's population relies on These people account for a large share of
kerosene or candle light for illumination kerosene consumption and CO2 emission.

Annual fuel consumption for lighting:
About 20 billion gallons of kerosene
24%
1.6 billion
people Annual emission of carbon dioxide:
About 190 million tons of CO2
76%
5.0 billion
people The present price for 20 billion gallons of
kerosene amounts to:
>50 billion $

For its users, kerosene is dangerous, expensive and unhealthy while offering low quality light
BUT: it can be bought in small portions, and thus allows for low and irregular incomes
OSRAM has developed an innovative off-grid concept “beyond the product” where
light can be bought in small portions, providing an inexpensive solution.

Off Grid Lighting – The Lake Victoria Project


A pilot project with "Energy Hubs" on Lake Victoria has been started
The concept is simple – Lanterns and batteries are charged at
a solar-powered "Energy Hub". An innovative financing
ensures energy and lighting at affordable costs for the BoP

The first three energy hubs have been built on the shores on
Lake Victoria. Providing Light without kerosene is especially
important here:
• The fishermen spend up to 70% of their income for kerosene
Lake Victoria
– they profit from the lower price of light, with the OSRAM
solution up to 40%
• Kerosene spills are avoided, and much less CO2 is emitted
• The pilot projects (OSRAM invests approx. 2Mio €) serve to
test the viability of an exciting new business model.

Off Grid Project - Mbita


Off Grid Project – Technical Details


A special tip from OSRAM on saving energy
There is further saving potential even with the most efficient lighting

When the music's over –

turn out the lights.


OSRAM Developing Country Initiatives

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