Please give a warm Georgia Tech.

Welcome to Mr Laughlin great
to be back at Georgia Tech and

I did do a completed minute.

M.O.T.D. here in in one
thousand nine hundred eight and

I've not been back on campus since
one thousand nine hundred eighty and

the place certainly looks very different.

I was thinking I'd come here today and
it would be wow boy feels like.

You know coming back home.

Everything looks you know pretty familiar
in the same and really it doesn't mean

a lot of changes around here in
the last twelve years or so.

So that's really good and

it actually fits in well with our you
know topic of sustainability and growth.

Today because a big part
of sustainability is

being able to to manage that along with
growth because if we can't do that.

Really the future.

For generations of people on
this planet is not too good.

OK so we it's really about managing
sustainability and growth.

OK.

Little story I did I did
do an M O T here and

I started that I guess that's an eighteen
month program as I recall and I started it

in beginning of two thousand and seven and
I was living in Augusta Georgia.

Working for
products I was managing a chemical plant.

Across the cross the Savannah River and

a little place called Langley South
Carolina and we have here of Langley.

South Carolina.

Really.
OK are you from over that that way or

Langley's a real small town near or
near a Can South Carolina and

so I started a program and
about six to nine months into it.

I got transferred and I my boss called
me up and said we want you to move

to Paducah Kentucky anybody
ever been to Paducah Kentucky.

RIDEAU Wow you guys are well traveled
all the hotspots of the world here.

Well so I had to go to Paducah Kentucky
we had just had our third child and.

Paducah Kentucky Augusta is
only about two hours from here.

As you know Paducah Kentucky is
about eight hours from here.

So I had to spend the last year of
the program dive driving back and

forth between.

Paducah Kentucky and.

In Augusta every every other weekend so
every Thursday night after

work out how in the car and
drive about six hours to Dalton Georgia.

There was a hand that in
there I'd stay at and

then get up to beat the traffic
into to attack Friday morning and

then after school on Saturday
afternoon get back in the car and

drive back home again home
around one in the morning.

So it was a it was a very graduating from
that program really meant a lot to me and

a lot to my wife as well and
she was a real trooper and it really is.

I think it really points to the value
of teamwork and anything that we do and

you know all of us rely on other
people to get stuff done that

we need to get done and often you
know those of you who you know we do

have families you know I'm sure there are
sacrifices that people in your families

are making in you know hopefully you guys
show your appreciation for that sometimes.

OK.

Again my title today is sustainability and
growth in the business to business world.

Couple couple of things the way
I'd like to run the talk today if

it's OK with you if people have
questions please go ahead and

just you know raise your hand and
we can talk about it as we go.

I know we're also going to save
time at the end for questions but

if there's something that I didn't
cover that you would like to ask or.

You know whatever just just feel free to
raise your hand we can talk about that.

And I said we will save
some time at the end.

Why this title like I said sustainability
and growth really go hand in hand.

You know the world's population
continues to get to.

We're going to have.

You know fifty percent more people on
the planet in two thousand and fifty.

Then we have today.

I know you guys have had other speakers
in here talking about sustainability and

they probably told you all these.

Scary numbers about population and
about water scarcity.

You know these numbers that
like only one percent of

the world's water is drink a bowl.

Things like that that twenty percent of
the population in the world doesn't have

adequate water supplies and
now that we are you know

really at the end or you know and
a lot of trouble and energy availability.

So and not to mention climate change.

So the importance of managing these
things in industrial companies.

Yet at the same time being able
to do it so that you can grow.

And then you can continue to sustain
economic development is really

I think is the critical challenge that
we're going to be facing in a next

twenty to thirty years and
it's really going to what drive a lot of

the innovation in the world tech is
a is known as an innovative place.

It's where you train a lot of engineers
and a lot of researchers also a lot of

business people but I think innovation
is really going to be everybody's job.

And it's really going to be the key
to successful sustainability of

sustainable growth.

So hopefully this works.

OK So first a little bit about
who is their products their

products as an industrial company are.

Our major products are industrial
gases hydrogen and

materials and we also sell equipment so

industrial gases take air air is
one of our major raw materials.

You compress it cool it you liquefy it and
you separate it.

And while you have nitrogen
you have oxygen and

you have argon the main components of air.

Now you take natural gas you strip
the hydrogens off it in a process called

Reforming you can put it in a pipeline
is gaseous hydrogen you can liquefy it.

As liquid hydrogen.

OK.

You have helium because take it
out of a natural gas stream.

That's coming out of the ground purify it.

Materials that go into electronics so
that's what we do.

OK we're a industrial company
where a fairly energy intensive

industrial company guy Air Products
started out in one nine hundred forty.

Founder was a guy named Leonard pool and
we started off in Detroit Michigan and

our first big break in business
was selling oxygen generators.

To the army for pilots.

So when during World War two all
the bombing you see the old movies and

are always dropping the bombs
on Dresden or on Hamburg or

someplace like that they had to get
up above the anti-aircraft guns and

the British were a little late discovering
that and a lot of planes got shut down.

So one of our first big contracts was
making small oxygen generators for pilots.

To put oxygen on airplanes so
they could fly high enough.

So they wouldn't get shot down.

So for us that involvement
with government type things

and government contracting is something
that was really at the beginning of

our products founding OK today we're
as Kate mentioned we're a Fortune five

hundred company we operate in around
forty countries around the world.

