At Chevron, we recognize and share the concerns of governments and the public about climate change. The use of fossil fuels to meet the world's energy needs is a contributor to an increase in greenhouse gases (GHGs) — mainly carbon dioxide (CO2) and methane — in the earth's atmosphere. There is a widespread view that this increase is leading to climate change, with adverse effects on the environment.
GHG emissions come from a variety of sources, including power generation, transportation, agriculture, manufacturing and other activities. Fossil fuels — coal, oil and natural gas — release CO2 during production and consumption. Based on current projections of population and economic growth, the world's consumption of energy is expected to grow by 55 percent by 2030. The majority of that energy will be provided by fossil fuels, even as lower-carbon alternatives continue to emerge.
Our Action Plan on Climate Change, now in its sixth year of implementation, reflects a balanced approach to addressing climate change through short- and long-term measures. The following sections highlight our efforts under the plan.
Guided by our Seven Principles for Addressing Climate Change, published in 2007, Chevron is working internationally and at the U.S. federal and state levels to build consensus on climate change policy. For example, we helped develop the core recommendations of a study by the National Petroleum Council, an advisory committee to the U.S. secretary of energy. The study recognized that reducing carbon emissions and enhancing energy security are dual, interdependent challenges. Innovation, collaboration and partnership will be crucial to address both, as will a global policy framework. In Australia, we provided input to the government on the development of a carbon trading program. In California, we are actively participating in the development of climate change policy and regulations.
Reducing Emissions and Improving Efficiency
The two primary sources of our GHG emissions are combustion, which occurs during operations, and flaring and venting of natural gas, a byproduct of crude oil production. Our total GHG emissions for the year came to 60.7 million metric tons of CO2 equivalent,1 compared with our goal of 63.5 million metric tons. For 2008, we are setting a preliminary goal of 62.5 million metric tons.
Based on available information, we estimate that our products resulted in emissions from combustion of approximately 404 million metric tons of CO2 in 2007.2
Chevron engaged Det Norske Veritas (DNV) to conduct third-party verification of our operated assets' GHG emissions for 2004 through 2006. DNV has determined that the Chevron GHG estimates are accurate with a high degree of certainty and generally consistent with the Chevron Emissions Inventory Protocol and voluntary reporting practices such as the World Business Council for Sustainable Development/World Resources Institute Greenhouse Gas Protocol. Download the full version of DNV's verification statement (49 KB).
Chevron has made a long-term commitment to improved energy efficiency in our day-to-day operations, which will diminish our own carbon emissions. In 1992, we began tracking the efficiency of our energy use across all of our operations. Since that time, we have increased our energy efficiency per unit of output by 27 percent. In 2007, our energy efficiency was the same as 2006 and slightly better than forecast.3 We continue to set yearly targets for improvement. For our company's operated assets, the total energy consumption in 2007 was 918 trillion Btu. The cost of energy to the company was approximately $5.6 billion.
We also are delivering energy efficiency and renewable energy solutions to external clients through our subsidiary Chevron Energy Solutions.
Gas Flaring and Venting
Chevron is working to minimize gas flaring and venting and the GHG emissions that result from this practice. We pursue all feasible opportunities to reduce flaring and venting in our global operations.
As a member of the Global Gas Flaring Reduction Partnership, Chevron actively participated in regional workshops that developed country-specific plans to minimize gas flaring. Our business units are implementing projects in Angola, Kazakhstan, Nigeria and other locations expected to produce significant GHG reductions by 2010.
Gorgon Carbon Sequestration
In 2007, Chevron Australia Pty Ltd received environmental approvals for the Gorgon Liquefied Natural Gas (LNG) project located on Barrow Island, off the northwest coast of Australia. As part of the project, Chevron is proposing to build one of the largest geosequestration projects in the world. The CO2 present in the natural gas would be injected into a deep underground sandstone reservoir below Barrow Island. This reservoir CO2 is extracted from the natural gas as a part of normal gas-processing operations and would otherwise have been vented to the atmosphere. Over the life of the project, approximately 120 million tons of reservoir CO2 is expected to be safely injected more than 1.5 miles (2.4 km) underground. The project includes state-of-the-art technology that would make it one of the world's most efficient LNG projects in terms of greenhouse gas emissions.
