Climate change is a critical issue that ChevronTexaco is taking seriously. ChevronTexaco's four-pronged climate change strategy comprises:

• reducing emissions of greenhouse gases (GHGs) and increasing energy efficiency;
• investing in research, development and improved technology;
• pursuing business opportunities in promising, innovative energy technologies;
• supporting flexible and economically sound policies and mechanisms that protect the environment.

In addition, we continue to integrate analysis of GHG emissions into the planning of all major capital projects.

Having completed our first post-merger GHG emissions inventory in 2002, we engaged KPMG and URS to perform an independent review of the GHG data quality for both 2002 and 2003. This process will enable us to set GHG emissions goals with the assurance that the goals are based on sound and robust baseline data. View the KPMG/URS report on our Greenhouse Gas Verification page.

During 2003, we also revised our emissions inventory protocol to align with the emerging guidelines described in the International Petroleum Industry Environmental Conservation Association, American Petroleum Institute, and International Association of Oil and Gas Producers report entitled "Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions."

As a result of revisions to our emissions inventory protocol and data adjustments arising from the review of our data, we are restating our 2002 emissions numbers. We also are reporting our 2003 numbers for the first time. For 2003, ChevronTexaco's total net emissions were approximately 64 million metric tons of CO2 equivalents. This is based on ChevronTexaco's equity share in those businesses and operations in which it has financial interests and over which it either has operational control or which report GHG emissions using a compatible protocol. In 2003, 89 percent of CO2 equivalent emissions were from CO2 and approximately 11 percent from methane, with trace amounts of nitrous oxide.

In 2003, ChevronTexaco's oil and gas production, as well as refinery input, declined over the previous year, in part due to asset dispositions. We made improvements in energy efficiency, though total energy consumption increased due to a variety of factors, including increases in steamflooding. An increase in net imported electricity, as well as slight increases in flaring and venting, also contributed to the rise of emissions in 2003. Altogether, these factors contributed with an increase of about 500,000 metric tons of CO2 equivalents in 2003 as compared with our restated 2002 net emissions of approximately 63 million metric tons.

ChevronTexaco's preliminary corporatewide emissions goal for 2004 is 63 million metric tons of CO2 equivalents. This projected slight decrease from 2003 will be achieved primarily through divestitures of some production facilities - while maintaining or growing production in other parts of the base business - as well as through increased efficiency.

In June 2004, ChevronTexaco announced the transfer of ownership of its SANGEA™ Energy and Emissions Estimating System software, at no charge, to the American Petroleum Institute (API) to promote the standardization of GHG emissions accounting. API will be able to make the SANGEA™ software available without charge to the worldwide energy industry.

ChevronTexaco continues to advocate for consistency in GHG emissions measurement and reporting across the oil and gas industry. For example, we played a leading role in helping shape the "Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions" and we have led the API Greenhouse Gas Emissions Estimating Work Group for the past two years.

ChevronTexaco personnel also have been selected as lead author and review editor in two scientific review processes by the Intergovernmental Panel on Climate Change (IPCC), including one on the revisions of national emissions inventory methodologies. The review results will have a significant impact on the accurate accounting and reporting process for greenhouse gas emissions by national governments.

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