Webinar Open and Instructions Dean Landeche Vice President of Marketing

Emerson Retail Solutions Welcomes You

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EmersonClimate.com/RetailSolutions

What the Lawyers Advise Us to Say

DISCLAIMER This presentation is intended to highlight changing developments in the law and industry topics. The law is frequently evolving and information and publications in this presentation may not reflect the latest changes in the law or legal interpretations. The statements and information provided in this presentation should not be construed as legal advice or legal opinion regarding any specific facts or circumstances, but is intended for general informational purposes only. The views and statements expressed during this presentation are the personal opinions of the presenter and do not those of Emerson Climate Technologies, Inc. or its affiliated companies. You should consult an attorney about your situation and specific facts and you should not act on any of the information in this presentation as the information may not be applicable to your situation. Although all statements and information contained herein are believed to be accurate and reliable, they are presented without warranty of any kind. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such use is free of patent infringement and are not recommendations to infringe on any patents. This presentation may not be copied or redistributed without the express written consent of Emerson Climate Technologies, Inc. 3

Our Speakers Today

• Rajan Rajendran, Vice President – System Innovation Center and Sustainability,

Emerson – As vice president — system center innovation and sustainability at Emerson Climate Technologies,

Dr. Rajan Rajendran is responsible for technical support to OEMs and end users for the company’s refrigeration business.

• Michael Britt, Vice President – Energy Innovation Center, Southern Company

– Located in Atlanta’s Technology Square, the Southern Company Energy Innovation Center focuses on developing and commercializing products and services that benefit customers as Southern Company extends its long-standing commitment to inventing the future of clean, safe, reliable and affordable energy.

• Marc Sanchez, FDA and USDA regulatory attorney; adjunct professor and textbook

author, Contract In-House Counsel and Consultants, LLC – Marc Sanchez represents FDA-regulated companies in the food, dietary supplement, beverage,

cosmetic, medical device and drug industries.

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What’s Next in Refrigerants, Energy Management and Food Safety Regulation? May 10, 2016

Status of Refrigerant Changes Impacting the HVACR Industry Rajan Rajendran Vice President – Systems Innovation and Sustainability Emerson Climate Technologies

North American Proposal for HFC Phase-down

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Canada, U.S. and Mexico Proposed This Several Years Ago; Other Proposals Are Also on Table – India, Micronesia, African Nations, etc.

0%

20%

40%

60%

80%

100%

120%

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

GW

P W

eigh

ted

Cap

(% o

f Bas

elin

e)

Year

Non-A5 countries (U.S., Canada, etc.)

A5 countries (Asia, etc.)

Proposed Amendment to the Montreal Protocol

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NA and European Commitment Is Strong and Article 5 Countries Engaging Well – Hoping for Agreement by End of Year

• 27th meeting of the parties to the Montreal Protocol in Dubai, UAE (Nov. 1–5, 2015) – Agreement reached to work on an amendment that would phase down HFCs – Negotiations underway on details – Best guess is target ~20% range achieved over a number of years and steps

• Article 5 (developing) and high ambient countries could get different schedule and limits – Currently phasing out of HCFC-22 and asked to phase down HFCs … and their economies are growing – Alternative refrigerants for high ambient conditions are not yet fully understood

• Three meetings are scheduled for this year – 4–8 April, 18–23 July, 10–14 Oct. – Is final deal likely in last meeting?

EPA’s Final Rule Phase-Out Candidates*, Likely Alternatives* and Dates

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Final Rule Published on July 20, 2015

* Refer to Tables 4, 5 and 6 of Final Rule for complete details.

Phase-Out Refrigerant

Super-market

New

Super-market Retrofit

Remote Cond. Unit

New

Remote Cond. Unit

Retrofit

Stand-Alone

MT <2,200 BTU/hr. and not contain flooded

evap. New

MT ≥2,200 BTU/hr. with or without flooded evap.

