We continue to proactively manage climate change, water, land stewardship, biodiversity, mineral and non mineral waste, air quality and closure. These programmes include input from our local communities as well as from experts in these fields, and are supported by our external partnerships with Bird Life, Earthwatch, Fauna & Flora International and Royal Botanic Gardens, Kew.

In 2009 we set new five year targets for a range of environmental metrics which are discussed in the sections below. We also made progress with the development of a formal relationship with IUCN.

Greenhouse gas emissions

We accept the urgent need for climate change action and recognise the issue as being one of our greatest challenges and opportunities. Reducing the greenhouse gas (GHG) emissions intensity of our production is a key performance indicator for the Group and we aim to improve the energy intensity of all our operations. We are also working to identify step change opportunities to improve our performance over the longer term.

As a result of the Alcan integration, the emissions intensity of our production decreased by ten per cent between 2007 and 2008, reflecting the high percentage of low carbon energy within Alcan’s smelter portfolio. Removing the effect of this acquisition, our intensity would have increased in 2008.

In 2009 we set a new target to reduce our total GHG emissions intensity by six per cent between 2008 and 2013. A further four per cent reduction is targeted to give an overall ten per cent reduction by 2015 as a result of the expected completion of planned capital projects. We index our performance relative to 2008 as the base year.

During 2009, our GHG emissions intensity reduced by 7.5 per cent, largely as a result of divesting the Ningxia aluminium smelter in China, which is powered by coal based electricity, and reduced production at a number of operations with a higher than average emissions intensity. We expect some reversal of this positive performance in future years as production levels increase.

Our total GHG emissions, defined as the sum of on site emissions and those from the net purchase of electricity and steam minus net carbon credits voluntarily purchased from, or sold to, recognised sources, were 41.0 million tonnes of carbon dioxide equivalent, nearly nine million tonnes lower than in 2008. This is the result of asset divestments and reduced levels of production at some operations. Rio Tinto’s on site emissions were 26.1 million tonnes in 2009.

We operate in an energy intensive sector and we seek to improve the greenhouse gas emissions over the full life cycle of our products. For instance, Rio Tinto Alcan is a leader in the development of energy efficient aluminium smelting technology. While it represents 71 per cent of the Group’s energy use, it only produces 64 per cent of our total GHG emissions due to its low carbon energy portfolio.

We recognise that there are significant GHG emissions associated with the transportation, processing and use of Rio Tinto’s products. In 2009, the three most significant sources of indirect emissions associated with our products were:

• Approximately 4.5 million tonnes of CO₂-e associated with third party transport of our products and raw materials.
• An estimated 120 million tonnes of CO₂-e associated with customers using our coal in electricity generation and steel production.
• Approximately 330 million tonnes of CO₂-e associated with customers using our iron ore to produce steel. These emissions are not in addition to the coal use emissions above, as some customers use both our iron ore and our coal to produce steel.

Emissions associated with third party transport and combustion of our coal reduced significantly in 2009 with the divestment of Rio Tinto Energy America.

Due to global demand, coal is likely to remain a significant source of energy for the foreseeable future. We are therefore investing in developing and commercialising carbon capture and storage (CCS) technology. In particular, we continued to progress our studies on the Hydrogen Energy California project, a joint venture with BP. Rio Tinto is a founding member of the Global CCS Institute and supports other collaborative efforts to deploy the technology, such as the CO2CRC’s Otway Basin geosequestration project in Australia.

Where we can influence our customers, we work to develop efficient downstream processes, and our metals and minerals can bring energy and emissions benefits. For example:

• Uranium is used in low carbon power generation.
• Our high purity ductile iron is used in the production of wind turbines.
• Aluminium makes cars lighter, reducing the amount of fuel used during their operation, and it can be efficiently recycled.

During 2009 climate change legislation was debated in a number of jurisdictions in which we operate. Rio Tinto continued to participate in collaborative efforts to promote effective public policy frameworks to address climate change, including the US Climate Action Partnership and submissions on proposed legislation to governments in Australia, the US, the EU and Canada. A comprehensive programme is under way to prepare the Group for climate legislation.

Rio Tinto’s operations are exposed to the physical risks of climate change. In 2009 our Energy & Climate Strategy group commenced a review of progress in identifying, managing and communicating these risks to better coordinate and support the integration of projected physical climate change risks in project planning and operations.

Energy use

Rio Tinto both consumes energy in its operations and produces it, with significant electricity generation at our hydropower facilities in Canada and in other locations. Our smelting and mineral processing operations are energy intensive and depend on hydroelectricity, nuclear power, coal, oil, diesel and gas to keep them running.

This year our energy use decreased from 553 to 497 petajoules. This change has been influenced by the divestment of the energy intensive Ningxia aluminium smelter and reduced production for some commodities.