What about nineteen thousand employees so
we've come a long way

in the last seventy years you can see
the markets we serve industrial market so

people who make things that are around
you all the day all the time so

we help process metal
steel wool Newnham spent

glass or in most electronic components.

OK so for displays or for.

Or mobile phones were in
the health care business so

we provide home therapy treatments and
that sort of stuff and we're.

Equipment supplier.

And we have around six hundred
plants around the world.

So we have fairly What would be considered
a relatively large number of operations.

OK somebody is operations or
big maybe a couple hundred people.

Some are very small.

OK our culture in the company
is first of all we are.

A company that deals with
fairly dangerous things so

safety protection of the environment
is something that's really core.

To the culture of our company and
how we do things.

Innovation is really core
Going back to that story.

You know with World War two and

the oxygen generators those things didn't
exist in one thousand nine hundred were

really founded on innovation and
innovation is core.

Is very much core to what we
do involve and into community.

Again six hundred plants.

You have to be a good neighbor to
be able to operate plants out there

you just can't go in and be a nuisance or

be a hazard to where you're operating and
then finally integrity and teamwork.

OK In the end it really comes
down to the people who work for

years that are ones who
generate the innovation.

OK.

So sustainability in how we define

sustainability is there's lots of
definitions the one that's commonly used

is the one that I think is from the UN
compact or something like that where it.

The one that says to to really meet
the needs of today without sacrificing

the needs of tomorrow's generations and

I'm paraphrasing that I'm sure it is
I missed a couple of words there but

the idea is that we can as a society
live today and live productive lives and

live enjoyable lives but don't screw it up
for one to two to three generations down.

Road.

OK And that's really what
sustainability is all about.

Right.

For a company that's in
an industrial business

like we are a very energy
intensive business.

Certainly that part of sustainability
of the quote not screwing it up or

are not doing bad things
is very important so

environmental stewardship protecting our
employees in our communities managing

our emissions being a good neighbor all
those things are very important to us.

You know for a long time.

Really we have to earn our
right to operate you don't have

an ultimate right to operate a facility.

OK.
Anywhere you have to earn that right

to operate and the community the
government can come in and shut you down.

If you don't do that.

So right to operate is
something we have to earn.

But really the past probably ten years.

There's really been a change and it's
not just about doing less bad any more.

Now it's about also how can you do more
good and some of that could be around

you know development and
you know creating economic value but

really I think the bigger part of that
is how we innovate and how you create.

And take advantage of the opportunities to
help your customers to help the markets to

meet those other challenges we're talking
about whether it's climate change or

the environment or safety or
managing risks and

that's where we look to find really
the value of sustainability.

So we break our sustainability
focus into two primary four primary

areas you can see their environmental
stewardship and that's like I said that's

been very traditional something
we've always done water waste.

You know greenhouse gases to give
you an idea I mention air is

our biggest raw material or
other big role materials energy.

OK we use but
a number out there we use sixteen million

megawatt hours of electricity every year.

That's a lot of electricity but it takes
a lot of electricity to separate air

into its components so for us we spend
a billion dollars a year on electricity.

OK So for us electricity is a big deal.

OK So all these things environmental
stewardship social responsibility.

So being a good neighbor managing
the safety of your operations not

impacting the community so what happened
in the Gulf out there with B.P.

you can have those things happen.

OK.

Employees making your place a good place
to work so people want to work for you and

they want to stay.

Governance in the end
we're a public company.

OK our shareholders rely on the integrity
of our management to do what's right.

OK for the company to obey
the laws not to take undue risk

that put their investments at risk.

OK And more and more there
are sustainability aspects that we'll talk

a little bit about some of the the the
people out there who are watching us and

sustainability but the investment
community is becoming a big part

of sustainability and
then finally really is business value.

So how do we create value from
the opportunities out there

to whether it's to improve energy.

Availability through renewable energy
sources like say you know solar energy or

to reduce greenhouse gas emissions

by controlling the emissions
say from a steel plant.

Through better combustion technologies
is again a lot of that ties

back to innovation because the reality is

a lot of the solutions that are needed
to really get us to where we need

to be in the next thirty to
fifty years don't exist today.

So there's a big challenge out
there to meet what has to be done.

All right.

Business case.

For sustainability so everybody.

And those of you who are in the M.B.A.

program know whatever you do you
have to have a business case.

Right.

And there has to be a business case for
sustainability and for many years

the business case for sustainability
was built around compliance.

That you have to comply
because if you don't comply.

You get in trouble and you get fined
you're going to shut you down or or

something like that.

OK another part a business case was
really your employees that you want to be

a responsible operator and you want to be
safe and you don't want people being hurt

and every employee has a right to go
home after work the same condition.

That they came to work at and
that's really a fundamental

responsibility of every company out
there is to make sure they do that.

OK so that's really in the past kind
of what our business case was around.

OK.

It was really managing risk.

OK but today it's really gone beyond.

Just managing risk.

OK the Marketplace Sustainability
requirements also

create a big part of
our business case now.

OK So an example is and

again this is an older example but
think back to acid rain.

OK back twenty thirty years ago there
was a big problem with acid rain

writer Barry knows that
acid rain is sulfur

that would come out from
combusting combusting scares me.

