Chevron

The global demand for energy will increase in the coming decades, and this rising demand presents significant opportunities for our industry. As demand increases, however, the complexities of global climate change also pose serious questions for the energy industry and the broader society. At Chevron, we are working to reduce greenhouse gas (GHG) emissions and expand our energy supply portfolio to meet the demands of customers for affordable, reliable and lowerimpact supplies of energy.

Our multifaceted response to climate change involves seeking ways to reduce GHGs from the use of fossil fuels, expanding the use of alternative fuels and renewables, and improving energy efficiency.
Climate Change and Chevron's Response

The Intergovernmental Panel on Climate Change states in its Fourth Assessment Report that most of the observed increase in global average temperatures since the mid-20th century is very likely due to manmade GHGs. Chevron is working to be part of the solution to the energy and climate challenge facing the world. Near-term mitigation actions, development of advanced energy technologies for the long term, and adaptation to the potential impacts of climate change are needed to meet the challenge.
Our Action Plan on Climate Change

Now in its seventh year of implementation, Chevron's Action Plan on Climate Change continues to guide our activities, including emissions reduction, efficiency improvements, research investments, business opportunities and advocacy positions. While we continued to grow our business, our total GHG emissions remained relatively flat due to the efforts that follow.

In 2008, our total emissions were 59.6 million metric tons, which is better than our goal of 62.5 million metric tons.1 Our preliminary goal for 2009 is 60.5 million metric tons, slightly higher than 2008's actual emissions. This goal accounts for emissions growth from new major capital projects and emissions reductions from anticipated declining production from maturing fields, continued energy efficiency in our operations, and continued reduction in flaring and venting. We estimate that combustion of our products resulted in emissions of approximately 382 million metric tons of carbon dioxide in 20082 — about 5 percent less than the 404 million metric tons in 2007. When compared with the International Energy Agency's Key World Energy Statistics (2008 edition), these emissions represent approximately 1.4 percent of global CO2 emissions from fossil fuels. Our GHG emissions intensity in 2008 was approximately 37 metric tons of CO2 equivalent per 1,000 barrels of net oil-equivalent production from our upstream operations and 36 metric tons of CO2 equivalent per 1,000 barrels of crude oil that was input into our refineries.
Reducing Emissions
Flaring

Routine flaring and venting of the natural gas associated with crude oil extraction are a significant source of our total corporate GHG emissions. We remain committed in our efforts to reduce routine flaring and venting in our operations. Since 2003, we have reduced emissions from flaring and venting by about 15 percent on an equity basis, and we continue to work aggressively to reduce routine flaring and venting in our operations wherever technically and commercially feasible.

Chevron's flaring reduction standard is aligned with the World Bank–led Global Gas Flaring Reduction voluntary initiative, a public-private partnership that is active in several developing countries where we operate. While we have made significant progress in reducing routine flaring and venting from our operations, we face many challenges, including local security, approval delays, partner funding, competing government investment priorities, materials availability and the lack of infrastructure. In these limited circumstances, flaring is currently the safest and most feasible way to manage the associated gas in the near term.

We are actively pursuing projects to further address this challenging problem in Angola, Kazakhstan and Nigeria. These long-term projects include major processing capacity to convert gas into liquid fuel that can be more readily used in the marketplace, and the commissioning of a new pipeline that will carry natural gas from the Niger Delta to Ghana and other markets. Construction is completed on the pipeline and testing is under way before the line is put into service.

Reinjection is one option to reduce flaring when there are suitable reservoir conditions and when the comparatively large financial investment is justified by the technical feasibility and expected life of the project or the expected duration of the need for injection. An example of a feasible and successful reinjection project is at the Agbami deepwater field in Nigeria. Other projects, for example, those that have a strong likelihood of near-term development of gas markets, are not generally candidates for reinjection.
Carbon Sequestration

Chevron holds large natural gas reserves in Australia and is making major investments to reduce GHG emissions. Our Gorgon project, located more than 81 miles (130 km) off the northwest coast, will produce liquefied natural gas, a lower-carbon fossil fuel. The project will include large-scale reinjection and storage of carbon dioxide. Gorgon represents the world's first commercial-scale GHG storage project to undergo an environmental impact assessment including public review and comment. In addition, Chevron and its joint-venture partners — ExxonMobil and Shell — committed to public disclosure of monitoring data from the injection project to assist in the further development of sequestration technology.
Improving Efficiency

Improving our energy efficiency lowers the life-cycle emissions of our products. In 2008, we updated our energy efficiency evaluation process to design new capital projects to optimize energy use. This allows cost-effective conservation measures to be part of the initial design. We incorporate the cost of carbon emissions in our decision-making process for capital projects. In 2008, we initiated a major effort to upgrade our GHG evaluation tools and methodology, which will improve our ability to assess the potential impact of the GHG emissions from our proposed activities and to identify the most cost-effective ways to address those emissions.

As of 2008, Chevron reduced the total energy consumption required to complete all of its business functions by 28 percent compared with the energy the company would have consumed in 1992 to complete the same business functions. In 2008, the cost of energy to the company was approximately $7.6 billion. For our company's operated assets, the total energy consumption in 2008 was approximately 914 trillion Btu. Because fuel combustion is the largest source of GHG emissions from our operations, improving our overall energy efficiency represents a corresponding reduction in our carbon emissions. We are increasingly attentive to opportunities to save on energy costs — as seen in the projects that follow.

