Bruce Jenkyn-Jones (United Kingdom) Managing Director - Impax Asset Management Limited Pegasus House,  37-43 Sackville Str...
<ul><li>Weak infrastructure </li></ul><ul><li>Power grids </li></ul><ul><li>Water sewerage </li></ul><ul><li>Waste process...
<ul><li>Greenhouse gas emissions are rising rapidly…  </li></ul>Source: OECD Environmental outlook to 2030 …  but must be ...
Source: IEA, 2008 US WTI Oil Price Peak Oil - US production peaked in 1970; North Sea in 2000 Source: 1950-1970 Economist ...
GHG Reduction: Importance of Energy Efficiency Source: Princeton University
Increasing Water Stress and Scarcity Source: OECD Environmental outlook to 2030 <ul><li>Current water usage is unsustainab...
Source: OECD Environmental outlook to 2030 Massive Investment in Water Infrastructure and Treatment Needed US$277 billion ...
Environmental Markets Size and Growth Rapid substitution <ul><li>Environmental Sector Key Data </li></ul><ul><li>Market si...
Listed Equity: FTSE Markets Energy Waste Water Renewable & Alternative Energy Energy Efficiency Pollution Control Water In...
Growth in the Environmental Universe Environmental Opportunities * Estimated Size Source: Impax and Bloomberg * * Number o...
FTSE EOAS performance vs MSCI World <ul><li>A nnualised outperformance ~4% </li></ul><ul><li>Beta 1.05 </li></ul><ul><li>T...
<ul><li>US Climate Bill  –  uncertainty on Climate Bill, KGL proposal delayed. Expect clarity Q2 </li></ul><ul><li>US Rene...
<ul><li>Polysilicon pricing –  Broker channel checks suggest spot prices at c.$50-$55/kg. Stable after sharp declines (200...
  Strong Investor Endorsement Investors in segregated accounts   European Institution Investors in pooled vehicles + > 100...
  Portfolio Characteristics* Parvest Environmental Opportunities Fund by market cap as at 30th April 2010. Source: Impax A...
Performance since Inception Source BNPP AM, in €, as at 30th April 2010, past performance is not a guide to future perform...
Summary and Conclusions <ul><li>Climate change creates mitigation and adaptation investment opportunities  </li></ul><ul><...
Contact Bruce Jenkyn Jones [email_address] Disclaimer This document has been prepared by Impax Asset Management Limited (I...
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Environmental Technologies: Providing Superior Returns While Addressing Climate Change

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Bruce Jenkyn-Jones, Managing Director - Impax Asset Management Limited - UK

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  • 01/23/08
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  • 01/23/08
  • Environmental Technologies: Providing Superior Returns While Addressing Climate Change

    1. 1. Bruce Jenkyn-Jones (United Kingdom) Managing Director - Impax Asset Management Limited Pegasus House, 37-43 Sackville Street, London, W1S 3EH, UK Tel: +44 (0)207 7434 1122 Fax: +44(0)207 7437 1245 Impax Asset Management is authorised and regulated by the Financial Services Authority Environmental Technologies: Providing Superior Returns While Addressing Climate Change
    2. 2. <ul><li>Weak infrastructure </li></ul><ul><li>Power grids </li></ul><ul><li>Water sewerage </li></ul><ul><li>Waste processing </li></ul><ul><li>Consumers </li></ul><ul><li>Population pressure </li></ul><ul><li>Higher living standards </li></ul><ul><li>Resource scarcity </li></ul><ul><li>Fossil fuel prices </li></ul><ul><li>Commodity prices </li></ul><ul><li>Water scarcity </li></ul><ul><li>Limited landfill </li></ul><ul><li>Pollution </li></ul><ul><li>Local air pollution </li></ul><ul><li>Global climate change </li></ul><ul><li>Contaminated land </li></ul><ul><li>Water quality </li></ul>Economic growth is unsustainable….. … but “society” is responding Powerful Drivers Behind the Environmental Sector Many largely independent forces are driving significant changes across the economy in favour of cleaner / greener products and services. <ul><li>Legislation </li></ul><ul><li>Target market sizes </li></ul><ul><li>Mandatory capex </li></ul><ul><li>Emission limits </li></ul><ul><li>Financial support </li></ul><ul><li>Technology </li></ul><ul><li>New solutions </li></ul><ul><li>Corporate R&D </li></ul><ul><li>Government support </li></ul><ul><li>Economies of scale </li></ul>
    3. 3. <ul><li>Greenhouse gas emissions are rising rapidly… </li></ul>Source: OECD Environmental outlook to 2030 … but must be drastically reduced by 2050 to limit the impact of climate change Source: IPCC Rising Greenhouse Gases Need to be Stabilised
    4. 4. Source: IEA, 2008 US WTI Oil Price Peak Oil - US production peaked in 1970; North Sea in 2000 Source: 1950-1970 Economist 100 years of Economic stats, 1971-1984 BP Statistical Review of world energy, 1985 -2004 International Energy Agency Oil Market Report. Increasing Energy Prices and Finite Fossil Fuel Reserves 0 20 40 60 80 100 120 140 160 180 200 220 1980 1990 2000 2010 2020 2030 Reference High Price Low Price Projections History 2007 dollars per barrel 0 20 40 60 80 100 120 140 160 180 200 220 1980 1990 2000 2010 2020 2030 Reference High Price Low Price Projections History 2007 dollars per barrel