Fossil fuels would get
up in the atmosphere and

it would react with things and
and you'd have acid rain and

it would kill trees and
it was a big problem in Western Europe.

Particularly in Germany and countries
like that where they had a lot of forest.

Destroyed because of it.

OK but the root cause was
that you had sole for the.

It was in fossil fuel and
it went up in the air.

So one of the early applications really
for a Marketplace Sustainability need was

taking sulfur out of out
of those fossil fuels.

OK That really is what's driven
our hydrogen business today

most of the hydrogen that air
products makes goes into fuels.

So it goes into part of the refining
process to take the sulfur out

of fuels the amount of sulfur that's
emitted in transportation today is ninety

percent less than what it was twenty or
thirty years ago and that's because of

the use of hydrogen in the refining
process to take that sulfur out.

OK Another big development again
transportation example would be catalytic

converters used to have a lot
of nature's compounds coming out

of tailpipes of cars a lot
of that's been reduced.

OK And again another byproduct
of the hydrogen work was that

it also help help those catalytic
converters work a lot better.

So this is you know some of
the examples of why we think there's

a strong business case for sustainability
another one down there is reputation.

OK reputation matters.

In lots of ways reputation matters in
terms of want to have here is access to

capital and
human resources you get investors

because you have a good reputation you
know you don't have a good reputation.

You're not going to have the same stock
price you're not going to have the same

investment interests as you do
if you have a good reputation.

Other is human resources people you guys.

You don't want to work for a company that
everyone thinks is out there out there

a terrible unsustainable company their out
polluting their dumping stuff no one wants

to work for a company like that people
want to work for a company that they

think is a sustainable company that has
integrity and is doing the right things.

OK And.

Really successful companies and
whether it's us or

do a lot of successful
companies out there.

General Electric.

You know take other successful companies
they can really bring these together

manage risk and also see
the opportunities and then leverage

the capabilities they have to take
advantage of those opportunities and grow.

OK So again the takeaway

here is that the business case is not
just about managing risk anymore.

In fact if you don't take advantage of the
opportunities you really are putting your

company at risk.

Financially.

All right.

There are a lot

of groups out there who are watching what
industry does around sustainability.

This is just a partial list but
there's I'm not sure what

the number is some was probably counted I
guess there's at least fifty maybe more.

I don't know it seems like every week we
get a we get a message from another one

who tells us that they have
an index that we're on but

some of these are are more
mainstream than others but

there's a lot of differences
in these groups some look at.

Maybe climate change.

So their Carbon Disclosure Project as
an example is really focused on like they

say Carbon Disclosure.

Although they're now also have awarded
disclosure report they just this is

the first year they've
initiated that they've been

Croft Mabel Croft is about
sustainability innovation.

OK or footsie for good and
Dow Jones Sustainability Index.

Those are social responsible
invest investment funds.

So they're taking people's money
who say they want to invest and so

sure there is possible companies and
there and they create an index for

those funds so there's there's lots of
different groups with different focus

who are looking at these things so that
you really can't play under the radar.

When it comes to sustainability
because there are people watching.

And you will be noticed.

So you as a company you ignore
sustainability at your peril.

All right.

For us.

Really sustainability comes
fairly naturally our strategy

in the company is called the three E's is
energy environment in emerging markets.

That's and that's been for a long time.

That's really what most of
our business is around.

OK is around how helping companies
Manning manage energy efficiency so

say a steel mill or
cement factory or a glass factory or

directly energy like refining or
solar power or something like that.

Environment so managing emissions.

So again helping companies man is
the emissions from their processes and

then emerging markets because we may
not like it but most of the development

out there in the industrial world
is not happening here anymore.

OK for our business we build a lot

of oxygen plants we estimate that sixty
percent of the oxygen plants built in

the next twenty years are going to
be built in China sixty percent.

OK that's because one thing China does
what does China have a lot of for energy.

When it was trying to have a lot
of coal it a lot of coal a lot of

coal in China not a lot of oil and
not a lot of natural gas.

So China uses coal but China wants
to be able to use that coal and

gas is format so they have to have
coal gas a Fires coal gas the fires

use a heck of a lot of oxygen to gasify
least if you're going to guess if I had.

I won't say clean because it's not clean
but it's cleaner than not using oxygen.

OK So
emerging markets whether it's China or

India or Brazil is really key to growth.

OK.

But and again for a.

This is very important and

just a couple of points I'd point
out one on this innovation thing.

And I'm happy to say this past
year on the maple Prof survey

we were ranked as the most
innovative company

in the in our industry group
which is called Basic materials.

So we think that's really good
because we think innovation really

is what we are about although
you do get surprises

as anybody seen the Newsweek green
issue came out yesterday you saw.

OK so last year.

Newsweek started doing a green issue and
they ranked the top five hundred companies

in America for their green they are well
we thought we were pretty good.

We thought we're doing a good job and
we were sustainable and all this.

Well last year two thousand and
nine the report comes out.

Guess what number we were three hundred
nine out of five hundred it was like

wow slap in the face wakeup call or you
guys or your We're missing something here.

What's going on.

So we we went out and
we talked to Newsweek people they actually

had a bunch of different groups
who were doing the work for

them they didn't do the work
themselves they contracted it out and

it looked at three things they
looked at your overall footprint.

OK so that what was your environmental
emission index or whatever they called it.

They looked at your climate change or
your green policies.

