Mr. Hiroyasu Naito President Rinnai Corporation Nagoya, Japan International Policy Leaders Dialogue on Energy Efficiency The Alliance to Save Energy Washington, DC

Corporate headquarters: Nagoya, Japan Formed in 1920 Operate in 20+ countries around the world One of world’s leaders in gas technology and gas appliances Leading manufacturer of on-demand/ tankless water heaters in the world Head Office

Corporate headquarters: Nagoya, Japan

Formed in 1920

Operate in 20+ countries around the world

One of world’s leaders in gas technology

and gas appliances

Leading manufacturer of on-demand/

tankless water heaters in the world

Corporate headquarters: Peachtree City, Georgia (south of Atlanta) Formed in 1974 Tankless water heaters, direct vent heaters, fireplaces Leading share of on-demand/ tankless water heaters in the US

Corporate headquarters: Peachtree City, Georgia (south of Atlanta)

Formed in 1974

Tankless water heaters, direct vent heaters, fireplaces

Leading share of on-demand/ tankless water heaters in the US

Climate change National security Economic competitiveness Quality of life

Climate change

National security

Economic competitiveness

Quality of life

Gasoline prices up substantially Soaring electricity and natural gas prices Global climate change Concern for energy security is at an all-time high World market for oil and gas Electricity generating capacity and grid reliability We’ve reached the tipping point: government, industry, and the public all agree there is no turning back…we have to re-think how to work together

Gasoline prices up substantially

Soaring electricity and natural gas prices

Global climate change

Concern for energy security is at an all-time high

World market for oil and gas

Electricity generating capacity and grid reliability

We’ve reached the tipping point: government, industry, and the public all agree there is no turning back…we have to re-think how to work together

7 billion people projected to call the Earth home in 2012 Only 6 billion in 1999 6.7 billion today: China (1.33billion), India (1.15 billion ), US (304 million) Projected energy consumptions 2030 v. 2004: Worldwide: 57% Developed countries: 24% Developing countries: 95% China and India alone will be 45% of the worldwide increase

7 billion people projected to call the Earth home in 2012

Only 6 billion in 1999

6.7 billion today: China (1.33billion), India (1.15 billion ), US (304 million)

Projected energy consumptions 2030 v. 2004:

Worldwide: 57%

Developed countries: 24%

Developing countries: 95%

China and India alone will be 45% of the worldwide increase

Electricity US alone: expected to grow 39% from 2030 v. 2005 Oil US: 5% of world population, consumes 25% of the world oil, but the GNP in China is growing at 4x the rate of the US Imagine if the Chinese and Indian lifestyle gets more “western”, impact on electricity and oil Oil usage would rise from 87 million barrels/day to 247 million barrels/day, exceeding the capacity of the planets ecosystem

Electricity

US alone: expected to grow 39% from 2030 v. 2005

Oil

US: 5% of world population, consumes 25% of the world oil, but the GNP in China is growing at 4x the rate of the US

Imagine if the Chinese and Indian lifestyle gets more “western”, impact on electricity and oil

Oil usage would rise from 87 million barrels/day to 247 million barrels/day, exceeding the capacity of the planets ecosystem

Unsubsidized, Coal and gas is in the 5 – 10 cents/ kilowatt hour Nuclear is 5 – 10 cents/ kilowatt hour Wind energy is 8 – 10 cents/ kilowatt hour Solar energy is currently more than 30 cents/ kilowatt hour, but public interest and public policy has a lot to do with prices

Unsubsidized,

Coal and gas is in the 5 – 10 cents/ kilowatt hour

Nuclear is 5 – 10 cents/ kilowatt hour

Wind energy is 8 – 10 cents/ kilowatt hour

Solar energy is currently more than 30 cents/ kilowatt hour, but public interest and public policy has a lot to do with prices

US was largest emitter, but passed by China in ’07 China: 24% US: 21% Projected increase in carbon emissions 2030 v. 2003: 75% Carbon caps will be coming in some form Global carbon trading has already increased from $10billion in ‘05 to $63billion in ’07

US was largest emitter, but passed by China in ’07

China: 24%

US: 21%

Projected increase in carbon emissions 2030 v. 2003: 75%

Carbon caps will be coming in some form

Global carbon trading has already increased from $10billion in ‘05 to $63billion in ’07

Water heating: 13 – 17% of home energy cost #1 energy cost behind heating and cooling Traditionally done with a tank, that heats water 24/7/365, inefficient by design Each year: approx 9.5 million tank water heaters sold 60 million US homes heat their water this way

Water heating: 13 – 17% of home energy cost

#1 energy cost behind heating and cooling

Traditionally done with a tank, that heats water 24/7/365, inefficient by design

Each year: approx 9.5 million tank water heaters sold

60 million US homes heat their water this way

Responsible use: heat it only when you need it Off when it is off 30% more efficient than typical tank water heater Energy is conserved, since actual therms are reduced

Responsible use: heat it only when you need it

Off when it is off

30% more efficient than typical tank water heater

Energy is conserved, since actual therms are reduced

If consider replacing 500,000 homes with Rinnai water heaters rather than gas tank water heaters: Consumer savings: $51 million CO2 reduction: 442 million pounds Landfills: save the space of 130,000 SUV’s Therms reduced: 37 million These savings are per year, every year No waiting for twenty years to get these savings: Commercially available today and sold in all fifty states

If consider replacing 500,000 homes with Rinnai water heaters rather than gas tank water heaters:

