We have already reduced the direct greenhouse gas (GHG) emissions from the facilities we operate by approximately 30% compared to 1990. (See Environmental data for a description of our GHG measurement and reporting). More than two-thirds of this drop has come from performance improvements.

Our biggest reductions have come from our multi-billion dollar programme to end the continuous venting and flaring of natural gas at oil production facilities. We ended the continuous venting of natural gas in 2003. By 2008 we had effectively ended continuous flaring everywhere outside Nigeria. Only five sites outside Nigeria (representing less than 0.5% of our total CO2 emissions) still continuously flare for technical or safety reasons.

Our total upstream flaring (including the non-continuous flaring which is needed for safety reasons) has dropped by more than 70% since 2001. This has lowered our CO2 emission levels by 18 million tonnes per year. More than half the drop in total flaring in this timeframe has come from programmes to tackle continuous flaring around the world, including Nigeria. The rest is a result of reduced production since 2006 in Nigeria (see Nigeria).

Energy efficiency improvements at our chemicals plants and refineries have also contributed to the reduction in our GHG emissions over time. Energy efficiency at our chemicals plants has improved by almost 8% since 2001. Their energy performance slipped back slightly in 2008, mainly because of unplanned shutdowns in big plants in the USA caused by Hurricane Ike. Starting up plants after a shutdown requires a lot of extra energy.

At our refineries, energy efficiency worsened in 2008, according to the Solomon Associates Energy Intensity Index (EIITM) (see [A] above), though it is still better than 2002 levels. The 2008 result was partly because we had more unplanned shutdowns. It was also due to refineries running below their full production capacity, hence less efficiently, as demand for their output dropped during the year. In addition, we were unable to sustain some of the gains from our 2002–5 Energize efficiency programme.

These energy efficiency results are disappointing. We are stepping up our efforts to improve energy efficiency in our refineries and chemicals plants. For example, we are rolling out Energy Management Systems that allow plant operators to spot energy losses faster and make small corrections quickly to stop the losses. These systems have already improved efficiency by more than 8% at our Geismar chemical plant in the USA. They were implemented at four more plants in 2008. We plan to roll them out at a further five plants in 2009.

Across the upstream industry, energy intensity continues to rise as existing fields age and more oil comes from heavy and harder-to-reach deposits. We are no exception. The energy intensity of our oil and natural gas production activities has risen by nearly a quarter since 2001. To help slow that rise, all our upstream operations are putting energy management plans in place. These 5-year plans include a range of operational steps that the facilities commit to take to improve their energy efficiency, including optimising their processes and equipment use.

Our current oil sands operation was the most energy efficient in the industry in 2007, according to a critical study of the oil sands by the Pembina Institute and WWF. We believe it remains so, even though the energy intensity in our operation rose slightly last year, due to plant shutdowns, maintenance, and construction activities.

In 2008, we also launched an energy efficiency drive in the buildings we own worldwide. It builds on a range of local initiatives that have been running at Shell locations for many years. Though the CO2 emissions from our buildings are tiny compared to those from our operations, we wanted to send a message to all employees: that using energy efficiently and reducing GHG emissions must always be part of how we work.

[A] Solomon Associates changed their proprietary Energy Intensity Index calculation methodology in 2006. Reported historical values have been recalculated based on this revised methodology.