How do you manage and
how do you improve these things and

then they looked at a thing that was very
subjective they called reputation and

they sent a survey out that people
basically same rank these people as

to who is the most sustainable and
what we found was that on that middle

one the social the climate
change policies or the green

policies we got really bad scores and it
was because we weren't transparent enough.

We were doing a lot of these things but
we weren't telling anybody about it.

So they didn't know.

So how do we fix that this year we we went
out one we hired one of my first things

was I went back and we hired to recreate
a new job for a sustainability manager.

So we had someone to do this full time and
but we spent.

A lot of time really on creating better
work processes around how we do planning.

So how do you do strategic planning
integrating sustainability into that.

How do you allocate capital in projects.

Integrate sustainability into that.

How do you do technology research and

what projects to fund integrate
sustainability into that.

So we did a lot of work over
the past year and a half doing that.

We also really got out
there on transparency.

We had dot that a thing called G. or I G.

arise a Global Reporting Initiative
we felt well you know we're reporting

sustainability we can report it
the way we want to report it.

Now you really can't do
that you have to follow

the protocol in the rules of
the game in the rules of the game.

So this year we did our sustainability
reporting format took a lot of time.

But it really paid off.

So yesterday the rankings came out in we
weren't we weren't like number one we.

But we did improve we went from
three zero nine to one fifty one.

So it was you know I think a good
a good improvement and it's really what

we wanted to do and really where we got
hit and we really have a tough time

improving here is on our environmental
impact we do have a big footprint.

OK We're very energy intensive We use

a lot of natural gas to
make hydrogen we use.

I remember over.

I think the number two hundred
thirty five million million BT

use of natural gas a year.

So again we spent a billion
dollars on natural gas and

we spent a billion dollars.

On energy.

I'm sorry on electricity and we're nine
billion dollar company so we spend twenty

twenty five percent of our revenue goes
to buy energy so energy is a big deal.

So managing energy is very important but
anyway so

the takeaway here is you
really got to pay attention.

People are watching.

So targets we kind of talked talked
about this certainly energy.

We have a target to reduce
our energy can some.

By seven percent that's.

Electricity and

natural gas and again you figure
a million dollar a billion dollars each.

That two hundred forty million dollars of
savings if you can reduce your energy by

seven percent to seven percent
doesn't seem like a lot but

when you say it's one hundred
forty million dollars.

Well that suddenly seems like a lot

of greenhouse gases water like most
industry we use a lot of water.

OK.

Water is really the next I
think the next big thing

after climate change is going
to be water water's a big deal.

OK And you know that just a couple
of examples Africa and Africa.

How much how much water do you think
goes to agriculture in Africa.

What percent of their water ninety
percent ninety percent of the water in

Africa goes agriculture
that's not sustainable.

OK you've got to improve that.

So water is a huge huge deal.

We use a lot of worry is sixteen
billion gallons of water.

Seems like a big number to me and
it's mostly for cooling stuff and

you know generally that's what people
use water force for cooling stuff.

OK.

And again other stuff here that.

And again most of these are environmental
We also you know you need to create goals

around other stuff too like your
innovation we're working on those things

but till now it's been
mostly environmental this

is a quote this is actually several
years old but read it to innovation

is at the core of creating a sustainable
human society a society will

not succeed as a society will and that we
will not succeed in creating a sustainable

world if we focus merely on doing more
efficiently what we currently do.

OK.

And I think that's really sums
up I think pretty nicely how

we least we think about sustainability and
I think how industry needs to think and

also academia needs to think
about sustainability just

doing things the way we're doing
things and incrementally getting.

Better two or three percent a year isn't
going to cut it and you're not going to

get the where you want to get by doing
two to three percent better every year.

We really need breakthrough
innovation around sustainability.

OK so it's not just making cars the
internal combustion engine more efficient.

That's not going to do it and it's got
to be something totally different right

now doesn't rely say on fossil fuels or
really takes a step change.

In that level of efficiency same
thing with water consumption and and

like I mentioned agriculture
is the biggest water consumer.

So probably around agriculture is not
something word that involved then

we are involved in food but really it's
more getting back to agriculture and

how we grow things.

You know we've got to deal
with these things and

that that's the job that's
really the challenge

I think that a generation of people
who are you know students now.

You know in so many I know many of
you have already been in industry or

still are in industry and

those entering industry is that you
know we really there's a lot of work to

those who think that everything that's
been discovered been discovered

are really missing the boat there
is there is a tremendous amount.

That has to happen here around
innovation in the sustainability area

because again it's not just
it's not just about saying

we're going to you know cut
carbon by seventy percent.

Yeah OK maybe you do need to
cut carbon by seventy percent.

But you also need to have an economy.

Out there right.

People need jobs.

Right.
People need energy.

Right.

People want their children in their
children's children to have as good of

a life as they had so.

Just saying we're going to cut
energy by seven carbon by seventy

percent alone doesn't get that.

OK So we really need some innovation
if we're going to get there.

So sustainability

is a macro trend kind of like the way
the computer was a macro trend.

You know fifty years ago.

Or you know the mobile phone.

You know mobile communications
maybe thirty years ago.

I think sustainability and

many people think sustainability
is a macro trend now and for us.

These are so many areas it really hits so
clean fuels and.

You know managing climate
change electronics

electronics have a big role to
play around sustainability.