New

LT New

LT and MT Retrofit

R-404A/507A Jan. 1, 2017

July 20, 2016

Jan. 1, 2018

July 20, 2016 Jan. 1, 2019 Jan. 1, 2020 Jan. 1,

2020 July 20,

2016

R-410A OK - OK - Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2020 -

R-407A/C/F OK OK OK OK Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2020 OK

HFC-134a OK OK OK OK Jan. 1, 2019 Jan. 1, 2020 OK OK

Reference: Federal Register / Vol. 80, No. 138 / Monday, July 20, 2015 / Rules and Regulations, 42870-42959

• Foam, motor vehicle AC, also affected by final rule (see reference for all details) • Stationary HVAC and transport refrigeration not impacted by the July 20, 2015 final rule

U.S. EPA: Additional Change of Status for Refrigerants Proposed March 29, 2016

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For Details, Go to: https://www.gpo.gov/fdsys/pkg/FR-2016-04-18/pdf/2016-08163.pdf

End Use Substitutes Effective Date Commercial ice machines (new) Propane 30 days after publication of final rule Very low temp refrig. eqpt. (new) Propane 30 days after publication of final rule Medium-duty passenger vehicles, heavy-duty pickup trucks, etc.

HFO-1234yf 30 days after publication of final rule

Proposed acceptable alternatives with use conditions

End Use Substitutes Effective Date Residential and light commercial AC and heat pumps – unitary split AC systems and heat pumps (retrofit)

All ASHRAE Flammability Class 3 refrigerants

30 days after publication of final rule

Proposed unacceptable alternatives

U.S. EPA: Additional Change of Status for Refrigerants Proposed March 29, 2016

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For Details, Go to: https://www.gpo.gov/fdsys/pkg/FR-2016-04-18/pdf/2016-08163.pdf

End Use Substitutes Effective Date

1. Centrifugal chillers (new) 2. Positive displacement chillers (new)

HFC-134a, R-407C, R-410A (plus others…)

Unacceptable, except as otherwise allowed under a narrow use limit, as of Jan. 1, 2024

Cold storage warehouses (new) R-404A, R-407A, R-507A (plus others…)

Unacceptable, as of Jan. 1, 2023

Retail food refrigeration – refrigerated food processing and dispensing eqpt. (new)

R-404A, R-407A, R-507A (plus others…)

Unacceptable, as of Jan. 1, 2021

Household refrigerators and freezers (new) HFC-134a (plus others…) Unacceptable, as of Jan. 1, 2021

Proposed change of listing status

Environment Canada (EC) Proposal

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Medium-temperature, Stand-alone and All Central Systems Might Find It Challenging to Meet Requirements

• March 23, 2016: EC issued a consultation document on proposed regulatory measures on HFCs*

*Documents distributed in EC communication with stakeholders; contact HRAI (Canada) or AHRI (USA) for copies

Application GWP Limit and Year (Jan. 1, 20XX)

Ref. – Stand-alone MT Max 650 GWP; Jan. 1, 2020

Ref. – Stand-alone LT Max 1500 GWP; Jan. 1, 2020

Ref. – Central systems (racks, both MT/LT) Max 1500 GWP; Jan. 1, 2020

Foams Max 150 GWP, Jan. 1, 2021

AC – Chillers Max 700 GWP; Jan. 1, 2025

Domestic Ref. Max 150 GWP; Jan. 1, 2025

Mobile Ref. Max 2200 GWP; Jan. 1, 2025

• Phase-down (NAP) option also proposed (2019 — 90%; 2024 — 65%; 2030 — 30%; 2036 — 15%; baseline 2011–2013)

• Comment period ended April 29; final rule expected later this year or early in 2017

Current State of Refrigerant Options Low-GWP Alternatives Are Flammable or High-Pressure

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Watch: EPA SNAP, AHRI’s A2L Research, Standards and Code Committees, Equipment Manufacturers’ New Product Launches

R-410A Like

Capacity

R-404A and R-407/22 Like

R-134a Like

GWP Level

400–675

< 1,500

~600

~300

HFO 1234yf HFO 1234ze ARM-42

R-410A

R-22 R-407A R-407C R-407F, R-452A = XP44 ARM-35

0 500 1,000 1,500 2,000

Pressure or

R-32/HFC/HFO Blends

R-32/HFO Blends

R134a

CO2

R-404A R-507A

DR2, HFO 1233zd, ARC 1

R-290

NH3

A1 – Non-Flammable A2L – Mildly Flammable

A3 – Flammable B2L – Toxic, Mildly Flam.

R-123 Like (V. Low Pr.)