Consumer savings: $51 million

CO2 reduction: 442 million pounds

Landfills: save the space of 130,000 SUV’s

Therms reduced: 37 million

These savings are per year, every year

No waiting for twenty years to get these savings: Commercially available today and sold in all fifty states

Must be a cooperation on multiple levels Both industry and government take responsibility to work together

Must be a cooperation on multiple levels

Both industry and government take responsibility to work together

Rinnai approach: we have an obligation to bring the most EE equipment we can to market Invest in R&D, pushing the technological limits Understand the market application Must prove it is high quality, performance, safety, reliability, on a mass-production basis In Rinnai’s case:

Rinnai approach: we have an obligation to bring the most EE equipment we can to market

Invest in R&D, pushing the technological limits

Understand the market application

Must prove it is high quality, performance, safety, reliability, on a mass-production basis

Engineers, architects, code officials, gas companies, builders, specifiers, and installers Proper sizing, application, and intended use Raise the technical competence 90,000 industry people trained; 31,000 active installers in-person installer training www.rinnai.solutions.com developed just for technical people Get them installing, help them build their confidence

Engineers, architects, code officials, gas companies, builders, specifiers, and installers

Proper sizing, application, and intended use

Raise the technical competence

90,000 industry people trained; 31,000 active installers

in-person installer training

www.rinnai.solutions.com developed just for technical people

Get them installing, help them build their confidence

Public relations and media outlets Performance, safety, and proper use Created www.foreverhotwater.com , with many inter-active tools Make the consumer comfortable with the technology Dispel myths, explain the process, connect them with trained installers Answer as much consumer information as possible, since installers often are not sales people Feed electronic sales leads to the installers Make installer feedback public to keep quality high

Public relations and media outlets

Performance, safety, and proper use

Created www.foreverhotwater.com , with many inter-active tools

Make the consumer comfortable with the technology

Dispel myths, explain the process, connect them with trained installers

Answer as much consumer information as possible, since installers often are not sales people

Feed electronic sales leads to the installers

Make installer feedback public to keep quality high

Warranty returns as a per cent of sales: less than 0.5% Leading market share We don’t have customers, we have “believers” High quality product + proper installation = market introduction success We consider training for proper installation and educating the consumer our “obligation” At this point, government needs to come forward with incentives and policy support

Warranty returns as a per cent of sales: less than 0.5%

Leading market share

We don’t have customers, we have “believers”

High quality product + proper installation = market introduction success

We consider training for proper installation and educating the consumer our “obligation”

At this point, government needs to come forward with incentives and policy support

Tax Incentive Energy Star Regulation Change Timeline ‘ 07 ‘ 08 ‘ 09 ‘ 10 ‘ 11 ‘ 12 Click 3x for animation Tankless Sales

Manufacturers are more confident that they might ultimately achieve a return on their energy-efficient technology investment Prices for manufacturers and installers stabilize or fall, which stimulates consumer sales More volume installed, positive impact on consumer prices, more benefit to the environment, and more energy is conserved

Manufacturers are more confident that they might ultimately achieve a return on their energy-efficient technology investment

Prices for manufacturers and installers stabilize or fall, which stimulates consumer sales

More volume installed, positive impact on consumer prices, more benefit to the environment, and more energy is conserved

Policy and process must be led at the federal level, and must not let it default to multiple versions of state codes Multiple versions of state codes drives up costs, which are passed to consumers, inhibiting growth, energy is not saved; everybody loses

Policy and process must be led at the federal level,

and must not let it default to multiple versions of state codes

Multiple versions of state codes drives up costs, which are passed to consumers, inhibiting growth, energy is not saved; everybody loses

US is a leader in many categories; should be a leader in all energy efficiency categories as well Policy-makers need to study what has been successful in other countries, and get it moving in the US sooner Otherwise, a lot of money and time is wasted

US is a leader in many categories; should be a leader in all energy efficiency categories as well

Policy-makers need to study what has been successful in other countries, and get it moving in the US sooner

Otherwise, a lot of money and time is wasted

Future solutions will not just be discrete projects, but combinations of technologies “ Silos” of different technologies will become a thing of the past Therefore incentives, public policy and laws needs to be technology “neutral” with the goal just focused on higher efficiency standards Rinnai will continue its move to expand from gas appliance company to energy solutions portfolio company

Future solutions will not just be discrete projects, but combinations of technologies

“ Silos” of different technologies will become a thing of the past

Therefore incentives, public policy and laws needs to be technology “neutral” with the goal just focused on higher efficiency standards

Rinnai will continue its move to expand from gas appliance company to energy solutions portfolio company

Rinnai is optimistic that the political climate and government policy is now more favorable than ever before toward energy efficient technology Rinnai will continue to innovate and broaden our energy solutions portfolio in the market We are hopeful that policy-makers will strive for “innovation” in their process, and quicken their pace on facilitating support for new technology

Rinnai is optimistic that the political climate and government policy is now more favorable than ever before toward energy efficient technology

Rinnai will continue to innovate and broaden our energy solutions portfolio in the market

We are hopeful that policy-makers will strive for “innovation” in their process, and quicken their pace on facilitating support for new technology

If the cooperation is working properly – and keeps pace with industry – it will be a great enabler for energy efficiency, and for Rinnai making the business case of energy efficient products-to-market successfully. Thank you.

If the cooperation is working properly – and keeps pace with industry – it will be a great enabler for energy efficiency, and for Rinnai making the business case of energy efficient products-to-market successfully.

Thank you.