2011 Sustainability Report –CATERPILLAR ON ENERGY

Caterpillar
On Energy:
Supplying solutions
for a demanding world.
2011 Sustainability Report12011 Sustainability Report –CATERPILLAR ON ENERGY

Table of contents

3 Chairman’s Message
6 Our approach
12 Our Views
19 Energy
20	Brightening Prospects Around the world
We help meet power generation needs

23 Converting Powerful Alternatives

Efficient, alternative/renewable power production

26 Driving Better Performance

Clean, more energy-efficient products

30 Bringing it up right

We are one of the world’s largest mining
equipment providers

34 Saving energy on the job

Saving fuel depends on the efficiencies
of design and operation

38 People
43 Goals & Progress
68 Connections2

2011 Sustainability Report –CATERPILLAR ON ENERGY

chairman’s message

Douglas R. Oberhelman
Chairman and CEO

caterpillar on energy
I have never been more committed to Sustainable Development thanI am today. I travel the world and see first hand how the world
needs the products, services and solutions that Caterpillar provides.
And I see a world population that is growing and modernizing. Allof these things lead to the question, “What does the world need?”
Ask 10 people what the world needs, and you’ll probably get 10 different answers.
At Caterpillar, we’ve got quite a list of what the world needs – freer trade, rational
regulations, more energy, quality education, quality healthcare, clean water, modern
infrastructure, improved standards of living around the globe, just to mentiona few. I could talk on the importance of any of these subjects; but this year,
I want to focus on energy. The world needs reliable, cleaner energy.
Some 2.7 billion people live without access to adequate energy services.
Approximately 1.3 billion people, nearly one fifth of the global population, haveno access to electricity at all. It’s hard to imagine. It’s also within our grasp tochange. Given the abundant supplies of energy resources and the technology
available today, there is no reason why we can’t expand energy access to those
who are living without it. In many cases, the biggest difference between adeveloping nation and a developed nation is access to electricity. Our challenge
is how to extend that access in the most sustainable way possible.
(continued)3

2011 Sustainability Report –CATERPILLAR ON ENERGY

chairman’s message

1.3

Approximately 1.3 billion people, nearly

one fifth of the global population, have no accessto electricity at all. It’s hard to imagine.

We all have a role when it comes to energy. At Caterpillar, our role isclear and significant. We are a global manufacturer; and, as we build
products, we use energy. We have to be as efficient in the use of thisenergy as possible. We employ efficiency programs like the Caterpillar
Production System to make the best use of energy in our productionlines. Our logistics business strives to find the most efficient ways to
get parts and components to facilities around the world. We build new
facilities to efficient building standards. And we monitor energy use
at our facilities and take proactive steps to reduce energy waste.
We also work with customers who are focused on their own energy
consumption and on providing the energy the world needs. As communities, states or countries grow their economies and improve qualityof life for citizens, they have to think about energy. Collectively, we
all need to think more about sources and impacts of energy – bothproduction and consumption.
We are all on this planet together and need to be informed on the issues
surrounding energy. Here’s what we believe at Caterpillar:• Energy sources need to be developed and used in an environmentally
responsible manner. We use energy, and we have a responsibility
to develop energy sources sustainably. Caterpillar is continuallyenhancing the efficiency of its equipment and improving producttechnologies. While the consumption of energy for our products isonly a very small part of global energy consumption, it is a significant
component of the business of our customers and, therefore, a key
focus for us.

• There is no one single solution to providing globally abundant,
reliable, secure, clean and reasonably priced energy. We need all
sources of energy, including alternatives/renewables like wind, solar,
biomass, waste and used oil. But, we also need to develop traditionalsources of energy, like nuclear, natural gas and coal. Nuclear is thelowest emitting base load energy source available today. Natural
gas is the fastest-growing fuel, now accounting for approximately
23 percent of the world’s energy consumption. And demand is growing.
Coal is abundantly available and has the scale to meet the primaryenergy needs of the world’s rising population and expected economic
growth over the next several decades. All energy sources havean impact on the planet. We need to work together to limit those
impacts wherever possible.
• C aterpillar supports market-based, cost-efficient energy solutions
to help meet the world’s growing energy demands. We need energy
policies and an atmosphere in which the best companies, experts,
researchers, inventors and entrepreneurs have the freedom to innovate and the flexibility and resources to develop cleaner, more secureenergy – and more of it. We need policies and flexible mechanismsthat harness the marketplace to drive innovation, mobilize investment
and allow the sharing of clean, efficient technologies.
• Access to affordable and dependable energy resources is critical forenergy security, economic prosperity and growing economies. Look at
the world. Energy consumption is rising rapidly, driven by worldwide
population growth, swiftly developing economies, improving global
living standards and the burgeoning use of ever more energy-dependent
technologies. The global demand for energy is expected to increasesignificantly over the next 20 years.
The energy challenges are great. And we all have a role in helping
shape a future where everyone has access to affordable, clean energy.
We take our responsibilities seriously in terms of our own operations
and in helping our employees, communities and civic leaders understand our perspective in the energy debate; but that’s only a smallpart of our interest in energy.
(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

chairman’s message

Energy is at the core of our business.
Caterpillar customers play a major role in satisfying the world’s increasing
demand for reliable energy sources and clean, more efficient energy use.
And our business is all about serving our customers.
For decades, we’ve been working with customers to use alternative
fuels to power our reciprocating engines and gas turbines. And while
it represents a small percentage of our sales today, we’re working togrow that business every day. Within this year’s report, you will read
how we convert waste energy into clean, useful energy. Today, oneof our largest businesses is mining. Mining is at the heart of much of
today’s traditional energy sources. We also supply the global oil and gas
industries. We provide an entire suite of services to help customers
extract energy resources more efficiently and enable more sustainable
harvesting techniques.
We are also focused on energy used for transportation. You’ll findindustry-leading efficiency in Cat marine engines in many ocean-goingvessels, and we are investing heavily in rail and locomotive power –and re-power.
Caterpillar’s role is clear. Our customers are in the energy business,
and we are working to find ways to help them provide the energy theworld needs in a more sustainable manner. We are helping themsucceed by helping them become more sustainable and efficient.

Caterpillar customers play a major role insatisfying the world’s increasing demand forreliable energy sources and clean, more
efficient energy use. And our business is allabout serving our customers.

Doug Oberhelman
Chairman and Chief Executive Officer
of Caterpillar Inc.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

our approach

Our approachcorporate profile
For more than 85 years, Caterpillar Inc. has been making sustainable progress possible anddriving positive change on every continent. With 2011 sales and revenues of $60.14 billion,
Caterpillar is the world’s leading manufacturer of construction and mining equipment,
diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.
The company also is a leading services provider through Caterpillar Financial Services
Corporation, Caterpillar Remanufacturing Services, Caterpillar Logistics Inc. and Progress
Rail Services Corporation.
Caterpillar is a global leader, a worldwide enabler of sustainable progress. Caterpillar
operates hundreds of offices and facilities across the world and has more than 125,000
employees. Caterpillar’s global presence, product breadth and financial strength enable us
to win in today’s competitive marketplaces. We serve customers in more than 180 countries
around the globe with more than 300 products. http://www.caterpillar.com.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

our approachgovernance & Ethics
Corporate Governance
Caterpillar’s corporate governance is designed to serve the interests ofstockholders and other stakeholders with the highest standards of
responsibility, integrity and in compliance with applicable laws. Thesestandards are developed and implemented by our Board of Directors
and global management team, who oversee the company’s performanceand governance policies.
http://www.caterpillar.com/company/governance
Code of Conduct
Our Values in Action – Caterpillar’s Worldwide Code of Conduct, firstpublished in 1974 and updated most recently in 2010 in conjunction withour corporate strategy update, defines what we stand for and believe in,documenting the uncompromisingly high ethical standards our company
has upheld since its founding in 1925. The Code of Conduct helps Caterpillar
employees put the values and principles expressed in our Code of
Conduct into action every day by providing detailed guidance on the
behaviors and actions that support our values of Integrity, Excellence,
Teamwork and Commitment.
http://www.caterpillar.com/company/strategy/code-of-conduct(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

our approachgovernance & Ethics (cont.)
Supporting Human Rights

Opposing Bribery and Corruption

We are asked from time to time about our commitment to human rights.
We believe that Our Values in Action – Caterpillar’s Worldwide Codeof Conduct, effectively articulates our long-standing support for, andcommitment to, human rights and the dignity of all people. Caterpillar
values teamwork with our employees, dealers, suppliers and otherstakeholders. We seek suppliers and business allies who also demonstrate strong values and ethical principles. We avoid those who
violate the law or fail to comply with the sound business practices wepromote. We feel strongly that Our Values in Action creates a work
environment that recognizes the rights of our employees around theglobe. Therefore, we do not see a need to become signatories to othervoluntary conventions, frameworks and standards that offer direction
on how to promote the rights and freedoms of people, including thosebrought forward by the United Nations and other intergovernmentalorganizations. Our employees and management receive regulartraining and participate in annual assessments to ensure that they
are aware of and able to apply the principles contained in Our Valuesin Action. We also maintain internal reporting mechanisms to holdemployees and management accountable for failing to comply with
Our Values in Action.

Caterpillar believes fair competition based on quality, innovation andoverall value is fundamental to free enterprise and economic growth.
Bribery and corruption can have serious social, environmental andeconomic consequences – impeding trade, competition, investment
and economic growth, and limiting a nation’s ability to reducepoverty and improve standards of living. In some areas of the world
where Caterpillar does business, bribery and corruption are significant
issues. As a result, we strongly advocate and enforce anticorruption
policies throughout our businesses.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

our approach

Vision, Mission & Strategy
Our vision is a world in which all people’s basic requirements – suchas shelter, clean water, sanitation and reliable power – are fulfilled ina way that sustains our environment.

CRITICAL SUCCESS FACTORSOur mission is to enable economic growth through infrastructure andenergy development, and to provide solutions that protect people andpreserve the planet.

Progress: We identify and share best practices to promote our
employees’ awareness and understanding of sustainability. We
continue to foster a corporate culture of transparency, disclosureand engagement.

