Dr. Theresa Kotanchek

Vice President for SustainableTechnologies and Innovation Sourcing

The Dow Chemical Company

November 2010

Delivering a SustainableFuture Through Innovation

Breakthroughs toWorld Challenges

Sustainability is about our relationship with the world & how wecontribute to solving its challenges.

Energy Health&

Nutrition

Transportation&

Infrastructure

WaterClimateChange

The World Needs EnergyThe World Needs Energy--20102010

The chemical industry uses 38 EJ (8% of world consumption)Adapted from EIA Energy Outlook May 2009, and IEA: Chemical & Petrochemical Sector 2009

Primary EnergyPrimary Energy536 Exajoules (EJ)536 Exajoules (EJ)

Coal 148 EJ

Natural Gas 125 EJ

Nuclear 31 EJ

Renewables 52 EJ

Petroleum 180 EJ

Electricity Losses 154 EJ

Residential 56 EJ

Commercial &Industrial 225 EJ

Transportation 101 EJ

The Fate of CarbonThe Fate of Carbon

Asphalt,Lubes,Waxes= 4%

Fuel Uses= 94%

ChemicalFeedstocks= 2%

Oil Refining Chemical Production

NaturalGas,

Naphtha,Fuel Oil,Coal &

Biomass

38 EJ

Fuel Uses= 49%

Contained inProducts= 51%

EIA 2004 Refining Data and IEA Energy Technology Transitions for Industry 2009.

Oil180 EJ

Chemical IndustryChemical Industry

1. Move to alternative FEEDSTOCKS that arereadily available and require less intensiveprocessing

2. Develop alternative POWER SOURCES forindustry & consumers

3. Develop energy SAVING products so thatfossil fuel use is decreased

How to Lower Carbon Footprint

DowDow’’s 2010 Investments ins 2010 Investments inEnergy TechnologiesEnergy Technologies

(non risk adjusted)

(risk adjusted)

~$7.5 B ~$2 B

R&D Investmentin 2010:

>$400 MM

FeedstockSourcesEfficiencyAlternativeSources

AlternativeFeedstock

EnergyEfficiency

Net Present ValueNet Present Value

Alternate Energy OptionsAlternate Energy Options

Ask the Right QuestionsAsk the Right Questions

• What is the material balance?

• What is the energy balance?

• What is the cost?

• Is it sustainable?

• Have we defined proper control volumes?

For a successful technology, reality must take precedenceover public relations, for Nature cannot be fooled.

- Richard Feynman

9

Feedstock Oxidation StatesFeedstock Oxidation States

Energy CostEnergy Cost

USA Middle East Brazil

Nat. gas Ethane EthylenePoly-

ethyleneCoal Crude

GasolineRBOB Biomass Corn

Ethanolwholesale

Electricityall sectors

$/MM BTU $/gal cent/lb cent/lb $/ton $/bbl $/gal $/ton $/Bu $/gal cent/kWh

May 2010 prices and last 2 years price density; Source: Dow.

Sugar Cane to Polyethylene ViabilitySugar Cane to Polyethylene Viability

Bz

Global Environment Brazil

US

US

Bz

Bz

US price

Brazil price

Brazil cost

Bz

Bz

Pro

fita

bil

ity

Pro

fita

bil

ity

February 2010 Prices and last two years price density; Source: Dow.

Potential for Solar EnergyPotential for Solar Energy

Adapted from Mines ParisTech / Armines ©2006

Average Solar Radiation 1990-2004

Solar Capture ProcessSolar Capture Process W/mW/m22 EfficiencyEfficiency

Sugar Cane to Ethanol 0.60 0.30%

Energy Crop - Fermentation 0.70 0.32%

US Corn to Ethanol (gross) 0.32 0.16%

Algenol 4.0 2.0%

Wind Farm 4.0 2.0%

Concentrated Solar 3.2 1.6%

PV cell (10%) 20 10%

Total solar energy on land= 697,000 EJ/year

1300 x world needs!

Issues:Issues:••IntermittencyIntermittency••CostCost

“I’d put my money on the sun and solarenergy. What a source of power! I hopewe don’t have to wait until oil and coalrun out before we tackle that.”

Thomas Edison 1931

Polysilicon(Feedstock)

Ingot Wafer Cell Module System

DW&PS

Ion exchange resin—catalyst for by-product recycle

Perf. Fluids

HTTF for distillationand reductionprocess

Perf. Fluids

Cutting fluid. Nextgeneration productdevelopment

Cleaners

Cleaners—for debris andmetal ion contaminationremoval

Binders

Binder for Al, Agpaste for cellmetallization.

Metallization

Light inducedplating to improvecell performance

Spec Films

Flexible frontsheet,Encapsulant, andbacksheet

Additives

Plastic additives—for backsheetlaminate adhesives

Adhesives

Thermoplastic, UVcurable & liquidencapsulant.

