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2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesEnergy EfficiencyBackground: Focusing on Efficiency and ConservationIn addition to being an energy provider, ChevronTexaco is also anenergy consumer. Like all companies, we use energy to run our operationsand transport our products. Energy efficiency and conservation –on the part of ChevronTexaco, other companies and society as a whole– is essential for ensuring future access to energy at reasonable costs.Improving the energy efficiency of our operations is also one of our keystrategies for managing our greenhouse gas emissions. Our focus onenergy efficiency applies to all aspects of our business, from extractingoil to managing our office buildings.Approach: Tracking the Efficiency of All OperationsTo track our performance, in 1991 we established an energy usageindex, now called the ChevronTexaco Energy Index (CTEI). The indexmeasures and represents in a single figure the energy required to produceour products today compared with the energy that would havebeen required to produce the same products in the base year. Our operationsare included in the index by multiplying an output measureclosely related to energy consumption – such as cargo ton-miles for ourshipping company or square foot of building space managed for ourreal estate company – by a unit energy consumption factor from thebase period.Each percentage point reduction in the CTEI represents approximately10 million gigajoules (GJ) less energy consumed, and it also equalsapproximately US$35 million in savings for the company based onworldwide energy usage and costs in 2003 (Note: These numbers cannotbe used to analyze past years’ performance due to changes in businessesand activities that make up the index). In the past, CTEI coveredonly ChevronTexaco’s North American operations. But in 2002 theindex was expanded to cover our international operating companies,and by the end of 2003, it will cover all assets we operate worldwide.We employ a full-time Corporate Energy Coordinator responsible foroverseeing the company’s energy measurement efforts, as well as leadingBest Practice Energy Teams to expand our knowledge and practices forcontinually improving our energy efficiency.ChevronTexaco Energy IndexPerformance: Striving1992–2002for the Highest Efficiency100ChevronTexaco’s total energyconsumption for the assets we80operate was 825 trillion BTUs60or 782 million GJ in 2002.Rather than total use data,40however, the primary performanceindicator we use200internally is the92 93 94 95 96 97 98 99 00 01 02ChevronTexaco Energy Index.The index allows us to measurethe energy efficiency of our operating companies on a commonbasis and assess trends in efficiency improvements, rather than energyuse alone.In 2001 and 2002, our operations reached their most efficient level sincethe inception of our Energy Index. We steadily have improved ourenergy efficiency over the last decade, and in some businesses we havemade dramatic progress. For example, since 1991, Chevron’s NorthAmerican Products business units have reduced their energy consumptionindex by 21 percent. This represents a nearly 2 point-per-year averageimprovement, compared with a 1 point-per-year average for theU.S. refining industry as a whole over that time period.Future Goals: Aiming for Continual ImprovementOur goal is to continue to improve our corporatewide energy efficiencyin the future. In 2004, we will work to better manage the factors thatinfluence energy efficiency in the business units we have recently addedto our index. ChevronTexaco’s North American refining operations alsohave joined with other American Petroleum Institute member refiningcompanies in committing to an industrywide 10 percent improvementin energy efficiency between 2002 and 2012.We also work with others to help them improve their energy efficiency.Through Chevron Energy Solutions, a subsidiary of ChevronTexaco, wedesign, arrange for third-party financing and construct energy efficiencymeasures and cogeneration facilities for commercial, industrial and publicsector customers.© 2003 ChevronTexaco Corporation. All Rights Reserved.37
2002 ChevronTexaco Corporate Responsibility Report Environmental IssuesClimate ChangeBackground: Addressing a Shared ConcernOne of the environmental concerns we all share is global climatechange. We recognize that the use of fossil fuels has contributed to anincrease in greenhouse gases – mainly carbon dioxide and methane –in the earth’s atmosphere.One of the most critical environmental challenges facing the world todayis finding ways to provide and use reliable, affordable energy while reducinglong-term growth in greenhouse gas emissions. Technology offers avariety of potential solutions, including efficiency improvements, CO 2capture and storage, use of biological sinks and the development ofcommercially viable nonfossil fuel energy systems, including the potentialevolution of a hydrogen fuel-based economy.Approach: Implementing a Four-Pronged StrategyChevronTexaco recognizes and shares the concerns that governmentsand the public have about climate change. We have developed a comprehensiveprogram to manage greenhouse gas emissions, and it isbeing integrated into our business decisions. For example, since 2001we have required our businesses to integrate greenhouse gas emissionsanalysis into the planning for all major capital projects.ChevronTexaco believes that although fossil fuels are a finite resource,they will continue to meet the vast majority of global energy demandfor at least the next 30 years. Energy from renewable resources, such aswind and solar, is expected to contribute a small but growing fractionto total energy sources. We invest in a variety of renewable and alternativeenergy technologies and believe that those energy sources willbe important in the overall mix of energy for the global economy inthe future. But widespread application will depend on many factors,including the rate of technological development, market acceptanceand demonstration of economic viability.In addressing climate change, ChevronTexaco works closely with governments,academic institutions, nongovernmental organizations andothers to create environmentally, technically and economically soundsolutions. As a company with global operations, we are respectful of thedecisions made by the countries where we operate regarding the KyotoProtocol. Our businesses work closely with each country’s governmentto manage greenhouse gas emissions from our operations and to helpour business partners and customers achieve their emissions goals.ChevronTexaco’s climate change strategyconsists of the following four-pronged approach:1 Reducing emissions of greenhouse gases and increasing energyefficiency: Our goal is to reduce emissions per unit output fromoperations. We inventory our emissions and use innovative technologiesto continually improve the energy efficiency of our existingoperations, new projects and products. We are incorporating greenhousegas emission assessments into our capital project evaluations.The following are examples of where we have improved existingprocesses or deployed new technologies that have resulted in reducedgreenhouse gas and other emissions:> In Indonesia, we switched from crude oil to natural gas for firing thesteam generators in the Duri Field in 1999 –2000, reducing emissionsof carbon dioxide by more than 1 million metric tons per year.> In Kuwait’s Wafra oil field and California’s Kern River oil field, weswitched to natural gas to generate electricity and steam. These movesalso reduced carbon dioxide emissions by more than 1 million metrictons per year.> We have a number of projects under way that will significantly reduceroutine flaring of gas in our international upstream operations.> In the United States, ChevronTexaco participates in cogenerationprojects that, together, produce enough electricity to power morethan 1 million homes. For example, two cogeneration facilities inKern County, California, with their high generating efficiencies ascompared with conventional gas-fired simple-cycle power plants,provide 600 megawatts of electricity while emitting substantiallyless carbon dioxide.> ChevronTexaco participates in the United States EnvironmentalProtection Agency’s (EPA) Natural Gas Star Program to reducemethane emissions. In 2003, the EPA awarded ChevronTexaco aCertificate of Achievement for its continuing accomplishments,citing the company for “aggressively reducing methane emissionsand helping lead the way to reducing climate change impacts.” OurU.S. upstream operating company removed a volume of emissionsequivalent to planting more than 1.9 million acres of trees or takingmore than 1.4 million cars off U.S. highways for one year. As separatecompanies, Chevron and Texaco were members of the upstream Starprogram since its inception in 1995. Both companies previously wererecognized as “partners of the year.”© 2003 ChevronTexaco Corporation. All Rights Reserved.38
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