(3,922)

R-32

R-448A = N40 R-449A = DR33 R-449B = ARM-32 N20

R-513A = XP10 R-450A = N13z

R-444B = L20 L40, DR7 ARM-20b

R-455A = L40x (HDR110) DR3 ARM-20a

R-447B = L41z; R-452B = XL55 L41y, ARM-71a

<150

Qualitative – Not to Scale

R-515A

Energy Trends Michael Britt Vice President – Energy Innovation Center Southern Company

U.S. Energy Productivity and Consumption

Confidential and Proprietary

Source: U.S. Energy Information Administration

70

80

90

100

110

120

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

United States, Total Energy Consumption (Index 2014 = 100)

Natural Gas Electricity

70

80

90

100

110

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

United States, Commercial Energy Consumption (Index 2014 = 100)

Natural Gas Electricity

Total Energy Productivity

02468

101214161820

1949

1953

1957

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

2009

2013

2017

2021

2025

2029

2033

2037

Thou

sand

BTU

/Dol

lar o

f G

DP

Rea

l$

U.S. Energy — Commercial Use per Customer

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Confidential and Proprietary

Source: U.S. Energy Information Administration

60

70

80

90

100

110

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

United States, Use per Customer — Commercial Sector (Index 2014 = 100)

Natural Gas Electricity

Impact of Demand and Regulations

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Confidential and Proprietary

• With the focus on climate change, new rules and requirements are likely to be imposed on all energy production (all fuels) and customer usage, which may cause significant cost increases to all.

• Although natural gas has less carbon emissions than other fuels, the combination of increased demand and new rules which are likely to be imposed may drive natural gas costs much higher than today’s pricing (impacting costs to all customers).

• With the expectation that environmental permits will reflect customer carbon footprint, end users may have to adjust their energy usage and processes to limit any on-site emissions.

Regulation — Impacts by Market

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• There are basically two types of markets: – Bid markets (RTO/ISO) — Focused on the value to all market participants (FERC controlled) – Vertically integrated markets — Focused on the customer while balancing the needs of other

participants (state controlled)

• The value proposition to the customer could be significantly different in each market – Bid markets allow customers to bid their demand response (DSM) into the market – State-controlled, vertically integrated markets provide customers greater input into EE/DSM program

offerings and more protection with the ability to smooth market shifts

Confidential and Proprietary

Evolving Markets

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• NY REV — turning the distribution system into an independent market, similar to the ISO/RTO market

• California — similar to NY REV, but being developed piecemeal through various commission dockets

• Illinois — state efforts to force all parties to do grid modernization and utilize strategic microgrids

Confidential and Proprietary

FSMA’s Impact on Retailers, Grocery and Convenience Stores Marc C. Sanchez, Esq. FDA Attorney Contract In-House Counsel and Consultants, LLC fdaatty.com

What Is FSMA?

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• First substantive change since 1938 to the food safety laws and regulations

How FSMA Functions

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• Self-enforcement model

• Seven core rules

• New FDA authority

• Integration of supply chain

• Liability of supply chain

FSMA Core Rules

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FSMA

Produce Safety Foreign Supplier Verification

Human Preventive Controls

Animal Preventive Controls

Intentional Adulteration

Sanitary Transportation

Third Party Accreditation

New FDA Powers Under FSMA

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• Mandatory recalls

• Threshold for seizures

• Suspension of food facility registration

Reportable Food Registry — Posting Recalls

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How is a consumer notified?

Conspicuous

Integration of Supply Chain

FDA Database

Retailers, the notifications link

Questions?

DISCLAIMER This presentation is intended to highlight changing developments in the law and industry topics. The law is frequently evolving and information and publications in this presentation may not reflect the latest changes in the law or legal interpretations. The statements and information provided in this presentation should not be construed as legal advice or legal opinion regarding any specific facts or circumstances, but is intended for general informational purposes only. You should consult an attorney about your situation and specific facts and you should not act on any of the information in this presentation as the information may not be applicable to your situation. Although all statements and information contained herein are believed to be accurate and reliable, they are presented without warranty of any kind. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such use is free of patent infringement and are not recommendations to infringe on any patents. © 2016 Emerson Climate Technologies, Inc. All rights reserved. This presentation may not be copied or redistributed without the express written consent of Emerson Climate Technologies, Inc.

Thank You!

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