DW&PS

Ultra pure water (DOWEXTM resins, FilmtecTM elements)

Waste water treatment and process (boron, silver removal and recovery)

Perf. Fluids

Concentrated SolarPower thermal fluid

Alternative SourcesCrystalline-Silicon Photovoltaics

Alternative SourcesAlternative SourcesConcentrated Solar PowerConcentrated Solar Power

• Established relationships withimportant system OEMs

• Proven ability to deliver highvolumes to remote locations

• Back integration to key rawmaterials

Generating 400 MW of power in Spain and North AmericaSupplying 250,000 homes with electrical power

Reducing carbon emissions by 800,000 MT annually

DOWTHERM™ AHeat Transfer Fluid

Addressable Market:5,000 MW by 2020

Welcome Dow Board ofDirectors

SolarSolar Solutions

Innovations for TomorrowInnovations for Tomorrow

Green HomeGreen Home

Power your homewith your home

www.dow.com/solar

Dow Participation in Thin Film PVDow Participation in Thin Film PV

Dow Solar System

Overmold

PV

CuInGaSe

Deposition Film/Lamination Flexible Roofing

Transforming PV – The Automotive Analogy

Weight Savings =1.5 lbs per door

Elimination of 50 parts

Dow Solar Solutions:Delivering More Affordable Solar Energy

• Building integrated photovoltaic (BIPV) design combinesroofing protection and power generation in one product

• Reduces installation costs by more than 50% compared toconventional solar modules

• Proprietary electrical connections eliminate tedious and costlyon-roof wiring

High Efficiency & Sustainability

• 1 micron of CIGS (copper indiumgallium diselenide) PV semiconductormaterial -- 1/100 of the material of Sisolar cells

• Consumes 1/3 of the energy toproduce

• Delivers up to 20% conversionefficiency

POWERHOUSEPOWERHOUSETMTM Solar ShingleSolar ShingleENERGY

Market Opportunity:

$5 B (by 2015)

Dow’s Share:

>$1 B of potentialrevenue

Launch:

2011Named one of TIME Magazine’s

“50 Best Inventions of 2009”

Named one of TIME Magazine’s“50 Best Inventions of 2009”

Energy EfficiencyEnergy Efficiency –– The Net Zero HomeThe Net Zero HomePOWERHOUSE™ Solar Shingles

STYROFOAM™ Spray Polyurethane

GREAT STUFF™ Fireblock

Silicon Solar Array

THERMAX™ Wall InsulationSTYROFOAM™ Tongue & Groove

STYROFOAM™ SIS

WEATHERMATE™ SILL SEAL

STYROFOAM™ PERIMATE™ FROTH-PAK™ FoamInsulation & Sealant

• Water BarrierFacerPrevents moistureand air intrusion

• PolyisocyanurateInsulationProvides higherR/inch (vs. XPS)

• StructuralReinforced Layer>80% recycled content;hot-melt silicone-basedadhesive; reliabilitytesting exceeds coderequirements

• Primer-treatedXPS Insulation

• MechanicalFastener

• Basecoat Mortarwith MeshEmbedded

• Adhesive MortarCement-based latexpolymer withMETHOCEL™modified waterproofingmortar (IP filed)

• THERMAX™ (ci)InsulationEliminates thermalbridges due to steel-gypsum

• Flashing TapeAir barrier and noveldrainage plane

• PolyurethaneSpray FoamInsulationHigh R-value; keepscavity warm and dryto reduce potentialfor mold growth

ENERGY

Market Opportunity:

$2 B

Dow’s Share:

$200 MM (by 2014)

Launch:

2009

STYROFOAM SISSTYROFOAM SIS™™ Structural Insulation SheathingStructural Insulation Sheathing

External Insulation Finishing SystemsExternal Insulation Finishing Systems

THERMAXTHERMAX™™ Wall SystemWall System

Dow Building Solutions:Next Generation Wall Systems

Dow Coating Materials:Formaldehyde Abatement

TRANSPORTATION& INFRASTRUCTURE

Asia MarketAt Maturity:

$80 MM

Dow’s Share:

>80%

Launch:

2009

• Formaldehyde confirmed as acarcinogen

• Carpets, furniture, textiles,construction glues haveformaldehyde releasing overperiods of 3-15 years

• Formaldehyde awareness level inChina is very high

• New-to-world, formaldehydeabatement technology removesformaldehyde from the indoor air

• Developed by regional R&D teambased on the local market andcustomer needs

• Identified leading architectural paintmanufacturer as a strategic partner

• Convinced customers of innovationneeds through visual andquantitative testing results

• Cooperated with customer ontechnical standards development

Breakthrough Formaldehyde Abatement Technologyfor Interior CoatingsBreakthrough Formaldehyde Abatement Technologyfor Interior Coatings

• Formaldehyde-abatement paint hasbecome a market trend in China

Market Demands Innovative Technology

Cooperation With Key Partner Market Penetration

Accelerating Breakthroughs inUltra Low-VOC Coatings

Morphology Control

#1 in Emulsion Polymers#1 in Emulsion Polymers

#1 in High Throughput R&D#1 in High Throughput R&D

New Binders & Additives Solve Key Unmet Needs:

Scrub resistance

Freez

eThaw

Stabi

lity

We

tA

dh

esi

on

Scrub resistance

Freez

eThaw

Stabi

lity

We

tA

dh

esi

on

PotentialNew DowUltra Low

VOC(5g/L)

…with ExceptionalPerformance

- Stain Resistance- Blocking Resistance- Durability- Weatherability- Scrub Resistance

Rapid Innovation...Rapid Innovation...