    5. 5. GHG Reduction: Importance of Energy Efficiency Source: Princeton University
    6. 6. Increasing Water Stress and Scarcity Source: OECD Environmental outlook to 2030 <ul><li>Current water usage is unsustainable with steadily growing demand for finite resources </li></ul><ul><li>Water scarcity is already an economic constraint in China, India, Australia and Western US </li></ul><ul><li>Scarcity worsening with climate change, rising living standards and depleting groundwater supplies </li></ul><ul><li>47% of the world population is </li></ul><ul><li>predicted to be living in areas of high </li></ul><ul><li>water stress by 2030 </li></ul><ul><li>World population growth, predicted at 80 million a year means an increased demand for freshwater of about 64 billion cubic meters a year </li></ul>Source: The United Nations World Water Development Report 3
    7. 7. Source: OECD Environmental outlook to 2030 Massive Investment in Water Infrastructure and Treatment Needed US$277 billion forecast expenditure require to upgrade water infrastructure (2008-2020) Source: The United Nations World Water Development Report 3 Source: US EPA <ul><li>For every 1 dollar invested in safe water and sanitation returns can be expected between $3 and $34* </li></ul><ul><li>Replacing aging water infrastructure in industrial countries could cost up to $200 billion a year </li></ul><ul><li>The US stimulus package has dedicated $18 billion to water infrastructure </li></ul>* World Health Organisation cited in The United Nations World Water Development Report 3
    8. 8. Environmental Markets Size and Growth Rapid substitution <ul><li>Environmental Sector Key Data </li></ul><ul><li>Market size: $500 billion + </li></ul><ul><li>Growth rates (CAGR): 10-20% </li></ul><ul><li>ROIE: 10%-20% </li></ul>Economic sector Energy Materials Industrials Consumer Discretionary Consumer staples Financials Information Technology Utilities Conventional Sub-Sectors Oil, Gas and Consumable Fuels Chemicals, Basic Resources and Construction Materials Capital Goods and Support Services Automobiles & Components, Consumer Durables and Consumer Services Food Retail, Household Products and Agriculture Banks, Insurance and Real Estate Software, Hardware and Semiconductor Equipment Electric, Gas, Water and Sewerage Environmental Markets <ul><li>Wind power generation eqpt. </li></ul><ul><li>Biofuels </li></ul><ul><li>Solar energy generation eqpt. </li></ul><ul><li>Water treatment eqpt. </li></ul><ul><li>Waste technology eqpt. </li></ul><ul><li>Pollution control solutions </li></ul><ul><li>Environmental testing & gas sensing </li></ul><ul><li>General waste management </li></ul><ul><li>Value added waste processing </li></ul><ul><li>General environmental </li></ul><ul><li>Hazardous waste management </li></ul><ul><li>Carbon & other env. assets trading </li></ul><ul><li>Renewable energy developers </li></ul><ul><li>and IPPs </li></ul><ul><li>Environmental consultancies </li></ul><ul><li>Power network efficiency </li></ul><ul><li>Industrials energy efficiency </li></ul><ul><li>Buildings energy efficiency </li></ul><ul><li>Transport energy efficiency </li></ul><ul><li>Water utilities </li></ul><ul><li>Other renewable eqpt. </li></ul><ul><li>Water infrastructure companies </li></ul>
    9. 9. Listed Equity: FTSE Markets Energy Waste Water Renewable & Alternative Energy Energy Efficiency Pollution Control Water Infrastructure & Technologies Environnemental Resource Management & Trading Waste Management & Technologies Renewable energy developers Solar energy generation eqpt. Wind power generation eqpt Biofuels Other renewables eqpt. Power network efficiency Industrials energy efficiency Buildings energy efficiency Transport energy efficiency Power network efficiency Industrials energy efficiency Buildings energy efficiency Pollution control solutions Environmental testing & gas sensing Waste technology eqpt. Value added waste processing Hazardous waste management General waste management Environmental consultancies Carbon & other environmental assets trading General environmental
    10. 10. Growth in the Environmental Universe Environmental Opportunities * Estimated Size Source: Impax and Bloomberg * * Number of companies
    11. 11. FTSE EOAS performance vs MSCI World <ul><li>A nnualised outperformance ~4% </li></ul><ul><li>Beta 1.05 </li></ul><ul><li>Tracking error 7.0% </li></ul><ul><li>PE ratio 15.6x </li></ul><ul><li>EPS growth 17.6% </li></ul>Data for the FTSE EO All Share has been back-tested. The index was launched June 2008. 175 142 <ul><ul><li>Impax is FTSE’s global partner for the environmental sector </li></ul></ul><ul><ul><li>18 environmental sector indices </li></ul></ul><ul><ul><li>Launched in 2007 </li></ul></ul><ul><ul><li>Adopted by major pension funds as a benchmark </li></ul></ul>