OK because electronics often will be
the key to getting that breakthrough

improvements that we need.

OK in clean water water reuse
they've got to use less water right.

And then food and again you've got
twice as many people are going to

eat or fifty percent more people are going
to eat fifty percent more food maybe even

more than that because Estonia living
goes up people even more right.

So food.

So being able to to to grow it sustainably
to manage the water consumption

and to ship it.

Sustainability talk to preserve
it to make it safe to eat to keep

chemicals out of it all those
things are really important.

So those are really we
think the macro trends.

We see out there.

We'll talk a little bit about
those put these up here.

So cleaner fuels talked a little
bit about low sulfur and

that was really an early on thing that
we focused on around acid rain and

also around Knox one other
point about that and

hydrogen use in refining is the other
thing that it does is we used to get

sixty five percent yield out of a barrel
oil turn to get in to transportation fuel.

Today we get eighty percent
least in California.

I think we get seventy some percent and
other refinery to California refineries to

up to about eighty percent
of fuel out of a barrel oil.

OK Because of that over
the last I think it's thirty

years we've avoided building
ten world scale size refine.

Areas in the US Think about what's
the environmental footprint of a refinery.

We've avoided ten of them
because of improvements and

how much fuel we can get
out of a barrel oil.

So this stuff is very important.

Next ones fueling hydrogen
fueling of course for us.

You know we're big hydrogen company we're
to world's biggest hydrogen producer

hydrogen fueling is a big deal.

We like hydrogen fueling So the hydrogen
fuel cell the probably many of you

are familiar with the the P.P.M.
the cell the the proton membrane type

cell used for for
hydrogen whether it's in a car.

Whether it's an A C.

or submarine are actually submarines
that run on PM cells or in a four truck.

OK very important and again it's
you know as zero emission vehicles.

Now the problem you've got there is
the hydrogen is not to remission.

OK So something to work on there and

then you know one of the ways to get
at that is new sources for hydrogen so

renewable I did in hydrogen from
electrolysis of water hydrogen

from biomass hydrogen from solar generated
power from wind generated power.

OK so there was non non carbon
emitting sources of hydrogen.

OK but but
just taking power off the grid in making

hydrogen making you know do electrolysis
on water to make hydrogen really isn't.

Low emitting as it goes worse.

You know where does fifty percent
of the power in the US come from

it comes from coal.

So just taking electricity in this case
really isn't a low emission answer.

OK So we really got to think through
the lifecycle impacts of these things and

think all the way from you know
where does that energy come from to

how your process to how it's used to how
it's you know eventually disposed of.

If you're really going to
be able to look at have.

How you can come up with really
what is the most sustainable

way to do these things.

Combustion technologies.

Again we're involved in a lot
of processes that burn things.

Ok lot of combustion involved in
making steel they're making cement or

making glass.

So we have a process because oxy fuel.

OK so instead of the simple simple way
to think about is instead of combusting.

Instead of combusting things.

A fuel source with air that's air
is eighty percent nitrogen right.

You combustion with oxygen
which is zero percent nitrogen.

So you're not making nux All right so

Knox is what causes smog
sure you guys all know that.

So that's a way to really and

that's why you really have a lot less
knocks in the air and less smog then

you had if you go back thirty forty years
ago maybe some of you don't remember but

there was a lot of smog out there in
certain places is a lot less smug

at least in the US you outside
the US there's still a lot of smog.

I lived in China for for three years and
there's a lot of smog in China.

Proprietary technologies
things like carbon

capture carbon capture and sequestration
is a technology that's very important.

We do it today we have a plant we're
actually building right now in Port Texas

that's going to capture about a million
tons of carbon from one of our hydrogen

plants that carbon is going to use it for
advanced enhanced oil field recovery.

That's what we'll do with the C O two
that we capture so there were are ways.

There are technologies out there today.

To capture carbon the big issue
really is what do you do with it.

If you capture it and also the cost
you know adding a carbon capture.

To a coal plant.

Increases the cost per B.T.U.
it almost doubles the cost to be

to you in that coal plant
when you had C O two capture.

For that plant.

So today we don't really have
an economically viable way to do that

on a coal plant.

Although we are there are in fact we have
some demonstration projects we're doing in

Germany right now.

A company called that in
fall that we are looking

we actually do have
a carbon sequestration.

Project we do have running there so there
are demonstration projects out there and

then you know and that's part of
the collaboration here we're doing

with other companies in we're
doing it mentioned that and

all we're doing with though the French
company also another project so

a lot of this and we're doing
things even here with Georgia Tech.

On the photovoltaic area and improving
the efficiency of photovoltaic cells.

So we can bring down the cost of power
generation and try to get grid parity on

foldable takes as we still got a while ago
here in the U.S. to get the grid parity.

And electronics I mentioned.

OK Power and Light.

So at least most of the traffic
lights now really days.

All right so
the big one solar panels photovoltaics.

Big big electronics consumer
big business for us.

They use a lot of lot of Syleena
use a lot of other materials.

It's really just a big.

It's like a big like a big T.V. displays
you know with thin film transistor T.F.T.

application just on a much bigger scale

kind of what a photovoltaic at least
a T.F.T. photovoltaic devices.

OK other high tech devices memes
memes are these motion things

that like go into we you know that are
going your air bag in your car that detect

when you had a sudden deceleration So
the airbag deployed a lot of

electronics in those things
that's not really sustainable

on the I'm sure when I'm talking
about that and then a fish and see.