Our strategy is to provide work environments, products, services andsolutions that make efficient use of the world’s natural resources andreduce unnecessary impacts on people, the environment and theeconomy. This means that we leverage resources, including technology and innovation, to:Culture. Create a culture of sustainable development in all our business
units and in all our daily work.

Operations. Be consistent with our sustainability principles andcontribute to enterprise sustainable development goals.
Progress: The Caterpillar Production System provides the recipe for
efficiency and sustaining excellence in our facilities. We actively
encourage employees to conserve resources and be more efficient.
Operating in a more efficient and sustainable manner will reduce
impacts on people and the environment, and help us and our customers
save money.

• Promote and protect individual safety and well-being• Provide employment, education and training• Minimize the use of energy, materials, water and land
• Maximize recycling

Business Opportunities. Identify and pursue business growth opportunities
created by sustainable development.

• Minimize emissions• Optimize the use of renewable resources

Progress: We are working to embed sustainability into our Caterpillar
brand portfolio, our new product development process and ourtechnologies. Our business leaders continue to drive growth in salesof products, services and solutions that help customers meet theirsustainability challenges. We utilize 6 Sigma methodologies to focus
our work and drive measurable benefits.

Promote andprotect individual
safety andwell-being

Provideemployment,
education andtraining

Minimize theuse of energy,materials, waterand landMaximize
recycling

Minimizeemissions

Optimize theuse of renewable
resources

We will execute our strategy by working to meet our long-term aspirational goals. We set yearly targets where possible and are working on additional targets to help us measure
our annual progress.

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our approach

Roadmap Milestones
2000 Diesel Technology Forum founding member
2001 Joined World Business Council for Sustainable Development
2002 Lead corporate sponsor for Nature Conservancy’s Illinois River2009 Sustainability Council formed to drive increased revenues
	Announced remanufacturing joint venture in China with
Yuchai Machinery and opening of R&D center in China
	U.S. EPA Clean Air Excellence Award for Cat® D7E
	Leadership Energy and Environmental Design (LEED) Existing
Building Gold Certification for Corporate Headquarters and
Cat Financial Headquarters

Emiquon Preserve restoration and preservation project2003 Vision Zero Safety Goal

2010 Revised and relaunched worldwide Code of Conduct

	U.S. EPA Climate Leaders	Developed innovative battery materials technology	Acquired Electro-Motive Diesel, Inc., manufacturer ofdiesel-electric locomotives

	First delivery of reduced-impact logging certified lumber in
the United States, resulting from Tropical Forest Foundation
program, supported by Caterpillar	Greenmark Gold Plus certification for Singapore
remanufacturing facility

2005 First Sustainability Report	LEED Gold certification for Suzhou, China, Medium Wheel
Loader/Motor Grader facility; Wuxi, China, R&D facility;
Tianjin, China, Asia Power Systems facility; and Washington,
Ill., Instrument Applications Center

Revised and relaunched worldwide Code of Conduct	Sustainable Development becomes Enterprise Strategic
Area of Improvement

	LEED Silver certification for Wuxi, China, Perkins Shibaura
engine facility and Beijing, China, office facility	Lead corporate sponsor for Nature Conservancy’s GreatRivers Project

2011 Acquired Bucyrus International, Inc., manufacturer of2006	Dow Jones Sustainability World Index Industrial Engineeringhigh-productivity mining equipment

Sector Leader

	Acquired MWM Holding GmbH, Germany-based manufacturerof natural gas reciprocating engines	Acquired Progress Rail Services, Inc.

	First Annual Chairman’s Sustainability Awards

	Co-leading corporate sponsor of the World Resources
Institute Center for Transport and the Environment EMBARQ
project

	LEED Silver certification for Seguin, Texas, engine facility

2020	Achieve enterprise goals in the areas of workplace and2007 U.S. Climate Action Partnership (USCAP)

product safety, energy efficiency, greenhouse gas emissions,water consumption, materials efficiency, waste reduction
and LEED building criteria	Founding partner, Energy Technologies Institute in the
United Kingdom

2008 First U.S. EPA International Combined Heat and PowerAward – to customer in China

Cat® D7E, electric drive track-type tractor introduced
	AC electric drive mining trucks introduced10

2011 Sustainability Report –CATERPILLAR ON ENERGY

our approachforward-looking statements
and trademark information
Certain statements in this 2011 Sustainability Report relate to future
events and expectations and are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,”“anticipate,” “plan,” “project,” “intend,” “could,” “should” or othersimilar words or expressions often identify forward-looking statements.
All statements other than statements of historical fact are forwardlooking statements, including, without limitation, statements regarding
our outlook, projections, forecasts or trend descriptions. These statements
do not guarantee future performance, and we do not undertake toupdate our forward-looking statements.
Caterpillar’s actual results may differ materially from those describedor implied in our forward-looking statements based on a number offactors, including, but not limited to: (i) global economic conditions
and economic conditions in the industries and markets we serve; (ii)government monetary or fiscal policies and infrastructure spending;(iii) commodity or component price increases and/or limited availabilityof raw materials and component products, including steel; (iv) our andour customers’, dealers’ and suppliers’ ability to access and manage
liquidity; (v) political and economic risks and instability, including
national or international conflicts and civil unrest; (vi) our and Cat
Financial’s ability to: maintain credit ratings, avoid material increases inborrowing costs, and access capital markets; (vii) the financial conditionand credit worthiness of Cat Financial’s customers; (viii) inability torealize expected benefits from acquisitions and divestitures, including
the acquisition of Bucyrus International, Inc.; (ix) international tradeand investment policies; (x) challenges related to Tier 4 emissions

11

compliance; (xi) market acceptance of our products and services; (xii)changes in the competitive environment, including market share, pricing
and geographic and product mix of sales; (xiii) successful implementationof capacity expansion projects, cost reduction initiatives and efficiency
or productivity initiatives, including the Caterpillar Production System;(xiv) sourcing practices of our dealers or original equipment manufacturers;(xv) compliance with environmental laws and regulations; (xvi) allegedor actual violations of trade or anti-corruption laws and regulations;(xvii) additional tax expense or exposure; (xviii) currency fluctuations;(xix) our or Cat Financial’s compliance with financial covenants; (xx)increased pension plan funding obligations; (xxi) union disputes orother employee relations issues; (xxii) significant legal proceedings,
claims, lawsuits or investigations; (xxiii) compliance requirements
imposed if carbon emissions legislation and/or regulations are adopted;(xxiv) changes in accounting standards; (xxv) failure or breach of IT
security; (xxvi) adverse effects of natural disasters; and (xxvii) otherfactors described in more detail under “Item 1A. Risk Factors” in our
Form 10-K filed with the SEC on February 21, 2012 for the year ended
December 31, 2011. This filing is available on our website atwww.caterpillar.com/secfilings.
CAT, CATERPILLAR, their respective logos, “Caterpillar Yellow” and the
POWER EDGE trade dress, as well as corporate and product identity
used herein, are trademarks of Caterpillar and may not be used without
permission. Cat and Caterpillar are registered trademarks of Caterpillar
Inc., 100 N.E. Adams, Peoria IL 61629.
© 2012 CATERPILLAR PUBLIC RELEASE All Rights Reserved.
Printed in the U.S.A.

2011 Sustainability Report –CATERPILLAR ON ENERGY

our views

Our views
Caterpillar is a global company. With more than 450 facilities worldwide andmore than half our sales outside the United States, we serve customers aroundthe world.
We understand that there are many differing economic and political philosophiesand forms of government globally. We acknowledge and respect the diversity ofsocial customs and cultural traditions in the countries in which we operate. And
we maintain the flexibility to adapt our business practices to them – to the extent
that we can do so in keeping with Our Values in Action. In certain areas, however,
our positions are clear and long standing. These include Energy & Climate,
Growth & Trade, and People & Planet.

122011 Sustainability Report –CATERPILLAR ON ENERGY

our views

Energy & climate
CATERPILLAR ENERGY STATEMENT

2.7

Some 2.7 billion people
today do not haveadequate access toenergy, and approximately
1.3 billion people do
not have any accessto electricity.

Caterpillar has a fundamental interest in and understanding of energy as a global
energy consumer, global industrial manufacturer, and a major manufacturer of energy
conversion and power generation products. Caterpillar is one of the world’s leading
technology suppliers to various energy markets, and leverages its technology andinnovation to meet the world’s growing energy needs.
The Challenge
Energy is a key requirement for sustainable progress and development around theworld. As a result, energy consumption is rising rapidly, driven by worldwide population
growth, swiftly developing economies, improving global living standards and theburgeoning use of ever more energy-dependent technologies. Global demand forenergy is expected to increase significantly over the next 20 years.
Caterpillar Positions• E nergy sources need to be developed and used in an environmentally
responsible manner.
• There is no one single solution to providing globally abundant, reliable, secure, clean
and reasonably priced energy. Political and industry leadership is required to forge
consensus and a commitment to providing global energy and related infrastructureneeds that address economic development, stability and environmental impacts.
• Caterpillar supports market-based, cost efficient energy solutions to help meet
the world’s growing energy demands.
• Access to affordable and dependable energy resources is critical for energy
security, economic prosperity, and growing economies. Caterpillar supports
balanced and comprehensive energy policies that include the responsible
development and utilization of all energy resources, including traditional sourcesof energy and expanded utilization of alternative energy technologies.
• Caterpillar supports regulatory structures that provide a competitive, technology
neutral, and level playing field in which Caterpillar and our customers can operate.
(continued)
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2011 Sustainability Report –CATERPILLAR ON ENERGY

our views

energy & climate (cont.)
ENERGY POVERTY
Some 2.7 billion people today do not have adequate access to energy,
and approximately 1.3 billion people do not have any access to electricity. So how do we get it to them? Today, the technology and thenatural resources exist to rapidly expand energy access, but how isthis accomplished in a more efficient manner?