As part of the upgrades planned for our refineries in El Segundo and Richmond, California, we proposed adding to the existing cogeneration facilities at both locations. Onsite cogeneration is a highly efficient technology that replaces the need for generating steam in a boiler and for purchasing electricity offsite.

The Richmond Refinery is the most energy efficient of all Chevron's operated refineries, and the workforce is always looking for ways to make the refinery more efficient. Approximately one-fourth of the refinery's annual operating costs represent fuel costs associated with producing steam throughout the facility. With strong support from senior management at the site, a coordinated team of operations, maintenance staff and facility engineers are working together to look for ways to optimize overall steam use and minimize venting waste steam. Compared with 2007, Richmond reduced its annual use of fired steam by about 17 percent, representing significant cost savings and the avoidance of an estimated 90,000 metric tons of GHG emissions.

Chevron Energy Solutions Co. assisted our Richmond, California, refinery in installing 55 kilowatts of solar power generation to help meet the facility's electricity needs with clean, renewable energy.

We continued to improve fuel efficiency in our shipping fleet by instituting a propeller painting and polishing initiative on our oil tankers. By reducing resistance across the propeller blades, we are able to decrease the amount of oil required to power each tanker by approximately 24 barrels per operating day.

We joined with the other members of the European Petroleum Industry Association to develop and launch an industrywide driver awareness campaign to promote more fuel-efficient driving habits among Europe's motorists.

Through a variety of employee-based programs, such as supporting vanpooling and public transit subsidies in some locations, we encourage our workforce to reduce miles traveled. And our recently launched "I Will" campaign, visible to the public, deals with energy conservation and efficiency, sharing facts about our corporate efforts and highlighting energy saving measures of individuals, such as vanpooling and unplugging appliances not in use.
Pursuing Business Opportunities and Investing in Research, Development and Technology

Chevron invests in research partnerships to develop alternative fuels whose life-cycle production results in less CO2 than do conventional liquid fuels per unit of energy.

Chevron Technology Ventures is working on a number of research projects and partnerships to develop low-carbon fuel from biomass.

Through our partnerships with universities, such as the Massachusetts Institute of Technology and the University of California at Davis, we are supporting innovative research in the environmental and economic impacts of climate change as well as in energy efficiency and other strategies to help reduce overall GHG emissions.

Chevron participates in joint-industry projects to enable the development and safe, widespread deployment of significantly lower-cost carbon capture and storage technologies. These projects draw on the best talent offered by the participating companies, universities, government and private research organizations to investigate a broad range of potential technologies in order to commercialize those that offer the most benefit to the participants. Chevron actively participates in the Cooperative Research Center for Greenhouse Gas Technologies (http://www.co2crc.com.au) and the CO2 Capture Project (http://www.co2captureproject.org). In addition to financial support, Chevron provides industry guidance, technical expertise, and program management. Results from these research efforts are being integrated into Chevron's Gorgon liquefied natural gas project in Australia and may be considered for potential future projects involving CO2 capture and storage.
Supporting Flexible and Economically Sound Policies

Our Seven Principles for Addressing Climate Change summarize the fundamental aspects of achieving a sustainable and economically viable carbon management program. We are actively engaged with governments and nongovernmental organizations in several jurisdictions currently considering climate policies — including in Australia, Canada and the United States (in California and other jurisdictions) — advocating for sound climate policy in line with our Seven Principles.

1. Chevron's net decrease of approximately 0.8 million metric tons of CO2- equivalent emissions from 2007 to 2008 can be attributed primarily to reduced flaring accounting for 1 million metric tons at the Cabinda (Angola) and Nigeria operations. Flare reductions in Nigeria are attributed to the Escravos Gas Plant facility and shutdowns caused by sabotage to pipelines. Continuing energy efficiency improvements also helped to minimize growth in emissions. Additional significant reduction of GHG emissions is attributed to decreased production in the U.S. Gulf of Mexico and California. Chevron Shipping Co. also lowered its emissions. Decreases were offset by emissions from a new deepwater operation in Nigeria; increased GHG emissions from Chevron’s share of the Yeosu Refinery in South Korea, which saw a new heavy oil unit come onstream; increased throughput at Chevron’s Richmond Refinery; and increased production from Chevron’s U.S. midcontinent upstream operations.

Chevron's 2007 emissions have been restated to 60.4 million metric tons of CO2 equivalent from 60.7 million metric tons due to a correction in data primarily from two business units.

Chevron's 2008 GHG emissions data are reported on an equity basis for all businesses in which Chevron has an interest except where noted as follows. The following entities are not currently included in the Chevron corporate GHG inventory: Chevron Phillips Chemical Co., the Caspian Pipeline Consortium, the Azerbaijan International Operating Co., the Chad/Cameroon pipeline joint venture, Caltex Australia Ltd.'s Lytton and Kurnell refineries, and other refineries in which Chevron has an equity interest of 16 percent or less. These are entities over which Chevron does not have full operational control or which do not generally follow Chevron’s corporate GHG inventory protocol or a compatible protocol.

Due to rounding, individual numbers may not sum to the total numbers.

2. Product emissions are calculated based on total 2008 upstream liquids, gas and coal production figures from Chevron's 2008 Annual Report. The emissions factors used are from the American Petroleum Institute's Compendium of Greenhouse Gas Emissions Estimations Methodologies for the Oil and Gas Industry, published in 2004.

Updated: May 2009