Rio Tinto uses a significant portfolio of hydro, nuclear and other renewable power sources in its energy mix, which represented 70 per cent of our electricity use in 2009. A number of new projects and technology upgrades that are either under way or planned will ensure that we use electricity available from our hydroelectric sources with greater efficiency.

To drive improvement in energy efficiency our businesses have set a range of local energy targets that cover nearly three quarters of the Group’s energy use.

The Group is working to reduce the energy intensity of new projects through demand reduction using asset design and the development of alternative sources of energy supply. We are also currently developing step change technologies for several of our products, including the drained cathode cell for aluminium production. This has the potential to significantly reduce the amount of energy required to produce aluminium.

Water

Our water strategy provides a framework for addressing water related business risk and improving performance, and we focus on ways to minimise the amount of water we remove from the environment, reuse it whenever we can, and return it to the environment meeting regulatory limits.

Following the increase arising from the inclusion of water withdrawal data for the former Alcan operations in 2008, our freshwater withdrawal decreased by six per cent to 487 billion litres in 2009, with lower water demand at a number of operations where production was reduced.

We set a new Group water target to reduce our freshwater use per tonne of product by six per cent by 2013 from a 2008 baseline. Freshwater use excludes water that is extracted for ground control and discharged without use in our processes. In 2009 we increased our freshwater use per tonne of product by four per cent. Although total freshwater use did decrease this year, the scale efficiencies achieved with high production rates in 2008 were not maintained as water use is not directly related to production rates at all operations. Internal local recycling and ecological targets support the Group water target.

We continued to support the development of water strategies at our businesses aligned with the Rio Tinto water strategy, and supported new projects to ensure that efficient practices are in place at mine commencement. Our water risk reviews support this strategic work and a total of 40 operations and new projects have completed reviews since 2005, including five in 2009.

Rio Tinto engages with governments on emerging water policy. We chair a water working group as part of the Minerals Council of Australia with the main focus in 2009 being development of a water account for Australian industry as part of a government-industry project to report on consistent water metrics across industry. We also engage on key water initiatives with organisations committed to sustainable water management such as the World Economic Forum.

Land

We manage just over 41,000 square kilometres of land, excluding our exploration leases. At the end of 2009 our activities had impacted nine per cent of this area. Our disturbance footprint doubled in 2009, primarily because the land utilised for Rio Tinto Alcan’s hydroelectric dams in Quebec was reported for the first time in terms of Rio Tinto’s reporting definitions, following full implementation of our land use stewardship standard by former Alcan operations.

In line with leading practice, we aim to rehabilitate land as it comes out of mining use rather than waiting until all operations at the site have ceased. By the end of 2009, 24 per cent of our disturbed land (excluding land disturbed for hydroelectricity dams) had been rehabilitated. An internal rehabilitation target helps to drive performance improvements.

In 2009 we formalised a programme to explore the threats and opportunities for the Group arising from emerging green markets in biodiversity, carbon, water and other ecosystem services. The Natural Capital Project has commenced exploring the ecosystem service values of our extensive non operational landholdings. Through our collaboration with the IUCN economics group we have undertaken a preliminary assessment of the biodiversity value of forest conservation projects in Madagascar. This groundbreaking work is being developed as a pilot project as part of the WBCSD Ecosystem Valuation Initiative. Rio Tinto also sponsored an IUCN paper on the cost of Reducing Emissions from Deforestation and Degradation (REDD). This paper was published as part of the Copenhagen Climate Change discussions in December 2009.

Biodiversity

The potential for impact on biodiversity makes our projects sensitive for external stakeholders and employees. Rio Tinto’s future success depends on our ability to manage these issues. Our biodiversity strategy, launched in 2004, provides this management framework with a goal to have a “net positive impact” (NPI) on biodiversity.

We continue to work with our conservation partners to improve implementation of the strategy and have commenced piloting offset methodologies in Madagascar and the Hunter Valley, Australia.

Tools and methodologies have been developed to assess the biodiversity values of Rio Tinto’s landholding. In 2009 a methodology for developing biodiversity action plans (BAPs) was completed in collaboration with Fauna & Flora International (FFI). A public version of this methodology is available on the FFI website (www.fauna-flora.org).

Thirty two per cent of our operations where the baseline biodiversity status had been fully assessed ranked as having very high biodiversity values and 21 per cent ranked with high values in 2009. Our biodiversity values assessment has now been rolled out to the former Alcan operations, enabling implementation of our biodiversity strategy.

2009 also saw a strong focus on the implementation of BAPs at sites with very high and high biodiversity values. Rio Tinto Coal Australia completed regionally focused BAPs for five sites in New South Wales and Queensland. BAPs are under development at a further 23 sites in seven countries. Biodiversity action planning will continue through 2010 at sites that have been ranked as having very high and high biodiversity values. An internal target supports our goal of achieving NPI at these sites.