Verizon Communications ­ Green House Gas …

         Verizon Communications ­
               Green House Gas
         Emission Reduction Initiatives
Verizon consumes nearly five billion kilowatt hours (KWhs) of electricity each year, which
translates into an annual energy bill of almost $500 million. This massive energy consumption
produces carbon dioxide emissions of nearly four million tons. Consequently, the incentives for
implementing a conscientious and conservative energy policy may seem fairly obvious. But
until very recently, few telecommunications firms had attempted to do so ­ that is, until Verizon
stepped up to the plate to play a leadership role in stimulating broader action in the fields of
energy efficiency and climate change.

In fact, Verizon's commitment to energy conservation began immediately in 2000, when Verizon
was established by merger. Verizon reinforced and strengthened the Energy Board of Directors
(EBOD) charged with a very specific mission: To seek out opportunities to reduce the
company's overall power consumption, especially its heavy reliance on high-pollution fossil
fuels.   The Energy Board includes department heads from all segments in the corporation
charged with a common objective to reduce consumption and associated green house gas
emissions. Energy bills, with the main focus on electric billings, have been centralized to
include a central energy database, tracking costs and consumption nationwide, to assist the
EBOD in achieving its objectives. Prior to centralizing energy bills, most departments fully
funded energy bill increases, as a fixed expense, with little emphasis on conservation.

Verizon has now expanded the EBOD and it has initiated a wide range of projects aimed at
making energy use and climate change top corporate priorities. In making energy--and by
extension, climate issues--a priority, Verizon is carving a path toward true business
sustainability: a positive mixture of increased capital targeting conservation, a decreased
environmental impact, and the kind of social responsibility and progressiveness of which its
executives and employees can--and do--brag.
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    Verizon's comprehensive and ever-expanding commitment to climate action runs the gamut
    from exploring new technologies, investigating opportunities for energy conservation, and
    building awareness among its more than 227,000 worldwide employees. The initiatives whose
    descriptions follow are a sampling of some of the most recent and exciting climate-saving
    challenges tackled by this telecom giant.



    INITIATIVES
    Energy Conservation

    To achieve beneficial energy/GHG reductions Verizon is faced with a significant challenge. At
    Verizon, 60 to 70% of its 5 billion KWh's consumed annually is DC power, operating network
    telecommunications switching equipment- the core business. Verizon's network equipment is
    manufactured by external vendors for functionality to meet customer requirements. Higher
    speed data connections, now in demand by Verizon customers, results in much higher energy
    consumption per square foot in core switching buildings. The switching equipment operates at a
    constant base load day and night and does not go into a power down mode at night when there is
    little customer traffic. In 2003 Verizon is launching aggressive initiatives specifically aimed at
    reducing network power consumption as well as traditional building power. Some of these
    initiatives are as follows. Please note that these initiatives are now being implemented in 2003
    and will not be in full force until 2004 if successful. The KWh's and associated GHG reductions
    presented below are estimates only:

·       Technology Architecture & Product Selection Committee-EBOD. In 2003 switching
    equipment RFP's now include energy requirements as an evaluation variable when analyzing
    bids. This has delivered a clear message to vendors that the constant base load mode of
    operation and increased equipment power consumption per square foot is being evaluated.
·        Target Buildings. To place emphasis on Verizon's high consumption/high cost buildings,
    Verizon has implemented the "Target Building" program. This program was implemented in the
    year 2000 and involves each of Verizon's Property Managers. Each year each Property Manager
    designates 5 highest energy consuming and highest cost facilities to conduct energy audits and
    initially claim all no cost/low cost energy conservation measures as well as develop future capital
    expense projects. To date approximately 2000 sites have processed through this program with a
    goal of reducing consumption by 3%. Since the program began it is estimated that
    approximately 50 million KWh/year have been saved or approximately 80 million pounds of
    GHG.
·       Network Advisory. Verizon has begun to place more emphasis on it's DC Power Plant
    usage by issuing Network Advisories to Network Supervisors outlining various methodologies
    and areas where possible energy savings should be investigated. The framework has been put in
    place and Verizon is hopeful that this effort will save approximately 30 million KWh/year within
    the first year of implementation in 2004 or 49 million pounds of CO2.
    Verizon Communications ­ Greenhouse Gas Emission Reduction Initiatives, 3


