Report on Response to Pressure for Renewable Energy

2004 – Chevron Texaco Corp.

WHEREAS:

§ Global mandates and goals for renewables are growing. Renewables are the fastest growing segment of the energy market.

§ In 2002, renewable energy use grew 11% in the U.S. Of all renewable energy technologies, wind energy grew the fastest at a rate of 56% in 2002. From 1992-2001 global wind capacity grew from nearly 2,300 MW to over 23,000 MW – a ten-fold increase, while solar photovoltaics capacity grew nearly 400% from 370 MW to over 1,800 MW.

§ Twelve states including California (20%), Nevada (15%) and Maine (30%) have renewables requirements for electricity production. The U.K. adopted a 20% requirement for renewables by 2020; six other countries have proposed or implemented mandates.

§ The E. U. has a goal of 22% renewables by 2010, and six European and Middle Eastern countries have goals ranging from 3% to 100%. Recent forecasts indicate clean energy markets will grow to $82 billion by 2010.

§ International energy companies will face unprecedented pressure to reduce emissions and meet clean energy demands, since 188 countries have signed the final emissions reduction rules for the Kyoto Protocol. Regardless of the fate of The Kyoto Protocol, the E. U., Canada, Japan and other countries have committed to significant reductions.

§ New laws are requiring both reductions in operational emissions, and utilizing or offering alternative low-carbon alternatives. Failure to do so may result in expensive requirements to purchase carbon credits while competitors with efficiencies such as renewables will generate a new revenue source through the sale of excess credits.

§ Two of our international competitors, Royal Dutch/Shell and BP, have significantly increased their development of renewables.

§ In July 2002, BP announced its goal of being “a new company able to offer global energy solutions” through gasoline and diesel producing lower emissions and becoming “the world’s leading producer of solar power.” BP stated in a March 11, 2002 press release that “BP would continue to expand its solar business which is set to grow by 40% this year and already has a 17% share of the world market.”

§ ChevronTexaco’s reports an average of $110 million annually on investments in renewables from 1999-2003; this initial step into renewables is promising but is nowhere near the scale of investment made by some of our competitors and we believe is insufficient to meet the needs created by growing political mandates.

§ ChevronTexaco has not told shareholders how it intends to keep pace with its competitors or how it intends to meet growing regulatory pressures for renewable energy.

RESOLVED: Shareholders request the Board to prepare a report (at reasonable cost and omitting proprietary information) by September 1, 2004 explaining how the company will respond to rising regulatory, competitive and public pressure to significantly develop renewable energy sources.

Supporting Statement

Supporting this resolution will indicate shareholder desire for full disclosure of the company’s strategy to meet growing demand for diversified energy sources and to remain competitive in the new climate-constrained energy markets.

Sponsors:

Lead: Srs. of St. Dominic of Caldwell, NJ, Sr. Patricia Daly; American Baptist Home Mission Society of the American Baptist Churches, USA; Benedictine Sisters; Christian Brothers Investment Services; Congregation of Divine Providence - San Antonio, Texas; Congregation of the Passion-East; Congregation of the Passion-West; Congregation of the Sisters of St. Joseph of Peace, St. Joseph Province; Congregation of the Srs. of Charity, Incarnate Word, Houston; Domestic and Foreign Missionary Society of the Episcopal Church; Dominican Srs. of Hope; Maryknoll Fathers and Brothers; Missionary Oblates of Mary Immaculate; School Srs of Notre Dame Cooperative Investment Fund; Society of Jesus -- Detroit Province; Srs. of Charity of St. Elizabeth, NJ; Srs. of Mercy Reg. Community of Detroit Charitable Trust; Srs. of Mercy Regional Community of Burlingame; Srs. of St. Francis of Philadelphia; Srs. of St. Joseph, Philadelphia; Srs. of the Holy Name-CA Province; Srs. of the Holy Names of Jesus and Mary, Washington Province; Srs. of the Humility of Mary