OK I got to get a shout out to
Georgia Tech there on our solar cell.

Another example is ina xenon is a very
important gas in the electronics industry.

Xenon today is made generally
from an air separation

process is eighty seven parts
per billion of xenon and

air and we've got to separate it out so
I can remember the number is but

you need like on a one hundred thousand
liters of air to make like one liter

was enough honors some crazy number but
it's very very inefficient.

So we've developed a process
now to recycle Xenon So

you go into the fab where
they use the Xenon.

And you take one percent
Xenon in one thousand gen and

you can recover that purify it and
then use it again

in the order of magnitude and the
concentration is like one hundred thousand

to one in terms of the efficiency
of using that Xenon in recovery.

So those are kind of things.

And you can think of the amount of energy
that goes in to get eighty seven parts per

billion out of something.

It's quite a bit.

And finally water is one
more example consumption.

That we've got to reduce consumption so.

One area we're looking
at here is reuse OK And

you know one area that's very big for
us is use of ozone and

these types of which is a non non US
non chlorine based So in that way.

It's not toxic chemical.

Containing and
we had several projects out there.

We did one with the city of
Santa Clara last year and

I think we recycled about
sixty two million gallons.

For the city of Santa Clara so the city
of Santa Clara got to save that for

drinking water.

And they sent us there.

They're there recycle stream and
we used it in our plant.

After we cleaned it up.

So these are things we had to
be working out there and into.

Tree to do these kinds of things
safe water I mention oxidation So

use of ozone a way to purify and
clean up water.

So people don't get sick.

Kill bacteria also taste better
doesn't have that chlorine taste in it

and again we want to be able
to have more water really for

for really the people have their food.

Again read I just got a tour
of the food lab overread.

The Technical Institute for

I came over here and John John took
me through a very very fascinating.

Food something we do we.

We've been food freezing food for
a long time we were the original.

Supplier to McDonald's
unfreezing hamburgers.

So McDonald's could use the same frozen
hockey puck hamburgers whether they

were in.

You know Atlanta or
whether they were in Tokyo.

Basically it's the same meat.

Because they freeze and
ship it all over the world.

So liquid nitrogen freezing also now use
of other mixed gases for more like for

fruit preservation and things like that
you make argon and an oxygen and nitrogen

a different proportions in for different
foodstuffs maybe a different blend.

Maybe to keep a banana from Turman turning
brown as fast or something like that or

keep an apple from getting soft and
all mealy insider or something like that.

OK.

Trends you know convenience
meals people are on the run.

You know two working spouse families.

So there's a lot more out there and
driving this food preservation thing.

And looking ahead certainly your
round attrition is another one.

So more you know on the farm doing
food preservation on the farm.

So you get fresh stuff you know any time
of the year around the world so foods.

Another big area for us and
also a big component of sustainability.

You know both from a a nutrition point
of view a quality life point of view and

from a water consumption point of view.

So let's you know we're
running out of time here

quickly to talk about this
then we'll get the questions.

What does this mean for you.

What does this mean for
all of us out there an industry.

First thing it means that
the world is really looking for

sustainable solutions and
in many areas we don't have them but

really future generations are going
to have to be able to innovate.

But up in ways we really
can't imagine today.

All right.

I don't think I think the challenge
ahead of the world and

what we need to do in this estate ability
space really is very daunting but

I think like most other things out there.

Generally innovation rules
today in the end and you

know it's kind of like Ben Franklin So I
would disagree in the mother of invention.

We're going to figure
out a way to do this.

Economic growth is really
key to sustainability

in now and part of sustainable solutions
is they have to be economically viable.

They're not economically viable.

They're not going to be sustainable.

Right.

So certainly there is a definite role for

subsidies and I think for government
involvement early on in technology and

a lot of things we had today in
electronics and things even in our

industry and hydrogen mean our hydrogen
business came out of the space industry.

You know we wouldn't have that today.

If there weren't government sponsorship
for many of these things so

there is a definite role for
government sponsorship

when it comes to technology and also
university involvement when it comes to.

We all need to be creative.

You know and really ask and

ask why I things have to be the way
they have to be why we can do things

differently why there isn't a different
approach to problems right.

Really that gets at the essence of
innovation is inquisitiveness and

really asking why.

In and really not being satisfied and
should you know you get an answer

that really satisfies you
finally everything's connected.

OK And it is it is very complicated.

This is not a simple matter like I said
before it's not a simple matter of just

say we're going to cut
carbon by seventy percent.

It's all connected.

OK People energy.

The economy our natural resources
the environment human health.

Everything impacts everything else.

So whenever we change one of these things
we're going to impact some something else.

So we really do need to think through
these things that it really takes.

A really a team working
together of various disciplines

to really make this thing.

Work out right.

So you know not to talk down engineers but

a bunch of engineers sitting
around to designing something and

not without getting some real
world economics involved.

May not work.

OK And
we may be going down the wrong path.

OK so

there really are a lot of other factors
in there that have to be considered OK so

that's what I had so questions.

We thank you for your time right
now as then you can have questions.

He's got the first natural
gas drilling has a lot of

his bad effects on the environment as far
as the water outlet the water consumption.

The boat ability of the water afterwards.

What IT technologies are is their product.

So that's going to.

