Financial Executives Institute Greenhouse Gas Emissions and Canadian

Financial Executives Institute Greenhouse Gas Emissions and Canadian Environmental Policy P. A. Smith Imperial Oil Limited Senior Vice President Finance and Administration January 8, 2008 This presentation includes forward-looking statements. Actual future conditions (including economic conditions, energy demand, and energy supply) could differ materially due to changes in technology, the development of new supply sources, political events, demographic changes, and other factors discussed herein (and in Item 1 of Exxon. Mobil’s latest report on Form 10 -K). This material is not to be reproduced without the permission of Exxon Mobil Corporation.

World is Not Short of Hydrocarbons TBOE Recoverable Resources Remaining Produced Source: Exxon. Mobil • Hydrocarbon resource ~12 TBOE • Produced 3 TBOE

Global Economics and Energy GDP Energy Intensity Energy Demand Trillion 2005$ BOE/2005$K GDP MBDOE Average Growth / Yr. 1980 – 2005 – 2030 2. 9% 3. 0% -1. 6% 1. 8% 1. 3%

World Energy Demand By Fuel By Sector - 2030 Average Growth / Yr. 2005 – 2030 MBDOE 1. 3% Other Industry 1. 7% 0. 9% Chemicals 1. 7% Heavy Manufacturing Other Coal Gas Oil Res / Comm Power Generation Transportation 1. 2% ~ 324 MBDOE

Electricity Demand Linked to GDP 1000 k. W hours per capita 1980 to 2005 OECD U. S. South Korea China Non-OECD 0 GDP per capita (2005$)

Power Generation Demand OECD Non-OECD MBDOE Average Growth / Yr. 2005 - 2030 0. 9% Renewables 2. 2% MBDOE 2. 2% 3. 5% 4. 2% 1. 5% 1. 8% Nuclear -0. 4% Coal Gas Oil 2. 3% 1. 9% -2. 8% 0. 0%

Light Duty Vehicle Penetration Linked to GDP Vehicles per 1000 people 1990 to 2005 OECD South Korea Non-OECD China GDP per capita (2005$) U. S.

Global Transportation Demand OECD MBDOE Average Growth / Yr. 2005 - 2030 0. 6% Non-OECD MBDOE 3. 1% 1. 2% Other Transport 1. 7% 3. 6% Heavy Duty Vehicles -0. 5% 2. 8% Light Duty Vehicles 3. 4%

Global Industrial Demand OECD Non-OECD MBDOE Average Growth / Yr. 2005 - 2030 0. 0% MBDOE 1. 9% 0. 8% 3. 4% Other 0. 1% Chemicals 0. 4% Heavy Manufacturing -0. 4% 1. 9%

Global Residential / Commercial Demand OECD MBDOE Average Growth / Yr. 2005 - 2030 0. 1% Non-OECD MBDOE 1. 0% 1. 8% 0. 9% Commercial Residential 0. 4% 0. 0%

World Energy Demand – Primary Energy Supplies Primary Energy MBDOE Average Growth / Yr. 2005 - 2030 Renewables Wind, Solar & Biofuels MBDOE 1. 3% 1. 5% Renewables 1. 5% Wind, Solar & 8. 7% Biofuels 2. 0% 0. 9% Nuclear 1. 7% 2. 0% Hydro/Geo Solar 9. 9% 0. 7% Coal 10. 5% Wind Gas 1. 2% Oil 8. 7% Biomass/Other Biofuels 7. 6%

World Energy & CO 2 Emissions OECD MBDOE Non-OECD Average Growth / Yr. 2005 – 2030 0. 5% Other Coal Gas MBDOE 2. 0% Other Coal Demand by Fuel Gas Oil Billion Tonnes CO 2 0. 1% 1. 9% Energy Related Coal Gas Oil CO 2 Emissions Coal Gas Oil

Global CO 2 Emissions Energy Related CO 2 Emissions Billion Tonnes Average Growth / Yr. 2005 – 2030 0. 5% Sensitivities • Double biofuels growth through cellulosic ethanol • Double rate of improvement of new car efficiency • Replace ½ of coal growth with nuclear / CCS • Retire coal plants at 40 years and replace with nuclear / CCS

Greenhouse Gas Policy – Implications for Canada • Any meaningful action must be a global action • A risk based approach is required given potential costs and uncertainty • Meaningful change requires breakthrough technology • Policy should ensure any cost of carbon is uniform across the economy and predictable

Alberta’s Enacted GHG Legislation • A challenging GHG regime on industry by world standards • Immediate 12 % reduction in emissions intensity from 2003 -05 levels is not likely for many to achieve physically • However, use of intensity targets is the right approach – allows economic growth • The Alberta technology fund, with contributions fixed at $15 a tonne provides cost certainty AND support to technology development – the only realistic long term solution

Canadian Federal proposed GHG regulation • Even more stringent than Alberta’s: • 18% intensity reduction required in 4 years and 2% each subsequent year • Restricted technology fund that phases out quickly • Intensity based targets, like Alberta’s, remain the right approach • Restricted technology fund provides no “safety valve” on the price of CO 2 credits or needed market liquidity; open-ended access for industry to provincial funds needed for effective compliance

A more effective approach to climate change risk • What would an effective climate change policy do? • Long term objective: reduce risks of serious impacts at reasonable costs to society • Near term: • Promote energy efficiency • Promote deployment of existing low-GHG technologies • Support R&D of new low-GHG technologies • What are we doing in Imperial? • Energy efficiency: 16% improvement in refinery energy efficiency since 1994; associated gas flaring reduced 42% since 2002 • Technology development: • Helping support Stanford University $250 M GCEP Program • $10 M to U of Alberta Imperial Oil Centre for oil sands Innovation