Current offeringshave good film

formation,but poor hardness

Goodhardness, but

poor filmformation

- OR -

Our innovationsdeliver low-VOC

with no detrimentto performance

...With Exceptional Performance...With Exceptional Performance

Water LeadershipWater Leadership

Dow Water & Process Solutions:Ensure Clean, Safe Water

• #1 position in reverseosmosis membranes and ionexchange resins

• Broadest portfolio of high-performance enabling waterpurification components

• Innovative technologies toreduce the cost ofdesalination and reuse by35% by 2015

• FILMTEC™ reverse osmosismembranes are valued bythe industry for their reducedenergy requirement and lowcost of ownership

By 2015, 5 Billion People Will Live in Areas of Significant Water StressBy 2015, 5 Billion People Will Live in Areas of Significant Water Stress

Market Opportunity:

>$5 B (today)>$10 B (by 2020)

Dow’s Share:

~$1 B (today)~$3.5 B (by 2020)

Validation &Development

New UF MembraneDevelopment

New RO MembraneDevelopment

New EDI Development

Implementation &Commercialization

High-Rejection Low-Energy RO Membrane

Largest Active AreaUF Membrane

Perchlorate RemovalIER Media

TRANSPORTATION &INFRASTRUCTURE

Launch:

Ongoing

Mining Materials Components Cells Packs Application

CathodeAnode

ElectrolytesSeparator

Alternative SourcesAlternative SourcesEnergy Storage MaterialsEnergy Storage Materials

Systems Thinking is a Competitive AdvantageSystems Thinking is a Competitive Advantage

Unique BuildingUnique BuildingBlocksBlocks

PerformancePerformanceProductsProducts

FormulatedFormulatedProductsProducts

EPOXY 12

Dow Epoxy Systems

Chip Underfill

• Ultra low viscosity• High heat resistance• Hydrocarbon based

Wind Power SolutionsWind Power Solutions

1.E+0

0

1.E+0

1

1.E+0

2

1.E+0

3

1.E+0

4

1.E+0

5

1.E+0

6

Viscosity (mPa.s)

Ten

sile

yie

ldstr

ess

(MP

a) 140

120

100

80

60

40

20

0

NeedsNeeds• Stronger & Lighter• Easier to Produce• Corrosion Protection• Longer Life

Energy EfficiencyEnergy Efficiency –– Dow ProcessesDow Processes

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

1

2

3

4

5

6

7

8

9

Cu

mu

lativ

eS

avin

gs

in$

Billio

ns

>$9 billion savedsince 1994

• Carbon constrained economy exists today

• Companies that can adapt and partner toprovide total solutions will win

• Requires a new paradigm and creativebusiness models

Energy + Carbon = ValueEnergy + Carbon = Value

By 2020, we project at least$10 billion in additional salesdue to products and services thatreduce energy consumption andGHGs

Clean Water

ArchitecturalCoatings

ENERGY

Photovoltaics BuildingSystems

Wind PowerSystems

CONSUMERISM

Electronics

Packaging

HEALTH &NUTRITION

HealthierDiets

Rice

Incipients

TRANSPORTATION &INFRASTRUCTURE

EnergyGrid

Home &Personal Care

Our Innovations Are Aligned ToGlobal Megatrends

• Lower device power usage• Photovoltaics and cell efficiency• Sustainable manufacturing

processes

• Rising demand for clean water• “Green” cleaners• Personal care products• Healthier food

• Zero ozone-depleting foamingagent technology

• Lower building energy consumption• CO2 abatement• Building integrated photovoltaics

• High performance water-basedadhesives

• Photovoltaics• Bio-based adhesives• Formaldehyde-free binders

• Solar power & photovoltaics• Wind turbines• Energy efficient vehicles• Emissions treatment

Clean Technology & Sustainability AreCentral to Our Business

Dow Electronic MaterialsDow Electronic Materials

Dow Specialty MaterialsDow Specialty Materials Dow Building & ConstructionDow Building & Construction

Dow Adhesives & Functional PolymersDow Adhesives & Functional PolymersDow Performance MaterialsDow Performance Materials

• Low-VOC coatings• Waterborne coatings• Biodegradability• Smart coatings

Dow Coating MaterialsDow Coating Materials

Latin America Growth DomainsLatin America Growth Domains

SolarEnergy Storage& Distribution

AlternativeFeedstocksAgriculture

Lightweighting

Water

Wind