Q. What is Chevron's view on Climate Change?
A. Climate Change is a complex subject, one that is evolving now, and one that will evolve for years to come. However Chevron believes that taking prudent steps now to lower Greenhouse Gas (GHG) emissions is the right thing to do, which is why we acted in 2001 to implement our Climate Change Action Plan.
Given the complexities involved in climate science, we look to the scientific community to provide consensus on the issue of global warming. The Intergovernmental Panel on Climate Change (IPCC), which was established by the U.N. in 1988 and which brought scientists from around the world together on the subject of climate change, released its Fourth Assessment Report in 2007. The report stated that, "Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level."
According to the IPCC, observations also include the following: "Global atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased markedly as a result of human activities since 1750 and now far exceed pre-industrial values determined from ice cores spanning many thousands of years." Further, the IPCC states: "The global increases in carbon dioxide concentration are due primarily to fossil fuel use and land use change, while those of methane and nitrous oxide are primarily due to agriculture. Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations."
Uncertainties still exist around climate change, such as predictions of future warming and impacts of that warming, pace of technology advancement and forecasts of economic and population growth.
Q. What is Chevron's position on The Kyoto Protocol?
A. The Kyoto Protocol assigns mandatory emission limits of greenhouse gasses to signatory nations. We support the intentions of Kyoto in reducing greenhouse gas emissions and respect the individual countries that have made the decisions to sign. However, while we support the global engagement that it envisions, we believe it focuses on signing up many countries rather than truly engaging the 10 – 12 critical emitting countries. Further, we think it asks for emission reductions that are too aggressive too quickly, given the technologies that are currently available. Finally, we don't think the economic consequences are fully outlined.
Q. If the U.S. developed a national carbon management framework that did not entail global engagement, would the company oppose it?
A. Global engagement is absolutely essential and, ideally, no national framework should go forward without such engagement. We would not oppose initially, but global and equitable engagement of the top emitters needs to be a part of the U.S. plan and needs to be acted upon in a timely manner. The U.S. needs a national approach in order to credibly engage with the largest emitting countries. However, if the U.S. adopts a national approach and other top emitting counties have not developed a coordinated framework within a reasonable period of time, the U.S. should consider modifying its program.
Q. What are the biggest challenges to de–carbonize the world's energy structure?
A. There are several challenges including the facts that:
- 85 percent of today's energy requirements are supplied by hydrocarbons and that mix is not expected to change substantially by 2030, according to the International Energy Agency (IEA).
- There is no single replacement for hydrocarbons — either for power or for transportation — at the scale needed to serve the world's energy demands.
- There is no 'silver bullet'. In other words, we need to rely on technology advancements across a wide spectrum of technologies for meaningful decarbonization; these advancements will take time (decades in some cases).
In the meantime, using energy more efficiently is critical (e.g. insulation improvements, vehicle fuel efficiency improvements, lighting and HVAC systems) to achieving meaningful reductions in greenhouse gas emissions.
Q. Why should climate policy recognize the role of fossil fuels?
A. Energy is needed to drive economic growth and to improve our quality of life. Today's energy requirements are huge and are expected to grow substantially larger as the world's population grows and economies develop further. About 85 percent of today's energy requirements are supplied by hydrocarbons (oil, natural gas and coal) and that mix is not expected to change substantially by 2030.
The role of renewable and alternative energy will continue to help meet the rising demand; however there is no single replacement for hydrocarbons — either for power or for transportation — at the scale needed. Therefore, climate change policies must enable available energy sources to operate in an energy–growth and carbon–constrained world. Policies that severely restrict the use of fossil fuels would be disruptive to global economic growth.
Q. What should government do to promote energy efficiency and conservation?
A: Efficiency and conservation should be the highest priority and first order of business in any climate policy. Government can play a valuable role on a multitude of levels. They can:
- Remove barriers and/or provide fiscal incentives to improve energy efficiency in residences, commercial buildings, transportation systems and government offices.
- Provide continued support for existing national energy efficiency programs.
- Strengthen energy efficiency standards for appliances and commercial building sectors over time.
- Educate the public and introduce practices of energy efficiency and conservation into school curricula.
In addition, business should continue its own efforts to become more efficient.