Caterpillar supports the development and use of energy efficiency
strategies and technologies, such as distributed generation, combined
heat and power, electric drives, remanufacture, clean diesel andnatural gas engines.
ENERGY INNOVATIONThe best companies, experts, researchers, inventors and entrepreneurs
need the freedom, the flexibility and the resources to develop clean,more secure energy – and more of it. We encourage innovation that
leads to new sources of energy and improved and more efficient useof existing, abundant resources.
Solar Turbines, a Caterpillar subsidiary, serves as a member of the Boardof Directors of the Business Council for Sustainable Energy (BCSE), which
advocates for the deployment of clean energy technologies, including
renewable energy, energy efficiency and natural gas. The Council promotes
the development of state, regional, federal and international energy andenvironmental policies that encourage the use of existing clean energy
technologies as an immediate way to meet the world’s growing energy
demand in an environmentally sound manner.
Caterpillar is a founding member of the UK Energy Technologies
Institute (ETI) a UK government/industry collaboration to accelerate thedevelopment of technologies that address the challenges of climatechange and provision of affordable energy access. The UK is a suitablelocation for this work, having some of the most aggressive targets,
such as an 80 percent reduction in CO2 by 2050. The ETI is developing
scenarios and technology pathways to yield the most cost effective
solutions. To accelerate the deployment of technologies, ETI has a$100 million per year portfolio of technology development and demonstration projects across a wide energy spectrum including distributed
energy, wind power, marine power technologies, energy infrastructure,transport including heavy duty vehicles, carbon capture and sequestration,
bio-energy and demand side management for buildings.

The Copenhagen Accord affirms that social and economic development
and poverty eradication are the primary goals of developing nations.
One of the biggest differences between a developing nation anda developed nation is access to energy – so let’s increase thataccess, help economies grow and reduce energy poverty where
it hits the hardest.
As energy is a key requirement for sustainable progress and development,
we need to focus our talents on reducing emissions while increasingenergy access. Caterpillar does this every day by leveraging technology
to improve air quality and limit environmental impact. With distributed
generation solutions, utilizing diesel and natural gas engines – andalternative fuels – Caterpillar is positioned to get power where it needs
to be. Cat® equipment helps meet the demands of the mining andresources industries, getting raw materials to where they need to be
to create increased access to power. Coal is an important fuel – bothtoday and for the future. Coal is available in the quantity and locations
needed to satisfy the world’s energy needs. All energy sources areimportant and should be developed, but coal is abundantly available andhas the scale to meet the primary energy needs of the world’s rising
population and expected economic growth over the next several decades.
Studies show that coal is about 70 percent cleaner burning today(from a particulate matter (PM), oxides of nitrogen (NOx), sulfur
dioxide (SO2) and mercury perspective) than just a couple of decadesago. New coal-fired power plants are 15-45 percent more efficient thanthe oldest ones in operation around the world today. Carbon captureand sequestration technologies that can remove most of the CO2(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

our views

energy & climate (cont.)
OPERATING IN A CARBON-CONSTRAINED WORLDAt Caterpillar we believe in the importance of providing energy-efficient
products and technologies for our customers and our facilities, as wellas advocating for policy solutions that are both environmentally andeconomically sustainable.
Caterpillar works with policymakers on developing economy-wide
emissions reduction programs in the United States that work in conjunction
with international efforts to reduce greenhouse gas emissions.

emissions are being demonstrated today. Efforts are needed tocommercialize this technology around the globe as part of a path for low
carbon-emitting energy. This energy can help the largest populations that
don’t have reliable energy today. Add new nuclear build outs (carbon-freeelectricity), new natural gas reserves, plus renewable energy sources
like wind, photovoltaic, tidal and others, and you start to see a portfolioof power that helps eliminate energy poverty, raise standards of living
and propel economic growth with less impact on the environment. This
leads to more investment in research and development for new technologies that develop cleaner and more efficient fuel sources. Eliminatingenergy poverty is a vision that can be achieved.
GLOBAL CLIMATE CHANGE
Global climate change has many environmental and commercial
implications, and a number of governmental and intergovernmentalorganizations are implementing mechanisms in an attempt to reducegreenhouse gas emissions. We support intelligent, responsible public
policies addressing climate and energy policies and are:• Investing in emissions reduction technologies that are importantto our customers and represent significant areas of opportunity
for our business.

Many countries already control greenhouse gas emissions, and morejurisdictions are evaluating plans to do so. Just as business cannot
operate efficiently under 50 different sets of state standards in the UnitedStates, business will struggle with vastly differing approaches aroundthe world. That is why we’ll continue to advocate a comprehensive
international approach that encompasses emissions reduction commitmentsfrom all major economies. We know we cannot reduce carbon emissions
in isolation. We must look at the issue with an eye toward energy security,
energy availability, technology, price and global competitiveness.
Innovation will be key to developing new energy sources, and wewill continue to call for policies that encourage innovation to improvethe use of existing energy resources – particularly coal, oil and naturalgas. We cannot afford to overlook any solution.
Despite the divergent proposals under discussion worldwide –everything from carbon caps and carbon taxes to strict regulatory controlof emissions – we all agree that technology plays a key role in any
successful strategic approach to reduce emissions. The private sector
must take the lead in developing and deploying technology solutions to
reduce greenhouse gas emissions. Regulatory structures should provide
a competitive, technology-neutral and level playing field. We believe
we should not disparage any solution that hasn’t been fully developed.

• An active supporter of policies and flexible mechanisms that harness
the marketplace to drive innovation, mobilize investment and allow
the sharing of clean, efficient technologies.

Ultimately, unilateral action to reduce greenhouse gas emissions will
not be successful. We need national policies that integrate well into
a global system of emissions reduction initiatives. Greenhouse gas
emissions reductions are about improvements in energy efficiency –that is where the most immediate and measurable benefits can occur.
We support legislation that’s both environmentally effective andeconomically sustainable. And we encourage a constructive dialogue
and a proactive approach to providing energy safely, efficiently andaffordably to the billions of people that inhabit our planet.

• Encouraging the coordination of domestic and international programs tomaximize the use of flexible, proven mechanisms to reduce emissions.

It’s a tall order – but one that’s critical to the future of business.

• Committed to development and deployment of technologies such as
combined heat and power, waste gas conversion to useful energy,
clean diesel engines and carbon capture and sequestration.

Through these activities, Caterpillar will continue making significant
contributions to efforts designed to reduce greenhouse gas emissions.
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our views

growth & Trade
ADVOCATING FREE AND OPEN MARKETSCaterpillar has along history of
advocacy for free
trade. Our support
comes not from theperspective of any
one country, but froma global context.

Caterpillar has long believed that the pursuit of business excellence and profit in a
climate of free enterprise, free trade and unencumbered competition is the best meansfor efficient development and distribution of goods and services. Further, we believe
such international exchange promotes better understanding across borders andcultures, leading to a more peaceful world. The enormous rise in post-World War II
gross domestic product and living standards in countries participating significantly
in international commerce has demonstrated such benefits. In contrast, countries
that have been isolated as a result of lack of infrastructure, protectionist policies,
conflict or economic sanctions have not enjoyed these advantages.
The economic growth brought about by international trade is essential for poverty
reduction, but it doesn’t come without challenges. Chief among them is the needto balance economic, environmental and social policies in support of sustainable
development. When this happens, sustainable development can become a sharedobjective and provide a common frame of reference – allowing environmental andtrade policymakers to engage stakeholders, analyze issues and evaluate policy
more efficiently.
Caterpillar has a long history of advocacy for free trade. Our support comes not fromthe perspective of any one country, but from a global context. We believe thatcompanies compete best in a free trade environment. When trade barriers are
removed, we can better meet our global customer needs and grow more efficiently.
Our suppliers benefit because they can more efficiently satisfy our global sourcing
requirements. Our employees benefit from a higher standard of living as they haveaccess to more product choices at lower prices. Because open markets lead to
improved competitiveness, we believe free trade also allows us to provide more
and better job opportunities.
(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

our views

growth & trade (cont.)
worldwide. Caterpillar provides input to regulatory agencies to help
ensure the smooth introduction of new technologies. We design products
and services that help people and communities as they strive to create
better lives for themselves. As the global population continues to grow,the availability of natural resources may diminish; and the need forCat® products and services as enablers of sustainable development
becomes even more important.

Caterpillar will continue to promote policies that reduce – or, better yet,eliminate – trade and investment barriers. At the same time, we willcontinue to speak out against protectionist policies. We believe thatdeveloped countries should adopt policies that allow the benefits of the
global economy to be extended to developing countries. Caterpillar also
recognizes that in many of the world’s poorest countries, humanitarianand development assistance is necessary to fight disease, improve living
conditions, combat corruption and provide the know-how to drive
economic growth and trade. We support the goals of initiatives aimed atincreasing economic growth and reducing poverty in developing countries.
HARMONIZING GLOBAL STANDARDSOn an international level, Caterpillar is actively involved in developing
International Standards Organization (ISO) criteria and chairs thecommittee that develops industry consensus standards for earthmoving
equipment, including standards for visibility, rollover protection structuresand braking. Our global standards and regulations team works closelywith these organizations to enhance machine safety standards

17

Caterpillar regularly makes its management and technical expertiseavailable to regulatory bodies in advisory roles and to provide technicalassistance as new product standards are developed. These activities
include participation and leadership roles in organizations such as theISO; membership in governmental and nongovernmental delegations tointernational bodies such as the International Maritime Organization;
participation in formal European Union industry expertise panels andparticipation in Federal Advisory Committees chartered under the U.S.
Environmental Protection Agency.

2011 Sustainability Report –CATERPILLAR ON ENERGY

our views

people & planet
safetyOur Vision:
Safely home.
Everyone.

Caterpillar is dedicated to the safety of everyone at Caterpillar, including our extended
family of employees, dealers, suppliers and customers. Caterpillar’s Global Health &Safety team plays a key role in providing expertise and support to Caterpillar operations
worldwide. Caterpillar also offers the SAFETY.CAT.COM™ website for environment,
health and safety training. This site provides access to a wide range of interactive
online training courses for safety, health and the environment – in full support of ourvision: Safely home. Everyone. Every day.™ The low-cost solutions offered throughthis safety training library will help users of industry-specific equipment create aculture of safety on any job site.