·       Engine Block Heaters. Verizon has approximately 3100 standby generators for the purposes
    of providing network reliability during power outages or other emergencies. These generators are
    equipped with block heaters to maintain a constant 120 degrees to ensure quicker starting and
    transfer time. It was determined through engineering, usage and trials, that these temperatures
    could be reduced safely to 70 degrees with little to no effect on the engine start. This will be a
    three year effort that will yield an approximate 35 million KWh/year savings or 57 million
    pounds of CO2.
·       Capital Energy Projects. Annually Verizon implements an approximate 7 million-dollar
    capital improvement program across the country aimed at energy conservation projects. This
    program began with capturing low/no cost measures and has grown to improving building
    infrastructure. An estimated 3 % savings in total usage since 1999 or approximately 30 Million
    KWh/year resulting in 49 million pounds of CO2 has been curtailed.
·       Energy Champions In the year 2001, Verizon implemented an employee volunteer program
    entitled "Energy Champions" Currently there are approximately 300 volunteer employees and
    the list is growing. The responsibility of these volunteers is to communicate the policies of
    conservation at their respective workspaces, develop conservation strategies specific to their
    work areas and to participate on semi-monthly status calls to share their progress with other team
    members. Energy savings attributable to this initiative varies, but can be estimated at
    approximately 23 KWh/year per Energy Champion, equating to approximately 37 thousand
    pounds of CO2 for each.


    New Technologies

    Fuel cells have become one of the most promising new energy technologies on the market, and
    for a simple reason. They offer a versatile and reliable source of high-quality power, they rely
    on readily available fuels, and they do not pollute. Through a catalytic process, fuel cells
    chemically combine oxygen and hydrogen to generate heat and electricity. The sole waste
    product is pure water. Verizon's Energy Board of Directors is focusing on fuel cell technology
    because it offers great potential for a broad range of critical applications. The Board's decision
    arose from an intensive search for alternatives to continuing reliance on electricity drawn from
    the transmission grid.

    Verizon has become an important participant in the research and development that is bringing
    fuel cell technology into our lives. For example, in its partnership with Nuvera Fuel Cells, the
    Massachusetts Technology Collaborative, and other public and private organizations, Verizon
    plugged into an ultra-clean fuel cell installation for a 500-hour demonstration, that powered the
    telecommunications facility serving 200 customers in the Woburn, Massachusetts area. The
    company also worked on a second demonstration project with Plugpower, Inc. in Ronkonkoma,
    New York and a third study of an Avista fuel cell at Verizon's Laboratory facility in Waltham,
    MA. Initiatives like these are important steps toward identifying and deploying real-world
    applications that use this clean, efficient energy technology.
Verizon Communications ­ Greenhouse Gas Emission Reduction Initiatives, 4


Other Initiatives

Only 400 buildings across America have been certified so far by EPA's Energy Star program.
Verizon owns eight (8) of them and over 150 company facilities have been benchmarked to
Energy Star standards. These standards require Verizon to meet a rigorous set of efficiency
criteria that are applied to every aspect of a each facility's energy usage.

Right now Verizon is canvassing greenhouse emissions for all of its operations in New Jersey
and has announced an agreement with the State of New Jersey to help it reach a GHG reduction
of 3.5% by 2005 over 1990 levels. In addition, Verizon is now investigating the possibility of
participating in the EPA's Climate Leaders Program and the Business Roundtable Climate
Resolve Program.

RESULTS
The success of Verizon's multifaceted energy initiative can be measured in four important ways:
financial benefits, environmental benefits, increased reliability and national security, and the
intangible but important boost this effort provides to company-wide morale.

 Looking at the first benchmark, the financial benefits, Verizon estimates that it saved $40
million in 2001 and 2002. Included are the savings achieved by upgrading, retrofitting and
auditing buildings, and the additional reductions obtained from other initiatives. These savings
are not one-shot; they will accrue year after year.