Q. Does Chevron support a carbon tax or "cap–and–trade" policy?
A. A carbon tax is a tax on energy sources that emit carbon dioxide into the atmosphere. An emissions trading program or "cap–and–trade" provides economic incentives for achieving reductions in emissions of pollutants. We are not advocating a specific solution at this time. We do see the conceptual benefit of having the known cost of a carbon tax, particularly as we wrestle with so many other unknowns. "Cap–and–trade" offers additional flexibility for companies to achieve their GHG reduction goals.
What is most important in either approach is that the principles of broad and equitable treatment across all sectors of the economy and transparency be applied. Policy–makers need to examine all available policy options, be thorough in the assessment of the impacts and consequences, and be open to revisions later on if unintended consequences appear. Whatever the eventual policy, it should first maximize energy efficiency and conservation opportunities for mitigation emissions.
Q. What is Chevron's experience with the European Union's Emissions Trading Scheme (ETS)?
A. ETS, which sets limits on the greenhouse gas emissions from major stationary sources such as refineries and power stations, is the first large–scale carbon market of its kind. Chevron complies with all applicable regulations wherever it operates and the company's Carbon Markets team participates in the EU ETS to manage the compliance of the company's refining and E&P assets in the region.
Q. Does Chevron support national mandated legislation or regulation around greenhouse gas reductions?
A. We support the intentions of governments to reduce greenhouse gases and we believe this is a global challenge that requires global participation. We therefore favor national programs to harmonize what would otherwise be sub–optimal regional programs. Whatever the framework, realistic objectives must be set based on the best available data. It is vitally important to understand and fully communicate the economic and social costs, as well as the environmental benefits, of all proposed legislation and regulatory plans. We do support mandatory reporting of greenhouse gas emissions at the national level. This would provide a baseline against which we can measure progress across all sectors in order to achieve broad, equitable treatment.
Q. One of Chevron's "7 Principles for addressing climate change" asks for broad, equitable treatment so that no sector or company is disproportionately burdened. What does Chevron mean by broad, equitable treatment?
A. This means we want policies that are inclusive, covering all economic sectors and key sources of greenhouse gas emissions, and that secure reductions in GHG emissions from the sources in proportion to their emissions contributions, and their technology capability.
Q. Chevron's "7 Principles for Addressing Climate Change" calls for government support and partnerships with private sector on R&D in carbon mitigation and clean energy technologies. What are the most promising technologies?
A. There are three primary technological areas that should be addressed to tackle this issue now, given what we know of mitigation costs. In order of priority, they are:
- Energy Efficiency and Conservation. Much can be achieved by addressing the demand. Technologies that deliver improved waste heat recovery, insulation, lighting and heating systems are ready to be deployed now.
- Carbon Capture and Storage (CCS). CCS, the practice of capturing CO2 from stationary sources such as power plants and storing it in existing geological formations such as depleted oil and gas reservoirs, may turn out to be promising technology. However, it will be a massive undertaking to tackle this on a globally commercial scale. Understanding more about its feasibility and its liabilities is critical before we can rely on widespread use. We support government sponsorship of large–scale demonstration projects in this area and we have ourselves taken a leadership role in a number of public and private CCS research projects. In Australia, our planned Gorgon field has the potential to store up to 3 million tons on CO2, making it one of the world's largest potential CCS projects.
- Lower carbon fuels. Cellulosic biofuels offer much promise and Chevron has created a number of research partnerships with academic and government institutions to further scientific understanding in this area. We have also announced an alliance with forestry products company Weyerhaeuser, to jointly assess the feasibility of commercializing the production of biofuels from cellulose–based sources.
Q. Chevron's final principle calls for transparency of climate policies. What do we mean by this?
A. Lowering emissions won't come free; most studies predict an increase in energy costs and a lowering of gross domestic product (GDP) as a result of climate policy. Individuals will inevitably have to bear these costs and this must be openly communicated to the public. As policy is developed, we all need to be informed about the costs and the trade–offs, the risks and the benefits. Truly informed decision–making requires an open discussion of the cost and consequences of possible actions.
Q. Who has the responsibility for transparency? For establishing and quantifying the trade–offs and communicating them?
A. Both public officials (policymakers) and the private sector have responsibility. We need reliable information openly communicated between policymakers and the public on costs, impacts and trade-offs during the legislative/regulatory process. After legislation and regulations are created, we also rely on information communicated on the progress of other top emitters, so that "equitable sharing" can be assessed; on the advancements being made in science and technology; and on the outcomes of the interim assessments of results.
Updated: May 2008