Every day.™

ENVIRONMENT
Caterpillar contributes to sound environmental stewardship in communities where
it operates. We establish and adhere to environmentally compliant policies andpractices in product design, engineering and manufacturing in all of our facilities
worldwide. Caterpillar’s Environment, Health & Safety Assurance framework helps
ensure that Caterpillar complies with applicable laws and regulations, as well as
remains an upstanding corporate citizen and good neighbor. Successfully identifying
and managing environmental issues protects the environment we all live in andmakes good business sense.
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2011 Sustainability Report –CATERPILLAR ON ENERGY

energyEnergyThe world’s increasing demand for energy will encourage discovery of new supplies,
conservation of energy, use of alternative/renewable energy sources and theenvironmentally efficient use of existing energy sources.
While working to increase access to energy, Caterpillar focuses on reducing
environmental impacts by boosting the energy efficiency of its products, services
and solutions.

192011 Sustainability Report –CATERPILLAR ON ENERGY

energy – power generation

In This Section
New Cat® 3516C-HD Diesel
Generator Set

Brightening Prospects
Around the WorldAs electricity use rises, Caterpillar is meeting emergency,
standby and continuous power generation needs with an
unparalleled line of diesel generator sets, natural gas generator
sets and integrated power systems.

Caterpillar Power Solutions for
Reliable Energy Sources

In 2011, we announced the purchase of MWM Holding GmbH (MWM), a
leading global supplier of sustainable, natural gas and alternative-fuelengines. The acquisition of MWM will enable Caterpillar to significantly
expand customer options for sustainable power generation solutions andhelp its customers become more efficient.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – power generation

New Cat® 3516C-HD diesel generator set
The new Cat® 3516C-HD diesel generator set offers highly efficientfuel consumption rates and lower emissions. The generator set iscertified to meet U.S. Environmental Protection Agency (EPA) Tier 4Interim standards. These emissions regulations set by the EPA
call for dramatic reductions in outputs of carbon monoxide,hydrocarbons, particulate matter and oxides of nitrogen.

To provide customers with the most economical and efficientemissions solutions, Caterpillar continues to develop generator
sets engineered to deliver flexibility, expandability, reliability
and cost-effectiveness, while at the same time addressing theemission reduction levels required by EPA regulations.

“This is the first diesel generator set producing more than 2MW
that has been certified to Tier 4 Interim standards,” said Robert
Koval, investment projects general manager of Caterpillar ElectricPower Division. “Tier 4 Interim certified generator sets are requiredfor high-hour applications, such as rock crushers, peaking plants
and remote installations. Our emergency standby customers will
also realize benefits with this generator set, particularly in areas
with stringent local standards. The lower emissions from theTier 4 Interim generator set should eliminate or minimize theamount of additional aftertreatment needed to comply withlocal emissions regulations.”“This is the first diesel generator set
producing more than 2MW that has beencertified to Tier 4 Interim standards.”– Robert Koval, investment projects general manager ofCaterpillar Electric Power Division

Ranging from 455 kW to 2500 kW, Caterpillar now offers thewidest range of Tier 4 Interim certified generator sets in theindustry. To support these products, Cat® dealers and technicians
are factory trained in emissions technology installation and service.

The Cat® 3516C-HD offers flexible packaging options for easy
installation and optimal performance, while minimizing impact
on generator set space requirements and maintenance hours.
The generator set is also available with a full range of factory
designed and tested attachments to meet customer requirements.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – power generation

Caterpillar Power Solutions for
Reliable Energy Sources
When the power goes out, it’s often Cat® emergency generator
sets that are responsible for providing back-up power.

fuel and propane to homes, businesses and hospitals on theisland. Access to gas and propane can be a matter of life and deathfor island residents during a long disruption of primary power.

Fulfilling this role can be critical. The American Hospital in Dubai,
for instance, uses Cat® C175-16 diesel-powered generator sets toprovide standby and uninterruptible power supply (UPS) to sustain
the reliable and high-quality energy supply required for patientcare and diagnostics. The C175-16 generator sets combine highpower density with efficient operation and low emissions. The Cat®
UPS system uses an energy storage system that is immediately
available to power up a critical load in the event of grid outage.
Elsewhere, Cat® generator sets provide essential back-up power.

In the Mtwara and Lindi regions of Tanzania, Cat® generator sets
also perform a vital function. Natural and agricultural resourcesin the area are plentiful, but economic development had beenhampered by an unreliable hydroelectric power supply that was
hit by drought conditions and other natural catastrophes. Now,
however, nine Cat® generator sets provide power generation for
the first privately supplied electric power franchise in Tanzania,
supplied by offshore gas supplies. This has at last given local
industries such as cashew nut factories a chance to grow, basedon the assurance that power will be available. Adequate andreliable electric power to the region provides the crucial foundationfor economic and commercial development.

The American Hospital in Dubai uses Cat®
C175-16 diesel-powered generator sets toprovide standby and uninterruptible power
supply (UPS).

The reliability and low fuel consumption and operating costs ofCat® equipment are factors that drive demand for our products
around the world. In 2011, we secured an order for eight generator
sets to provide emergency back-up power for gas compression
stations that service the Asian Gas Pipeline, which runs from
Turkmenistan and Kazakhstan to China and will be completed in
2014. The pipeline, which will deliver 40 billion cubic meters ofnatural gas – 2 percent of China’s energy requirements – needs
the generator sets to keep supplies going around the clock toindustry and homes.

In Puerto Rico, the wholesale fuel supplier Cabo Rojo Gas uses Cat®
generator sets to ensure its fuel pumps at five distribution centers
are always working during the June to November hurricane
season, delivering uninterrupted supplies of gasoline, diesel

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Alternative/renewable energy

In this section
Coke Oven Gas

converting powerfulalternatives
Caterpillar helps customers produce power efficiently – fromalternative and renewable fuels, such as methane from landfills,
livestock manure, sewage treatment and underground coal Mines.

Wind Turbines andRemanufacturing

We offer financing solutions through Cat Financial, to build and maintainlandfill gas, anaerobic digester and combined heat and power projects thatgenerate alternative/renewable energy and reduce greenhouse gas emissions.
Cat Financial is expanding efforts to support companies in other types ofalternative/renewable energy projects, such as gasification and coalmine methane.
Cat World Trade gives Caterpillar customers an alternative way to finance thepurchase of equipment and services, through the creation of nontraditional
trade agreements. For example, Cat World Trade helps the forestry industry
market woodchips and other biomass to renewable energy producers and also
supports landfill operators, dairy farmers and other Caterpillar customers whoconvert biogas to energy. To maximize the efficient use of natural resources,
Cat World Trade sells ferrous and nonferrous scrap to integrated steel mills andmini-mills. Reusable or recyclable materials including specialty alloys, copperand castings can also go to market through the Cat World Trade global network.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Alternative/renewable energy

coke oven gas
Shandong Jinneng Coal Gasification Co. Ltd. became the firstcompany outside the U.S. to win the U.S. Environmental Protection
Agency’s International CHP Award for exceptional leadership inenergy use and management.

For many years it was common practice in China for enterprises
producing coal derivative chemicals and products to bake the cokeoven gas out of the coal and then emit it into the atmosphere,
missing an opportunity to turn waste into energy and at thesame time reduce emissions.

Caterpillar subsidiary, Solar Turbines, helps customers use
coke oven gases as a fuel for highly efficient CHP generation.
Solar™ turbines are helping Chinese coke makers recycle thegases into much-needed energy, while reducing overall impact
on the environment.

Caterpillar saw an opportunity to turn that wasted oven gas into
energy – by burning it in a gas turbine. The key engineering
challenge was not only to find an efficient way of using the cokeoven gas, which is a by-product of the manufacture of coke for steel
making, but to burn out some of the contaminants it harbors –such as hydrogen sulfide, tars and other chemicals.

Solar Turbines is now a leader for coke oven gas projects andcurrently has inquiries for coke oven gas projects all over theworld. The success in China helps position us as a contender
for a growing number of natural gas fired CHP projects currently
being developed in that market.

A small group of Caterpillar experts got to work, and after two
years of development, their first gas turbine power generation
package was brought into operation at the Shandong Jinneng
Coal Gasification plant. The combined heat and power (CHP) system,
operated by a Solar™ gas turbine, operates at approximately
68 percent efficiency and uses approximately 26 percent lessfuel than equivalent separate heat and power. The CHP systemis estimated to reduce CO2 emissions by 40,000 metric tons
per year. This reduction is equivalent to removing the annual
emissions from approximately 6,600 cars.
By the end of 2011, Caterpillar had turbines up and running thateliminates the equivalent of 540,000 metric tons of CO2 emissions
per year. The application is sustainable in several ways. First,
pollutants are reduced in the combustion process. Second, electricity
is produced which allows reduction in the coal consumed (and theemissions generated) by the local power plant. Third, the exhaust
heat from the turbine is used to make steam to quench the cokeand is used in other chemical processes at the plant.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Alternative/renewable energy

Wind Turbines and Remanufacturing
The environmental and cost benefit of remanufacturing components
is recognized globally. Demand from other customers is rising,and Caterpillar is expanding to meet that need.

In the fall of 2011, Caterpillar reached a 10-year, global agreement
to remanufacture wind turbine components made by VestasWind Systems, a Danish wind turbine manufacturer that has
44,500 of its turbines installed and working around the world.

In May 2011, Caterpillar opened a facility in Singapore that will
provide remanufactured components for large off-highway trucks
and other mining equipment. The facility will have advanced
remanufacturing technologies on site to provide high quality,
durable products. Together with a remanufacturing facility inShanghai, China, Caterpillar provides an exceptional combinationof availability, cost and regional support for Asia-Pacific customers.

Caterpillar will supply Vestas with remanufacturing services
that will return end-of-life components to “same-as-when-new”
condition in terms of reliability, durability and performance. This
reduces waste, minimizes the need for raw materials to produce
new parts, and lowers costs.
Vestas wind turbine components will be remanufactured
using Caterpillar’s existing facilities, equipment and suppliers.
Remanufacturing will begin in Caterpillar’s North America
facilities, followed by facilities in Europe and Asia.