I guess change that.

Yeah.

Well natural gas.

We're talking about natural
gas like Marcellus Shale type.

And I do want gasoline
talking about I'm going.

Yes OK Now fracking fracking
is when you have to fracture

the rocks to get to the natural gas and
this is actually big we're headquartered

in Allentown Pennsylvania and Marcellus
Shale is big out there in New York and

Pennsylvania and West Virginia
like every technology there's

a there's an environmental impact to just
about everything including fracking.

And as you correctly point out
a lot of it has to do with

the contamination of the water.

It also has to do with the use of
the water because it takes a lot of water.

You have to use chemicals often chemicals
are used today the way your products.

Primarily is involved in this from
a from an innovation point of view is

really using nitrogen in
the fracking process.

And perhaps to replace some of the more
hazardous chemicals that are used in

fracking So looking at a less hazardous.

Fracking fluids is really primarily

where involvement as the other area
would be on the water reuse side.

And how you use a recover to

water that's involved in fracking might
be to two major areas were involved.

Yeah.

Basically So
what exactly is the biggest growth market.

In a percentage probably the last year or
so

I think electronics has been
probably growing the fastest and

in particular one area just growing
very fast is the full of all take.

Market photovoltaics which is what
you know the thin film transistor

type photovoltaic to go
into solar arrays and

the growing about fifty percent a year
the last two or three years and

are projected to grow to continue at
that growth rate for the next five.

Years or so so of a major market
that's probably another market

that's been very good and continues to
grow well there's the refining market.

So hydrogen of refining
continues to do very well and

then the other one which I mentioned
was the coal gasification So

really massive oxygen plants for
coal gasification in China.

You know that area when you do.

Emerging markets like Brazil or
China possibly could.

You know Africa.

Can be cost effective.

With the local competitors.

That's a good question and
it is a big challenge to particularly for

a Western company and when you're
dealing in an industry like ours.

We take risk management very seriously.

So how we manage our plants how we manage
our interface impact on local communities

our compliance with laws we
have the same rules whether

we're operating a plant in southern and in
California whether operating the plant and

Lucy in China doesn't matter same rules.

So for us we often find ourselves
sometimes at a bit of a disadvantage

versus local competitors.

OK So we have to be that much more
efficient at how we do things and

often it's because we have
better technology and

we have better scale in terms of that
we can bring ready to market tested.

Because again building these plants
are fairly high tech type thing.

So a lot of it is the fact
that we can operate and

make and in the end make it more
efficient for the customer.

But at the end of market the sites.

People aren't and
particularly in an emerging market.

They're not going to buy from you because
you have a nice sustainability report.

Now it's all about money.

Yes.

Also that you now conserve sustainability
as part of your capital allocation process

and I guess my question is that we
think about capital allocation to.

Look at allocating capital projects
at the highest economic returns.

Just wondering if.

In your business.

Do you you accept lower economic
returns if there is a hostile state

ability to act or.

No we don't we have the same
hurdle rates for every project.

Well I shouldn't say we don't give a lower
hurdle rate we do sometimes depending on

where we are in the world.

Well have a different hurdle
rate sometimes because of risk.

But what we're doing to whatever
managing this is where building

this into two areas one.

We're taking account.

Take trying to take into
account uncertainties.

Of future costs or future revenue streams
and build that into the economic model.

So we try to build in

what's the likelihood probability
of say future carbon costs.

OK Or a future revenue stream increase
because of greater market demand

in the future and you build those then
using you know a probability probabilistic

methodology to build that into how you
look at that is how we would do that.

That enjoyed the presentation and I guess

a follow on question of that when you
look at the return on the investment one.

How is innovation going to be brought into
that I mean similar to sustainability

because they can I guess eventually change
business models drastically and yeah.

How is that while it's interesting
it we looked at this for

the first year as part of
our strategic planning.

And one of the areas we looked
at we looked at really two

primary areas we looked at innovation.

So we looked at where we spending
our innovation dollars and R.

is that for
sustainable future sustainable off.

Trains are just for normal offerings and
what we found in that regard.

Was that and
I can't remember the exact number but

it was it was indeed eighty
to ninety percent range

of our technology investment was
unsustainable opportunities.

However when you went back and
looked at what about today's revenue.

It didn't match.

That cost and questioning well why
are you spending all this money on these

areas that aren't what's
generating your value.

So we did have to go back and
justify that this is

future revenue and we believe this
is where the market's going now.

We didn't set a target.

This is just the way it came out we
didn't say we want eighty ninety percent.

It just came out that way.

So that's one way is that we're
looking at this more from a future.

Perspective The other thing we looked
at we really are trying to build

ownership for sustainability metrics so
I mention the metrics right energy can and

water consumption energy efficiency waste
generation much the way we do in safety

where we we put the responsibility for
achieving the metric in safety

on the business manager so the V.P. of
each business division is responsible for

delivering safety results we
put the onus on those guys for

delivering the sustainability
results that's really neat and so

they had to have plans in their strategic
actually was really in their three

year operating plan on how they were going
to achieve where they need to be in three

years on whether was energy efficiency or
waste.

Generation or whatever the target was.

And we didn't have them.

And so we had some gaps and so
it identified some future work water

a particular was one that we did not have
good plans and so we're kind of back

to the drawing board now trying to figure
out how we're going to get we had a really

we didn't have a good handle on how much
water we were using until this year.

