(Ferrovial) Climate Strategy

Ferrovial's exposure to climate regulation covers directly all of its businesses. Despite the failure in the EU´s expectations, we think the Copenhagen Accord will significantly accelerate investment in "climate sectors”. The agreement has been signed by 106 countries that generate more than 81% of global emissions, including all those where Ferrovial operates. The agreement limits the global temperature increase to 2 ° C, and with this aim forces developed countries to make a significant investment. In the next 2-3 years we assess as highly probable that global agreement related to the reduction of emissions will be legally enforced.

Transportation sectors would be probably affected by this new regulatory framework and market environment, due to the predictable regulation on climate change and energy efficiency. In aviation, for example, demand for air travel is increasing - driven by globalization and the rise of emerging economies. As owners of the UK’s only hub airport, our interest is to enhance the national and local economic benefits that Heathrow provides while minimizing our impact on local communities and the environment. We believe that the growth of aviation and avoiding dangerous climate change is not a zero sum game. Both can be achieved through technological advances, low carbon fuels and more efficient operations supported by aviation’s participation in open emissions trading, initially at the European level and then globally. Technological advancements will make this possible through the development of more efficient aircraft, low carbon fuels and more efficient operations. Modal shift and other measures will also have a role to play.

The direct carbon dioxide emissions are managed through BAA´s climate change strategy which focuses on a major investment in energy efficient technology and sourcing more renewable energy as well as demand management. In terms of aviation’s climate impacts, our strategy is to work closely with key stakeholders in Europe to build support for incorporating aviation into the EU Emissions Trading Scheme. Moreover, the information gathered suggests a significant regulatory change on a global scale in upcoming years, with the year 2009 considered as a turning point. The volume of investments linked to the "climate" sectors has already begun to soar and is expected to increase even more in 2-3 years. We think that the anticipation can be a key in accessing new business opportunities globally. In fact, according to the criteria of HSBC, 9% of Ferrovial Group´s revenues are derived from the "climate" sectors.

Other identified growth areas are for example:

• Renewable Energy.
• Energy efficiency in buildings.
• "Low carbon" Mobility - modes of transport with low energy intensity (i.e. railroad) will gain a market share for middle-distances trips.
• Air travel will maintain or increase its market share for a long distance (international importance of the hub), but will search for greater energy efficiency solutions in order to reduce their emissions.
• Access to drinking water and reduction of deforestation. The UN-REDD initiative has been strengthened by the Copenhagen agreement and will be one of the sectors where the significant amounts of provided funds will be invested (mainly in developing countries).

Based on these trends, Ferrovial has started during 2010 a very ambitious project focused on our Strategic Positioning by 2015-2020, under a likely "post-Copenhagen" market environment. This project includes a detailed analysis on climate policies, available support programs and other government incentives (under the "umbrella" of the "green stimulus" initiatives), with the aim of (a) anticipating relevant regulatory risks, (b) positioning Ferrovial to take advantage about new business opportunities, and (c) committing with public targets on reducing GHG emissions in medium and long term. “Ferrovial 2015” project has started in 2010 and will generate an output for the Ferrovial’s strategic meeting to be celebrated in the first quarter of 2011.