Sustainability is also built into the Singapore facility itself,
through a number of features such as energy use that will
significantly reduce environmental impact. In recognition ofthese innovations, the facility received a Green Mark Gold Plusaward from Singapore’s Building Construction Authority.
In August 2011, Caterpillar announced plans to significantly
expand its remanufacturing facility in West Fargo, N.D. The
expansion will help meet strong demand for remanufactured
drivetrain components in the mining sector. Operations are
expected to begin in June 2012. When the expansion is complete
and fully operational, it is anticipated Caterpillar will add roughly
250 additional workers over a three-year period, bringing thetotal workforce to approximately 550 in West Fargo. The West
Fargo facility has produced remanufactured components for the
past 40 years.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Clean & Efficient Products

In this section
Revolutionary Dozer is Clean
and Efficient

DRIVING BETTERPERFORMANCE
Global demand for energy, rising fuel prices and tighter emissions
regulations are challenging our customers to work more efficiently.

Emissions Control Technology for
Diesel and Natural Gas Engines

Caterpillar is responding by enhancing the efficiency of its equipment andimproving product technologies. Caterpillar is also meeting the U.S. Environmental
Protection Agency Tier 4 / European Union Stage IIIB / Japan MLIT Step 4 productdevelopment challenge. Our customers will realize the value of our updated
machines through features such as improved fuel economy, shorter cycle times,
greater operator visibility and improved ergonomics.

Timber Harvesting With
More Horsepower andLower Emissions

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Clean & Efficient Products

Revolutionary Dozer is Clean and Efficient
The Cat® D7E is a midsize earthmoving vehicle in a categorycommonly referred to as ‘dozers.’ When it comes to moving
earth in a more efficient fashion, the D7E electric drive tracktype tractor is – well, earth moving.

The revolutionary electric drive power train has 60 percent fewer
moving parts than a drivetrain with a powershift transmission.
Oil and filters need to be changed less often, and intervals between
routine maintenance are extended. All this saves resources.

In 350,000 hours of monitored activity by the D7E through the endof 2011, more than 840,000 gallons (2,680 metric tons) of diesel
fuel were saved, reducing CO2 emissions by more than 18 million
pounds (8,500 metric tons).

The modular air conditioner in the D7E is estimated to reduce
refrigerant leaks four-fold as a result of elimination of the belt
driven air conditioning compressor and air conditioning hoses;
it also dramatically reduced the number of lines and connections.

Thanks to a revolutionary diesel-electric drivetrain – the first of its
kind – the D7E’s fuel consumption is between 10 and 30 percent
lower than the conventionally powered D7R Series 2 that it
replaced; while due to its speed and power-to-ground efficiency,
the D7E moves 10 percent more material each hour. Overall, thisadds up to approximately a 25 percent improvement in material
moved per gallon of fuel. Lower fuel consumption also results inlower lifetime greenhouse gas emissions. The D7E is designed toconsume fewer resources during its working life, to reduce theimpact on the environment while preserving valuable resources
for future generations.

The D7E has also reaped business benefits for Caterpillar.
Most customers and operators like the machine’s efficiency
and productivity, continuously variable transmission, smooth
directional changes, superior visibility, spacious and quiet
cab and exceptional uptime.
The full value of the technology developed on the D7E is yet tobe realized as this breakthrough technology is applied to other
Caterpillar products.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Clean & Efficient Products

Emissions Control Technology for
Diesel and Natural Gas Engines
The E-POD is an all-in-one emissions control unit utilizing SCR
coupled with diesel oxidation catalysts (DOCs) or diesel particulate
filters (DPFs). The product features proprietary technology housed
within a stainless steel silencer shell. Using iron zeolite SCR
catalysts, the E-POD offers dramatic reductions of NOx, particulatematter (PM), commonly known as soot, hydrocarbons (HC) andcarbon monoxide (CO). The E-POD with DPFs reduces NOx by morethan 95 percent, PM by greater than 85 percent, and HC and
CO by up to 95 percent. The E-POD with DPFs offers Tier 4 Finalequivalent levels for Tier 1 and Tier 2 diesel stationary engines,
and some unregulated engines.

The Pinedale Anticline Project Area (PAPA) is one of the largest
gas fields in the continental U.S. providing natural gas energy.
The field is located in the Wyoming Sublette County Green River
Valley in Pinedale, Wyo., and covers approximately 197,000
acres of federal, state and private lands.
The PAPA contains natural gas reserves estimated at up to
40 trillion cubic feet (1.1 cubic meters), with 20 – 25 trillion
cubic feet (0.6 – 0.7 cubic meters) of that recoverable – enoughto supply 10 million U.S. homes for more than 30 years.
PAPA requires drilling engines in the anticline to be equipped with
Selective Catalytic Reduction (SCR) systems capable of achieving
greater than 90 percent oxides of nitrogen (NOx) reduction, andrequired reductions to be met by January 1, 2012. Drilling rigs
that remain unequipped with SCR, or are unable to pass quarterly
emissions demonstration tests, will not be allowed to operate.

As an integrated system, each E-POD can be moved by one service
truck, versus competitive SCR systems that require additionaltear down and setup. Reduced emissions enable the customer
to operate for more hours, increasing overall productivity.

Cat Dealer Wyoming Machinery offered the CleanAIR Systems
E-POD as a retrofit solution for drilling rigs in the Pinedale,
Wyo., oil fields. The E-POD demonstrates a constant 90 percent
plus NOx reduction. Since total emissions output per year for each
rig are regulated, E-POD use enables the drill rig owners to operate
longer hours. At the end of 2011, 42 E-POD systems have been
installed on 14 drilling rigs in the Pinedale, Wyo., oil fields.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Clean & Efficient Products

TIMBER Harvesting With More
Horsepower and Lower Emissions
Our new Cat® wheel feller bunchers – machines that harvest
timber – deliver more horsepower but use less fuel. This means
lower emissions (reducing impact on the environment) andreduced operating costs (good for our customers).

The engine also meets the U.S. Environmental Protection Agency
Tier 4 Interim and EU Stage IIIB emissions standards. Yet thechanges needed to meet these requirements were made withoutcompromising uptime or shortening the life of the vehicle.

The change is the result of advances in Caterpillar’s engine
technology and machine design. The C Series engine generates
power at lower revolutions per minute than previous models,and a new technology called PowerDirect Plus delivers power
selectively, where and when it is needed. This optimizes machine
efficiency, performance and productivity.

When designing the new wheel feller bunchers, our focus wason keeping the machine cool, which improves performance andfuel efficiency. The oversized, hydraulically driven fan spins at a
slower speed overall and only turns as fast as needed to keep
temperatures at the right level. In colder weather or when themachine is first started, the fan spins more slowly to conserve
fuel and reduce noise.
As well as maximizing energy efficiency, the new Cat® feller
bunchers are designed to conserve resources. All major parts
are designed to be rebuilt, reducing waste and replacement costs.
With fewer parts and longer component life, there is less to replaceor throw away.
Operator safety has also been a key consideration in the upgrade.
With the new design, the engine is placed at the back, producing
better weight distribution and balance between the front and rearaxles. This revolutionary design provides exceptional stability –even when carrying big pieces of timber on steep or uneventerrain. A three-piece front windshield, large rear windows andskylight give the operator excellent visibility.
The new Cat® feller buncher C Series is also the first and only wheel
feller buncher that can be fueled on the ground. In addition, theengine, hydraulic pumps and key components can be accessedfrom ground level, enabling safer and easier servicing.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – RESOURCE EXTRACTION

In this section
Autonomous Mining Trucks
Drive Efficiency and Save Energy

Bringing It Up Right
The rapid development of the world’s emerging markets is driving
an increasing need for mined commodities, as billions of people
around the world seek to improve their standards of living.
Caterpillar is engaged in the mining industry at every level, working alongsidecustomers to help them mine efficiently and productively while protecting thehealth and safety of miners.

Efficient Truck Built
Closer to Customers

In 2011, Caterpillar completed the acquisition of Bucyrus International, Inc.,
expanding its leadership and support for customers in the mining industry. The
acquisition enables Caterpillar to offer the broadest range of surface and underground mining products and solutions to customers in the industry and to help
those customers to become even more efficient.

Sustainability in Mining

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – RESOURCE EXTRACTION

Autonomous mining trucks drive efficiency and save energy
The idea of a fleet of autonomous trucks working round theclock at a mine site while a technician supervises them from the
comfort of a control room may appear to be a work of science
fiction. But in one part of the world it will soon become fact.

The large mining trucks follow assigned lanes through anever-changing map of the mine, follow the best path from where
they are to where the system tells them to go and even stop
when something unexpected appears in the road in front ofthem. The result of all these technologies working together issafer, more predictable and more productive hauling operations.

Starting in third quarter 2012, six Cat® 793F autonomous trucks
will begin working at the Solomon iron ore mine run by Fortescue
Metals Group in Western Australia. At full operational capacity,
it is anticipated the Solomon mine will have approximately
45 autonomous trucks by 2015 – all operating without an
operator onboard.

Onboard technology ensures optimum efficiency – programming
trucks to operate exactly as intended, reducing use of fueland wear and tear. One of the greatest efficiencies in mining
processes results when there’s less energy used. Autonomous
mining trucks use energy in a more effective way, lessening
impact on the environment.

But there’s more to autonomy than just trucks. Cat Command forhauling utilizes wireless communication, global positioning and abroader suite of technologies, known as Cat® MineStar™ System, toenable remote monitoring of the trucks while they go about theirbusiness of collecting loads and dumping them in assigned positions.

There are other sustainability points. Traditional machines stop
periodically for operator breaks and shift changes. Command forhauling improves productivity by running continuously day andnight, only stopping for fueling and planned maintenance intervals.
Autonomous operations bring fundamental changes to mining
processes, making the entire operation, not just the trucks, more
efficient while reducing infrastructure needs and lessening theimpact on the environment even further.
Caterpillar is developing autonomous versions of other mining
machines. This industry-changing technology offers our mining
customers a competitive advantage.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – RESOURCE EXTRACTION

Efficient Truck built closer to Customers
The hydraulic tank has been constructed to be compatible withbiodegradable oil. The 773E is also built to be rebuilt. Once acomponent reaches the end of its service life, it can be remanufactured. This makes both economic and environmental sense
because it reduces waste and consumption of raw materials,
and provides a lower cost to the customer.