Accounting for Carbon Costs in New Project Evaluation
All new capital projects and development initiatives must go through a rigorous decision making process to identify potential risks and benefits. We incorporate the cost of carbon emissions into this analysis. During 2007, Chevron introduced additional tools to forecast carbon costs in the evaluation process.
Efficiency Gains Through Cogeneration
Worldwide, Chevron operates cogeneration units at refineries, production facilities and other sites, with a combined electrical generating capacity of about 3,500 megawatts. These units, also referred to as combined heat and power units, generate electricity about twice as efficiently as the average power supplied by a local utility company.
Our Kern River Cogeneration Co. facility in California, a joint venture, was the state's first large cogeneration facility. It has a generating capacity of 300 megawatts and, after 20 years of operation, the facility went through air emissions permit and licensing revisions in 2007. To comply with the new requirements, Chevron worked with General Electric to install industry-leading combustion control technology, expected to be in operation at Kern River in 2008.
Investing in Research, Development and Technology
Chevron supports academic and government research programs to explore climate change policies and technologies, including carbon sequestration. We participate in the West Coast Regional Carbon Sequestration Partnership, one of seven regional partnerships sponsored by the U.S. Department of Energy working to create a "carbon atlas" of sequestration potential across North America.
Examples of other programs in which we participate include the following:
- Chevron is a founding sponsor of the Joint Program on the Science and Policy of Global Change, established in 1991 at the Massachusetts Institute of Technology. The program is an interdisciplinary organization that conducts research, independent policy analysis and public communication on issues of global environmental change.
- Chevron provides financial support to the Global Energy Technology Strategy Program, created by the U.S. Department of Energy and the University of Maryland, to advance technology that will address the long-term risks of climate change.
- Chevron has actively participated in the work of the Intergovernmental Panel on Climate Change since 2004. Chevron staff provided reviews and comments during the official expert-review rounds of the panel's Fourth Assessment Report, finalized in November 2007.
- Chevron continues to participate in the Carbon Sequestration Leadership Forum, an international climate change initiative focused on development of improved cost-effective technologies for the separation and capture of carbon dioxide.
Supporting Flexible and Economically Sound Policies
In 2007, Chevron joined the board of Resources for the Future (RFF), a nonprofit, nonpartisan organization that conducts economic research on environmental and natural resource issues. Chevron also participated in the RFF-led U.S. Climate Policy Forum, which began in 2006 and brought together climate change experts from 23 companies representing a broad spectrum of the U.S. economy.
We are working with officials in California to shape sound implementation approaches under legislation adopted in 2006 that mandates GHG emission reductions. In addition, we are especially active in shaping California's new Low-Carbon Fuel Standard, which was established through Executive Order in January 2007. The standard calls for a 10 percent reduction in the carbon intensity of fuels by 2020, either by replacing petroleum with biofuels or through the use of other transportation alternatives, such as electric vehicles. Chevron is working closely with state officials and industry partners to help regulators design an efficient, achievable and equitable framework for businesses to use in meeting these new mandates.
In September 2007, Chevron submitted testimony to a select committee of the U.S. Congress detailing the challenges associated with carbon sequestration and making specific recommendations for government action that could help address those challenges. We are providing technical and practical field experience to help federal legislators understand critical issues and prioritize their actions on emerging climate change legislation.
Updated: May 2008
1Chevron's GHG emissions data are reported on an equity basis for all businesses in which Chevron has an interest except as noted below. The following entities are not currently included in the Chevron corporate greenhouse gas inventory: Chevron Phillips Chemical Co., the Caspian Pipeline Consortium, 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.
2Product emissions are calculated based on total 2007 upstream liquids, gas and coal production figures from Chevron's 2007 Annual Report. The emission 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.
3Chevron no longer uses the Chevron Energy Index to report externally on energy efficiency due to a recalibration in 2007 that makes year-to-year comparisons inaccurate. The company is now reporting energy efficiency expressed as a percentage improvement from 1992.