No one was counting it.

Yes Let me a piece I have a story and
then a question.

OK.

Let.

One of the things I find out really
interesting about your company is

the fact that you not only strive to and
Chris.

It creates efficiency and
promote sustainable development.

Within the company but
also outside its borders.

So as the climate negotiator at

the United Nations Framework Convention
on Climate Change.

I was in charge of negotiating
the technology track and

it was really interesting how people up
in countries where basically divided into

There was one who of developing
countries that basically wanted nothing

to do with sustainable development they
did not believe that sustainability and

growth could go hand in hand.

They just wanted to continue to
develop with all the carbon intensity.

Things with that we've seen so far and
then there was another group of countries

who was really interested
in in being able and

having the opportunity to
develop in a sustainable way but

it was basically impossible to have access
to new technologies given the fact that

more efficient technologies
are often more expensive.

Initially you need to incur and in initial
costs that are higher and a little at

the end you'll get more savings and it'll
end up being the best thing for everybody.

So given the fact that communities
local communities governments and

developing countries often have have the.

Have the the need to have access
to better technologies but the.

That X. is basically not there.

There is there isn't enough information
there is no corporate involvement in

government decisions and I was looking
at your sustainability report and

it says that although overdrawn
I was impressed that it

says that your company strives to have
an open dialogue with with with and strong

relationships with local and regional
governments So what would do you think is.

It's a good approach.

Floyd companies like yours that
develop cleaner better technologies so

that poets governments and be able to
basically get to the people who actually

need it and it will clearly here
it's a very good question and

it really depends where you
are in the world here in the U.S.

there are established mechanisms for doing
this so we have a large deal we grants and

that particular that carbon
capture plan I mentioned in Texas

has about two hundred million dollars
deal we money associated with it.

OK so we're spending a lot of money
too but there's also support because

the technology on its own would
not be economically viable.

And on the one we have a technology
called ion transport membrane for

producing oxygen with very
very low energy consumption.

Again today not economically viable but
we do have a deal we grant.

On that as well.

So I think in the U.S. and Western Europe
as well there's pretty good mechanisms for

for government sponsorship
of these sorts of things.

Also interesting in China there is there's
there's a fair degree of partnership and

there is money out there and
partnerships in China undeveloped

NG you get into
Africa India Latin America.

It doesn't really exist.

So really it has to be business working
with business to make it happen.

I think it really there's not really
a mechanism in the governments there often

have other more pressing issues they
feel they need to deal with them with

subsidising sickly and that's probably
some of the experience you've had with

company countries that don't want to
spend money on these things and now so

it's really I think about the industry
to partner with industries.

And we do work with local industries.

You know in those forty
countries that we operate in.

From an emerging perspective that's
primarily China India Brazil Mexico.

And then others like
Southeast Asia Russia and

Southeast Asia would be the primary areas.

We do that but again it's it's it's really
hit and miss it doesn't happen very well.

So it's probably reaffirms
your experience.

It's hard because it has to be
economically justified because if

it were a public company were
owned by shareholders or

shareholders expect a return.

We have a fiduciary responsibility
to give them a return.

So we can't go throwing money around.

Now we do we spend money
we have a foundation and

we do a lot of contributions
to our foundation.

But that's different than spending
hundreds of millions of dollars on

something that you know is an economically
viable that wouldn't be responsible.

JR has the last question yes or no and
I'm great how are you going to speech.

You spoke at length about licensing
of them even sustainable now but

you also mentioned that
you used your company

as a billion dollars in electricity and
natural gas.

Yeah.

With six hundred plants.

I would think that you have
a major major influences.

I guess leverage as far as saying.

Hey we come to a country we only
want electricity made this way

through sustainability and
so what am I to do.

I guess leverage damp amount of power.

OK.
I mean before I get to that question just.

Your comment on just to
reinforce the point.

Everybody.

Particularly if you're an industrial
company you have a footprint.

You have the emissions you have
impact on the environment and

you've seen our numbers in our report we
have a pretty big impact because we do use

a lot of energy and
a key point is being able to really

really measure on a lifecycle
basis from what you do what.

It's upstream of you with your suppliers
what happens downstream of you with

how your product gets used and

at the end of the day is what you're
doing the most environmentally and

most sustainable way of meeting a need
the society has where the need is for

energy whether the need is for
transportation or for steel or whatever.

Specifically to your point.

It kind of goes back to
the question we had here about

investing in technology
said may not be viable.

No we do not do that.

OK we're out there we're
buying generally off the grid.

Like everybody else's We do not.

And again we buy a lot of power.

I don't think there's enough power in
the US today from sustainable sources to

give us the power we need.

So today I mean it's not really.

And then again it's not really what would
be in the economic best interest of our

shareholders.

We are a public company.

We are in business and our responsibility.

Certainly we have a responsibility to
society to be responsible company to

the governments to obey the laws but
we also have a responsibility to

our shareholders to give them a good
return on their investments and

if we don't they're going to take
their investment someplace else and

our stock price is going to go down and
we're going to have some pretty happy

unhappy investors and
you may even have lawsuits on your hands.

So we're in business to give
our investors a good return and

that that's and
I say unashamedly that you know business.

You should make a profit and that's
what our job is is to make a profit for

your shareholders in a responsible.

And a responsible way.

Thank you thank you.