Caterpillar has launched in-country production of Cat® 773E trucks
in Tosno, Russia, to support the demand for mining trucks acrossRussia and the Commonwealth of Independent States. The trucks
will be used by customers to extract resources vital to accelerating
infrastructure development in the coming decades.
“More than half the world’s population now lives in cities,
and the population of the world is expected to grow more than
60 million a year for the next 30 years. The demand that is expected
to be placed on mining, which provides the raw materials forbuilding housing, infrastructure, supplying clean water and otherthings that make cities work, is vast,” Caterpillar Group President
Steve Wunning explained.
The 773E will be sold to extractive industries across the country.
By building the trucks closer to mining customers, Caterpillar
will reduce delivery costs as well as reduce the environmental
impact of shipping parts. Caterpillar will also be able to provide
better after-sale maintenance, increasing product life and reducing
waste. New jobs will also be created to support the 773E
manufacturing operations.
The 773E, which achieves emissions levels equivalent to those of
EU Stage II emissions standards, is also very efficient. For a start,
it can move more material per unit of fuel. Fuel injection iselectronically controlled to match specific load requirements.
An economy mode reduces fuel use, engine noise and operating
costs in conditions when the vehicle is at a standstill, waiting
to be loaded.

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energy – RESOURCE EXTRACTION

Sustainability in Mining
When it comes to improving sustainability performance, there ismore that Caterpillar can do for its customers than providing
energy efficient equipment. Across the world we are expanding
our support for customers in the mining industry by coming up
with new solutions to reduce costs, save resources and reduce
environmental impacts.
At Cargill Deicing Technology’s underground salt mine, forinstance, Cat Dealer Milton Cat developed a solution to extend
the life of machinery – enabling the mine to be more efficientwhile reducing waste.
Cargill Deicing Technology’s Cayuga mine is located 701 meters(2,300 feet) under a picturesque lake in New York. Getting partsand machines into the mine can be a challenging endeavor. In
fact, when it’s time to repair or replace large pieces of equipment,
they must be dismantled above ground and then reassembled
in the mine.

CCRs take advantage of the “second life” built into the Cat® LHDs.
And for the first time ever, the rebuilds would be completed
underground – a challenge that has been met and that is now
a recognized solution for other underground fleets.
At Boliden mining company’s Aitik mine in Sweden, Caterpillar has
helped improve productivity and reduced environmental impact
by being the first mine in the world to put into production the newCat® 795F AC trucks on a site in the Arctic Circle. The 345-tonelectric drive trucks are so big they have increased the payload
capacity dramatically, contributing to a significant boost inannual production to what is already one of the largest copper
mines in Europe.

Cat® Certified Rebuilds (CCRs) were selected to improve theperformance of the Cayuga mine fleet of Cat® R1700G loadhaul-dump (LHD) loaders. A CCR typically costs approximately
60 percent of the cost of buying a new machine. And the CCR
could be done without ever removing the machine from its
underground home.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – RESOURCE EXTRACTION

Sustainability in Mining (cont.)
The Cat® C175 meets the European Union’s
emissions requirements, yet it delivers
2,535 kilowatts (3,400 horsepower) of power.
The philosophy of “mining with minimal environmental impact” hasbeen put into practice with significant results. Chalco’s advanced
management methodology and the strong sense of responsibility
for protecting the environment set a role model for China’s mining
companies. Caterpillar and Chalco are working together on various
projects all over the world.
Productivity is also enhanced by the 795’s Cat® C175 diesel engine.
The Cat® C175 meets the European Union’s emissions requirements,
yet it delivers 2,535 kilowatts (3,400 horsepower) of power.
Caterpillar is also helping Boliden reduce its environmental impact at
the Aitik mine by providing training on the importance of avoiding
contamination of fuel. The training draws on the expertise of Caterpillar
technicians from around the world and emphasizes that better
management of hydraulic oil filters, transmission fluid and axle oil
extends the life of many components, improving energy efficiency.
In China, the Guangxi aluminum mine owned by Chalco has been
rewarded many times for its achievements in environmental protection.
The site has achieved significant social, economic and environmental
benefits, setting new benchmarks for mining enterprises across thecountry. Zhou Zhiqiang, business supervisor at the site’s equipment
administration center, says the mine has come to rely on Cat®
equipment’s low failure rate and high availability. Productivity andavailability have a direct impact on work performance.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Customer Solutions

In this section
Locomotive Repowers
Save Resources

SAVING ENERGYON THE JOB
As electricity use rises, Caterpillar is positioned to promotesustainable progress by helping customers be more efficient andto enable growth and development in sustainable ways.

Fleet Management Drives
Efficiency and Reduces Waste

Caterpillar takes a holistic view of customer sites to improve overall efficiency
and safety, focusing on a life cycle approach that evaluates the environmental,
economic, social and regulatory implications of our products and services
throughout their lives. Our products and services provide total solutions to ourcustomers’ needs. We help them increase revenue, increase efficiency, reduce
cost and reduce environmental impact.
As technology continues to develop, Caterpillar is constantly refining advanced
technologies to help make customers’ equipment more productive and efficient,and to help customers more effectively manage equipment fleets and operations –for efficiencies in time, fuel burn and emissions reductions. We also help ourcustomers reduce costs by taking near end-of-life parts and restoring them tooriginal engineering specifications through remanufacturing, an advanced formof recycling.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Customer Solutions

Locomotive Repowers Save Resources
Canadian Pacific Railway’s locomotive fleet has long operated
on one of the world’s most famous cross-continental railroads.
While the fleet has been in operation for years and beaten awell-worn path on service routes, it does not meet modern day
sustainability standards – nor has it remained particularly efficientor reliable. It would seem logical to consign the fleet to the scrap
yard and buy new stock.

Progress Rail has also been working with Pacific Harbor Line torepower 16 locomotives that service the ports of Long Beach and
Los Angeles, Calif. Thanks to a new Cat® 3512C HD engine and acustom-made diesel particulate filter, the repowered locomotives
not only cost less than new models, the repowered locomotives
also reduce emissions of particulate matter by around 90 percent
compared to the older model. This is an important considerationin the Los Angeles basin area, where there are strict requirements
on exhaust emissions. By using repurposed steel and repoweringwith new engines, the project will save approximately 53 tons
(48 metric tons) of new steel per locomotive, the production ofwhich would have generated approximately 60 tons (54 metric tons)of CO2 per locomotive.

But replacement locomotives can be expensive – and wasteful. So
Caterpillar’s wholly owned subsidiaries, Progress Rail Services andElectro-Motive Diesel, have stepped in to help the railway repower
its locomotives with fuel-efficient engines with reduced emissions.
Progress Rail Services, Electro-Motive Diesel, and Canadian
Pacific Railway are in the process of reconfiguring up to 500
locomotives dating back to the 1950s, eliminating the need to
produce more than 15,000 tons (13,600 metric tons) of steel
for new locomotives and the generation of more than 18,000
tons (16,300 metric tons) of CO2.

In addition to the benefits in energy and materials efficiency andreduced emissions, the projects have been well received bycustomers, and have given Caterpillar a competitive edge overcompanies providing new locomotives. Even better, the repowered
locomotives can eventually be upgraded again, meaning that thecharacter of the old rolling stock can be retained for decades to come.

Initially, the locomotive modernization and repowering effort
will reconfigure 150 locomotives built in the early 1950s. The
locomotives will be modernized by reusing 25 percent of theoriginal content and repowered by upgrading to run on biodiesel.
The repowered engines will meet the latest emissions regulations.
There are plans to modernize 350 more locomotives that datefrom the 1970s. The total order of 500 locomotives will result insignificant fuel and maintenance savings.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

energy – Customer Solutions

Fleet Management Drives Efficiency and Reduces Waste
Caterpillar takes a holistic view of its customer sites to increase
productivity and improve sustainability. Working with customers
and Cat® dealers to carefully manage the fleet of Cat® machines
working a site, Caterpillar Job Site Solutions helps customers
improve fuel consumption, reduce emissions and increase safety.
The lifecycle of equipment is also maximized through component
and full machine rebuilds. Job Site Solutions drives fuel efficiency
for our customers by making sites as efficient as possible throughimprovements in site planning, equipment updates, right-sizingof fleets and increased operator performance.

Caterpillar fleet management technologies will also monitor morethan 700 pieces of heavy machinery, including 186 earthmoving
products, as work progresses to build Belo Monte Dam, the world’s
third-largest hydroelectric dam complex, in Pará, Brazil. The
construction fleet will be managed via Cat® Product Link satellite
machine control and guidance and condition monitoring technology
to enable maximum efficiency, increase productivity, reducedemand for fuel and lower owning and operating costs forthe fleet. Part of the Brazil government’s Growth Acceleration
Program, the Belo Monte Dam project on the Xingu River will
provide 11,233 MW of renewable hydroelectric power.

Collaborative innovation between Caterpillar, a Cat® dealer anda customer of a quarry site allowed the customer to reduce fuelconsumed to produce one million tonnes of rock. The sustainability
benefits have come in the form of a reduction in safety related
machine fault codes, improvement in raw material usage byextending the life of equipment on site, and improvement in both
the reduced demand for fuel and a significant reduction in emissions.

Safely increasing haul road speeds andimproving loading cycle times allowed
the customer to increase production by
110 tonnes per hour – resulting in a potential
annual 17,500 gallon (49 metric ton) reduction
in fuel consumption and representing a$75,000 savings.