With respect to the environment, Verizon estimates it has decreased its carbon dioxide in the
Verizon footprint by 500,000 tons over the past two years ­ a very significant achievement.
Verizon has demonstrated to employees, to customers and to competitors the virtues of energy
conservation, and in doing so has further advanced its environmental mission.

Verizon plays an important role in ensuring national security. Besides using less energy, which
decreases U.S. dependence on foreign sources of energy, Verizon's fuel cell program seeks to
establish energy and telecommunications reliability in the event of a failure to the electric grid.

A final, crucial component of the company's energy efficiency "profits" is measured in prestige
­ the prestige that arises from strong leadership and healthy morale. Verizon's energy efforts
have won many accolades, including a 2002 EPA Energy Star Award for outstanding corporate
commitment to energy efficiency; a similar award in 2001 for significant energy reductions;
several Energy Star building certifications; a 2001 Association of Energy Engineers Award for
excellence in corporate energy management; the International Interior Design Association's
Sustainable Design Leadership Award; a Global Energy Award sponsored by the Financial
Times (London); and, in 2002, the prestigious EPA Climate Protection Award. These honors
have helped Verizon become a role model for the entire telecommunications industry, and
beyond.
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    LESSONS LEARNED
    Not surprisingly, being a leader in energy efficiency often means learning by doing. In
    embracing this challenge, Verizon has found that the company's efforts over the past three years
    have resulted in improved financial health, a better work environment, and added brand appeal to
    both customers and shareholders. Some other "lessons learned" include the following:
·               An energy data management system is critical to ensure an effective energy
    management program. Tools for tracking ongoing energy data must be constantly adjusted to
    allow for input of additional equipment and other factors.
·               With so many energy initiatives ongoing, it is essential that all audits and project
    proposals include figures for initial investment, payback period, and overall effect. Otherwise,
    different projects cannot be compared in a common capital program.
·             An energy conservation program must not only focus on the present, but must always
    look forward to new technology and innovation.
·              Partnering with external agencies, organizations and businesses is important to
    ensuring that core ideas be communicated to key audiences.

    Positive attention given toward past environmental accomplishments can be a key leverage point
    for keeping the ball rolling. Verizon's participation in a prominent ad campaign published in
    both the Wall Street Journal and New York Times (sponsored by the Energy Foundation and the
    Center for Energy and Climate Solutions) featured the series slogan "Energy Efficiency. It's
    Money in the Bank" touting the company's leadership on conservation and clean energy
    technology development.

    FUTURE COMMITMENTS AND GOALS

    Verizon has established a goal to complete a corporate-wide GHG inventory to be used as a
    benchmark for setting corporate carbon reduction. Here are some of the highlights:
·           Be the first U.S. telecommunications company to build a "Central Office of the Future."
    In cooperation with the DOE, NYSERDA, EPA, Telcordia, VTO and the State University of
    New York at Buffalo, Verizon plans a demonstration project that will use fuel cells to provide
    the direct current-to-direct current power it needs for its equipment.
·             Refine an already-proven ability to manage, predict, and shrink its sizable corporate
    energy budget.
·          Motivate all Verizon employees to focus on energy and environmental issues.
·          To be a role model for the increasing number of companies seeking to become
    environmental leaders. Verizon is now considering participation in the EPA Climate Leaders
    and Business Roundtable Climate Resolve programs.
Verizon Communications ­ Greenhouse Gas Emission Reduction Initiatives, 6


ORGANIZATIONAL PROFILE

Verizon Communications, (NYSE:VZ), formed by the merger of Bell Atlantic and GTE, is one
of the world's leading providers of high-growth communications services. Verizon companies
are the largest providers of wire-line and wireless communications in the United States, with
nearly 136 million access line equivalents and more than 33 million wireless customers.

Verizon is also the world's largest provider of print and online directory information. A Fortune
10 company with more than 227,000 employees and $67 billion in 2002 revenues, Verizon's
global presence extends to 45 countries in the Americas, Europe, Asia and the Pacific.