    12. 12. <ul><li>US Climate Bill – uncertainty on Climate Bill, KGL proposal delayed. Expect clarity Q2 </li></ul><ul><li>US Renewable Energy - Continuing uncertainty on federal RES & stimulus provisions. State RPS requirements remain in place/expanding </li></ul><ul><li>Europe Renewable Energy – FiT cuts in Germany, Italy, Czech Republic, Spain. UK FiT introduced </li></ul><ul><li>US & Europe Transport Energy Efficiency - Enhanced US CAFE standards deadline: 2016 and EU CO2 standards </li></ul><ul><li>China - 12th Five Year Plan – 2x increase in environmental budget; specific clean energy targets expected. More details Q2-3 </li></ul><ul><li>Japan Renewable Energy - 10% by 2020 target. FiT for all renewables, recently extended for wind, hydro & geothermal </li></ul>Current Legislative Considerations
    13. 13. <ul><li>Polysilicon pricing – Broker channel checks suggest spot prices at c.$50-$55/kg. Stable after sharp declines (2009) </li></ul><ul><li>Turbine Pricing – believed to be at 2006 levels, and at least 20% lower than peak prices </li></ul><ul><li>EV Battery pricing – Numerous auto OEMs launching low volume HEVs/EVs. Battery manufacturers building commercial scale plants to come online in next 12-24m. Suggestion that pricing forecasts of c.$500 per kWh in 2013/14 (50% decline from today) need to occur for scale adoption. </li></ul><ul><li>Fracturing technology – Horizontal drilling and modern fracturing techniques. Marginal cost of gas production now as low as $2.5/Mcf – this has fundamentally changed the energy industry </li></ul><ul><li>Smart grid – rollout of AMR/AMI, high voltage and DC grid </li></ul><ul><li>LEDs – costs falling and brightness increasing. TV/PC market led – general lighting gaining traction </li></ul><ul><li>Cellulosic ethanol – first commercial scale facilities due to come on line in the next 12m </li></ul>Current Technology Considerations
    14. 14. Strong Investor Endorsement Investors in segregated accounts European Institution Investors in pooled vehicles + > 100 other institutions Consultants White label funds
    15. 15. Portfolio Characteristics* Parvest Environmental Opportunities Fund by market cap as at 30th April 2010. Source: Impax AM Company Size Sector Breakdown Forward 12 months’ PE Ratio Share Listing
    16. 16. Performance since Inception Source BNPP AM, in €, as at 30th April 2010, past performance is not a guide to future performance
    17. 17. Summary and Conclusions <ul><li>Climate change creates mitigation and adaptation investment opportunities </li></ul><ul><li>The sector has seen strong growth over the last 10 years </li></ul><ul><li>The drivers of the sector have been robust through the financial crisis </li></ul><ul><li>Diversified range of opportunities that contribute to strong performance of sector </li></ul><ul><li>Growth and M&A are key drivers of performance </li></ul><ul><li>Sector has matured substantially and currently trading at attractive valuations </li></ul><ul><li>Dynamic sector leads to emerging opportunities in new sub-sectors and geographies </li></ul>
    18. 18. Contact Bruce Jenkyn Jones [email_address] Disclaimer This document has been prepared by Impax Asset Management Limited (Impax, authorized and regulated by the Financial Services Authority). The information and any opinions contained in this document have been compiled in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. Impax, its officers, employees, representatives and agents expressly advise that they shall not be liable in any respect whatsoever for any loss or damage, whether direct, indirect, consequential or otherwise however arising (whether in negligence or otherwise) out of or in connection with the contents of or any omissions from this document. This document does not constitute an offer to sell, purchase, subscribe for or otherwise invest in units or shares of any fund managed by Impax. It may not be relied upon as constituting any form of investment advice and prospective investors are advised to ensure that they obtain appropriate independent professional advice before making any investment in any such Fund. Any offering is made only pursuant to the relevant offering document and the relevant subscription application, all of which must be read in their entirety. Prospective investors should review the offering memorandum, including the risk factors in the offering memorandum, before making a decision to invest. Past performance of a fund is no guarantee as to its performance in the future. This presentation is not an advertisement and is not intended for public use or distribution.

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