Safely increasing haul road speeds and improving loading cycle
times allowed the customer to increase production by 110 tonnes
per hour – resulting in a potential annual 17,500 gallon (49 metricton) reduction in fuel consumption and representing a $75,000
savings. Equally important is that the fleet achieves this additional
productivity with fewer operating hours. This reduction adds
another $100,000 in savings.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

PeoplePeopleCaterpillar is dedicated to the safety of its employees, dealers, customers and suppliers.
Our uniform safety standards enable our employees to identify and make safety-conscious
choices, both inside and outside of the workplace. The safety of our people is primary ineverything we do. We believe that continually improving our safety practices, processes
and performance supports the business excellence for which Caterpillar people worldwide
are known.
As individual citizens, we can help solve local problems and contribute to the welfare
and prosperity of our communities. As a global company, we can use our strength andresources to improve and rebuild communities around the world. Caterpillar’s involvement
in strategic collaborations supports its commitment to conserving the earth’s resourcesand efforts to pursue development in new and more sustainable ways.
A company can make important contributions to the communities in which it operates. Throughstrategic philanthropy, Caterpillar seeks out issues where it has unique capabilities,
relationships or expertise to offer – and works with nonprofit and other organizations toleverage these assets to benefit both the company and society.
Caterpillar is in a unique position to react when disaster occurs. Cat® machines are essential
to relief, recovery and rebuilding efforts. Cat® power generation equipment provides criticalemergency and back-up power for businesses, hospitals and other organizations. With hundredsof facilities and Cat® dealers worldwide, Caterpillar can quickly respond with products,
services, people and funds.
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2011 Sustainability Report –CATERPILLAR ON ENERGY

People – Leading In Safety

Leading in Safety
Caterpillar’s vision is to be recognized as a leader in our industry for creating and maintaining
world-class workplace safety. We are committed to improving employee safety through:Holding leaders at all levels accountable for safety improvement. Leadership toward safety
excellence is an expectation across the enterprise.
Replicating and sharing best practices. Our injury reporting process helps to pinpoint where
improvement is needed and which facilities need more focus.
We have identified best practices – supported by tools and templates – to help Caterpillar
facilities worldwide develop strong safety procecsses and positive cultures:
1.	Managers will be held accountable for the safety performance of their organization.
2.	Supervisors and facility leadership will perform safety walks to demonstrate their commitment
to employees, gather information about conditions and behaviors, provide on-the-spotcorrection of unsafe activities and recognize efforts by employees to improve safety.
3.	Safety will be embedded into existing business processes such as the Caterpillar Production
System, purchasing and performance management.
4.	Safety issues and results will be communicated frequently, and employees will haveregular opportunities to discuss safety with their supervisors.
5.	Each facility or department will maintain an Incident Notification and Review Process for
managers and employees.
6.	Each facility or department will develop a safety learning plan for managers and employees.
7.	We will carefully evaluate our performance on a regular basis and make improvements
when necessary, using 6 Sigma to guide our activities.
8.	Each facility will develop a list of best practices to define expectations for activities andbehaviors and establish a system for measuring performance against them.
9.	Each division will establish a program to recognize facilities with superior performancein safety, and each facility will establish a program to recognize safety performance at the
department or individual level.
We will continue to strengthen our processes to help all our facilities succeed –and ensure weall return home as safe and healthy as when we came to work.
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2011 Sustainability Report –CATERPILLAR ON ENERGY

People – Investing in Communities Around the World

Investing in Communities
Around the WorldThe Caterpillar Foundation makes sustainable progress possible in our communities in the areasof basic human needs, disaster relief, education and environmental programs. The Foundation
has invested more than $500 million since its inception in 1952. Historically those investments
were made in and around our headquarters in central Illinois. Today, the Foundation supports
communities around the world, with 50 percent of its dollars invested in 2011 outside theUnited States.
Investments in 2011 include:• A five-year, $12.5 million grant to the World Resources Institute (WRI) to promote the conceptof sustainable cities in China, India and Brazil – countries in which rapid urbanization poses
substantial challenges. WRI will develop low-carbon city models and – by partnering withup to five urban centers – will demonstrate how cities can improve energy efficiency, reducegreenhouse gas emissions, and improve water quality, mobility and land use.
• A $10,000 grant to the Winston-Salem Sustainability Resource Center to improve the energy
efficiency of homes in North Carolina, U.S. Through collaboration with neighborhood organizations, the program provides energy consumption monitoring, educational workshops, installationof energy efficient products and technical support for homeowners.
• A $1 million pledge to the Dealer Environmental Sustainability Fund (DESF). The DESF is apartnership between the Caterpillar Foundation, participating Cat® dealers worldwide andeligible nonprofit environmental organizations to promote environmental sustainability
around the world.
• A $3 million pledge to Water.org, a non-profit organization that aims to provide more than
218,000 people with clean water and sanitation over the next three years.
• A $3.5 million investment in disaster relief to assist in relief, repair and rebuilding.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

People – Fostering Development Around the World

Fostering Development
Around the World
Caterpillar strives to enable economic growth through infrastructure and energy development, and toprovide solutions that preserve the planet. Cat® equipment is being used around the world to foster
sustainable development.
In the state of Washington, Cat® machines can be seen at work on the largest dam removal project in
U.S. history. In September 2011, a three-year process began to remove the Elwha and Glines Canyon
dams in order to restore a free-flowing river. Water flow from Washington’s Elwha River has been
limited from its source in the Olympic Mountains for nearly a century and lacked passage for migrating
salmon. The river restoration reopens more than 70 miles of pristine spawning and rearing habitat in
the Elwha River and its tributaries. Salmon populations are expected to swell.
In Belfast, Northern Ireland, Caterpillar is providing generator sets to produce alternative power froma former landfill site, which is planned for redevelopment into a public park. The Belfast City Council
identified a former landfill site – Dargan Road – as a redevelopment opportunity and proposed tocreate a landmark public park on the site. The 220-acre Giant’s Park went into operation in the summerof 2009; and future development is expected to include sports fields, a nature reserve, an educational
facility and a festival space.
To produce electricity, the methane rich landfill gas is collected from a network of gas wells and pipes. The
gas is then pumped into generator sets to convert to electricity. Cat® dealer Finning (UK) Ltd provides
power generation and ancillary equipment to run this innovative project. Five Cat® G3516A generator
sets were supplied to produce the alternative power. Each generator set is rated at 1150 kW, thus
providing a combined output of up to 5.5 MW of continuous power to the local grid.
The landfill site will generate electricity from methane for up to 20 years, producing five million watts ofelectricity for export to the local grid. This could provide power to as many as 6,000 households in the area.
In Pará, Brazil, Caterpillar is providing more than 700 pieces of heavy machinery, including 186 earthmoving products, as work progresses to build Belo Monte Dam, the world’s third-largest hydroelectric
dam complex. Part of the Brazilian government’s Growth Acceleration Program, the project on the
Xingu River is expected to provide 11,233 MW of renewable hydroelectric power. The Brazilian government says Belo Monte is essential to meet Brazil’s rising energy needs. Upon full completion, plannedfor 2019, an estimated 70 percent of the dam’s energy output is expected to go toward public use.
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2011 Sustainability Report –CATERPILLAR ON ENERGY

People – Supporting Healthcare and Education Programs

Supporting Healthcare
and Education Programs
Caterpillar works to build strong relationships with our customers and the communities inwhich they work. That is why we invest in local mining communities through educationaland health initiatives.
In South Africa, many children near our customers’ mines have never had the opportunity tohave their teeth checked by a dentist. Caterpillar sponsors a free mobile dental care service fordisadvantaged children. We ask our customers to select communities they feel would benefit
most from the initiative. Each unit also offers hygiene tips to help children care for their teeth
in the future and provides a gift pack consisting of a toothbrush, rinse cup and toothpaste.
More than 2,000 children were reached in 2011. Of those screened, approximately 60 percent
were suffering from painful tooth decay. Fifty percent of these needed fillings and 49 percent
required tooth extraction, evidence of how important the initiative is to the dental health of
local communities.
In the Andes Mountains in Peru, children who live near our customer’s Antamina mine have limited
educational opportunities. In 2011, Caterpillar Peru initiated a program to improve children’s
reading ability. With the help of a specialist institute, a program was developed that aims toraise reading comprehension by 50 percent among a group of 37 children. Results are alreadyvery promising, with reading skills improved by 38 percent in initial tests. Plans are to replicate
the program in other primary schools in rural areas near our customers.
Benefits include:• improved reading comprehension among potential future employees to our customers,
as they need to hire employees from communities near the mines operations• improved community and customer relationships where we do business• improved relationship between mines and communities42

2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progressgoals & progress
Caterpillar has set aspirational, long-term goals for its operations as well as its products, services and solutions. We believethese higher standards affirm our determination to lead our industry to a more sustainable future. (Baseline 2006)

2020 Goals for Operations

25%
Reduce recordable workplace
injury rate to 0.6 and lost-timecase rate due to injury to 0.15

25%

Increase energy efficiency
by 25%

Reduce absolute greenhousegas emissions from existing
facilities by 25%

20%
Use alternative/renewablesources to meet 20% of ourenergy needs

LEED
Eliminate waste by reducing
waste generation and reusing
or recycling all that remains

Hold water consumption flat

Design all new construction
to meet Leadership in Energy
and Environmental Design(LEED) or comparable green
building criteria

2020 Goals for Products, Services & Solutions

Provide leadership in thesafety of people in, on andaround our products

20%

20%

20%

Reduce customer greenhousegas emissions by 20%

Increase customer energy
efficiency by 20%

Increase customer materials
efficiency by 20%

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

operational goal
Reduce recordable workplace injury rate to 0.6 and lost-time case rate due to injury to 0.15.

Health and
Safetyoverview
Vision Zero is our commitment to creating a zero-injury workplace. We continue to maintaina strong focus on personal safety and strive for zero injuries.
In 2011, 44 percent of our facilities reached zero recordable injuries and 65 percent of ourfacilities reached zero lost-time injuries.
It’s not about the metrics, but about our people!

Performance Summary

1.03

0.28

Recordable Injury Frequency (RIF)(Recordable injuries per 200,000 hours worked)

6.06(Lost-time injuries per 200,000 hours worked)

2.90

1.66

2003

Lost-Time Case Frequency (LTCFR)

2008

1.17

1.18

2009

2010

1.03

0.48

2011

2003

We have improved our Recordable Injury Frequency rateby 83 percent from our 2003 baseline year and 13 percent
from our last reporting period.

<1%

2008

0.36

0.35

0.28

2009

2010

2011

We have improved our Lost-Time Case Frequency rate by
91 percent from our 2003 baseline year and 20 percent
from our last reporting period.

In 2008, Caterpillar launched a global risk assessment initiative thathas resulted in the reduction of thousands of high-risk work elements
to medium or low risk.
In 2011, facilities renewed their focus on safety and ergonomic risk
reduction by establishing baselines for new or modified jobs. Our focus
on ergonomics has driven continued reduction in ergonomic-related
injuries. By year-end 2011, less than one percent of all job elements
assessed remained high-risk jobs.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

Health and Safety
Examples

AURORA SAFETY PLAN RESULTS IN FEWER INJURIESThe Caterpillar Aurora facility in Illinois reduced its Recordable Injury Frequency rate by morethan 60 percent after introducing a new safety plan in January 2011.
The plan was introduced to every employee in an effort to build accountability at all levels andidentify potential process problems. Measures included:• Carrying out weekly shop floor incident reviews with injured employees• Ensuring one employee is dedicated and trained as a safety champion every month• Reviewing safety metrics and implementing improvement plans if a target is not being met• Ensuring five safety observations per week are completed by employees in each section• Challenging manufacturing engineers to eliminate the five greatest hazards associated withinjuries in each area
• Holding all employees accountable for their own safety and the safety of those around them
• Recognizing safety achievements and milestones.
Execution of Aurora’s 2011 Safety Plan has allowed the facility to make a monumental improvement in the culture and performance within the facility, at a time of ramp-up of production levels.

ENGINEERED SOLUTION IMPROVES SAFETY AT BOONVILLE
A project team at Caterpillar’s High Performance Molded Products facility in Boonville, Mo.,
implemented an engineered solution with a more technologically advanced system for rubber
processing. The facility mixes more than three million pounds (1,360 metric tons) of rubber
annually for use in molded components designed for use on Cat® machines.
Previous manual handling of rubber strips is now automatic with the new solution, avoiding
potential hazards assoicated with this process. A new layout also has stopped operators,
passers-by, and truck traffic from getting too close to the machinery, further reducing risks forpotential injury.
The new process reduced the risks for potential injury to operators as well as to pedestrians in
the process areas. The facility’s safety risk assessment score improved by more than 50 percent.
(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

Health and Safety
ExamplesFULL-TIME SAFETY COACH BOOSTS ENGAGEMENTAT BCP LEICESTER AND STOCKTON

A full-time Safety Coach is helping Caterpillar’s Leicester and Stockton facilities in the UK
engage employees in health and safety. The coach’s role is to:• Deliver formal health and safety training• Offer one-on-one coaching to the workforce• Provide an avenue for employees to raise concerns• Provide support and training for safety improvement projects• Assist in risk assessments and incident investigation• Attend safety meetings• Prepare daily safety briefings for employees.
Since the implementation of the Safety Coach role, the safety awareness of employees has
increased and injury rates have decreased. The role of Safety Coach has enabled improvementsin the quality and quantity of focused health and safety training in the facilities, dramatically
improving competency.

ELECTRICAL HAZARD SAFETY

Caterpillar’s dealer learning center implemented a project to ensure the safety and well-beingof those working with electricity in its laboratories. The goal is to maintain a zero electricalhazard recordable injury rate.
The learning center is responsible for the safety of Caterpillar employees and students attending
Caterpillar training classes. The lab environment features fully functional generator sets,
uninterruptible power supplies, and other equipment that poses electrical hazards. New
safety measures include:• Changes in circuit breaker settings• Labeling equipment with electrical hazard stickers• Additional personal protection equipment for use when interacting near or on a live circuit• Enhancing instructor training on electrical hazards.

SITE PEDESTRIAN SAFETY

In a period of 12 months and using very limited resources, Caterpillar’s Skinningrove, UK, facility
made a major contribution to pedestrian safety around the site. Workshops were held todetermine the best facility layout to achieve production in the safest manner possible.
Site managers produced maps for each zone of the facility and worked out ways to keep people
and traffic separated. Plans were drawn up to create safe access for forklift trucks. Where
pedestrians and forklift trucks come into close proximity, special consideration was given to
ensuring line of sight for drivers. Facility layout enhancements include well-marked and welllighted pedestrian walkways and doorways, new locations for tooling racks, relocation ofshipping ramps and marking of shipping lanes.
(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

Health and Safety
Examples

INDIA FACILITIES BOOST SAFETY THOUGH ENGINEERING IMPROVEMENTS

Engineers at Caterpillar’s machines division in Tamil Nadu and power systems division in
Hosur, India, have identified new assembly processes to improve employee safety.
In Tamil Nadu, installing pins into the body of off-highway trucks using hoist cylinders posed
potential risk. Assemblers were climbing onto the suspended truck body to install pins. A new
assembly process was implemented to allow assemblers to install the pin while standing on
the ground outside of the frame rails, reducing the potential for injury.
Also in Tamil Nadu, dollies used to hold and maneuver frames between line assembly stations
were improved. Potential risks included the large size of the dolly, potential trip hazards fromelectric cables and a problematic hydraulic system for lifting purposes. A new dolly design
considerably reduced the size of the dolly, eliminated potentially dangerous cables with use ofwireless energy transfer and replaced the hydraulic lifters with electrically powered lifters.
In Hosur, manual cylinder head tightening was replaced with automatic tightening. The
automatic tightening considerably reduced operator effort and repetitive motion andpotentially awkward postures.

GRIMBERGEN EQUIPMENT INSPECTIONS INCREASE SAFETY

Caterpillar’s Grimbergen Distribution Center in Belgium implemented a new rack inspection
program in 2011 to ensure that all the racks were installed and maintained correctly to avoid
potential safety hazards. Continuous inspection of the racks will be performed to ensure theracks are safe and serviceable.

GRENOBLE PROACTIVE IN ERGONOMICS AND SAFETY

A project team for the undercarriage production area at the Caterpillar France Grenoble facility
defined the best layout adapted to types of activities required for track group assembly. Standard
work activities were identified that balanced operators’ workloads, reducing walking, waiting
and transportation times. A handling device was developed to assist operator handling andpositioning, and platforms and tables were placed for best-height processing.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

25%

EnergyEfficiency

operational goal
Increase energy efficiency by 25 percent.
overview
Energy efficiency is a continually evolving field, and we will evaluate our metric in the future
if standards become available. Individual projects will be launched as identified throughresearch and analysis.
An enterprise-level energy management team was formed in 2011.
Performance Summaryof revenue/absolute
2,047 Dollars
gigajoules energy use(Baseline: 2006)

2,047
1,754
1,465

2006

2008

1,541

2009

1,639

2010

2011

The 2011 result is 28.3 percent better than our 2011 target, andexceeds our 2020 aspirational goal by 11.8 percent.

Note: Data does not include facilities acquired after June 1, 2010, or Caterpillar Japan Ltd – Direct Dealers operations.
Previously reported data has been restated due to:a) acquisitions,b) data updates realized from improved accuracy,c) divestitures.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

25%

Energy Efficiency
Examples‘CUTTING THE LIGHTS’ SAVES ENERGY IN FOUNTAIN INN

A simple decision to fit high-efficiency lights with motion sensors throughout Caterpillar’s
approximately 90,000 square feet (8,361 square meters) Fountain Inn, S.C., facility is reducing
energy consumption and providing savings of more than $11,000 annually. The lights now turnoff after 10 minutes of inactivity and have contributed to a nearly 25 percent drop in electricity
consumption, proving that the most efficient lights are the ones that are turned on only
when needed.
The move was part of the facility’s “cut the lights and reduce the water” project, which also has
led to the installation of low-flush toilets, saving approximately 900,000 gallons (3.4 million liters)of water over the first year of installation. Replacing the toilets not only cut water use per flush,
it also eliminated several leaks that were detected in the old system.

IMPROVING ENERGY EFFICIENCY IN CORINTH

Reducing energy consumption is a continuous goal at Caterpillar’s Cardinal Drive facility in
Corinth, Miss.
Through partnerships with the Tennessee Valley Authority and the State of Mississippi, thefacility estimated that 97 percent of their greenhouse gas (GHG) emissions at Corinth come fromelectrical usage at the plant. This allowed the facility to focus on improvements throughout, suchas heating, ventilation and air conditioning equipment upgrades and energy control measures.
The facility initiated these projects and was able to cut electricity consumption by nearly athird from 2009 to 2011 – and have reduced GHG emissions by approximately 5,700 metrictons of CO2e.
This is also helping to fulfill Caterpillar’s goal of reducing absolute GHG emissions.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

25%

GHG Emissions

operational goal
Reduce absolute greenhouse gas emissions from existing facilities by 25 percent.
overview
Despite a record increase in production, demand and sales volumes, energy conservation
projects contributed to realizing absolute GHG within one percent of the target.
Performance Summary

million metric tons
2.75 Absoluteof CO e2
(Baseline: 2006)

2.96

2.99
2.65

2.75

2010

2011

2.16

2006

2008

2009

The 2011 result is within one percent of our 2011 target. The increase
from 2010 is due to a record increase in production, demand andsales volumes in 2011.

Note: Data does not include facilities acquired after June 1, 2010, or Caterpillar Japan Ltd – Direct Dealers operations.
Previously reported data has been restated due to:a) acquisitions,b) data updates realized from improved accuracy,c) divestitures.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

25%

GHG Emissions
Examplestransportation process reduces greenhouse gas emissions

A Caterpillar European Transportation team implemented a Network Control Center collaborativetransportation process, enabling consolidation of parts flow across the supply base, optimal
selection of transport companies to haul parts, and dynamic choice of transport mode to final
delivery. Carriers handling Cat® equipment will avoid the use of multiple cross-docks necessary
to route Cat® parts to plants. Shipping more parts together in larger shipments from each supply
location will reduce trailer utilization of trucks delivering parts to plants. Less trucks and lesshandling results in a reduction of total kilometers traveled.
The Network Control Center is expected to reduce distance traveled by approximately 12 percent,which is a reduction of approximately 1,200 metric tons of CO2e annually and a reduction in
freight costs of approximately 15 percent annually.

EFFICIENT LIGHTING SLASHES GREENHOUSE GAS EMISSIONSLighting upgrades at Caterpillar’s facility in Clayton, N.C., will save an estimated 1,900 MWhof electricity and cut greenhouse gases by approximately 1,000 metric tons CO2e per year.
The previous lighting at the Clayton plant was more than 10 years old, inefficient, andwas requiring increasing amounts of maintenance. Poor lighting in some areas meantvisibility was also affected, potentially affecting work quality and posing a potential
safety hazard to employees.
The Clayton facility replaced more than 900 fixtures with higher-efficiency lamps, combined withmotion sensors that ensure lights are switched off when there are no personnel in the area.

ELECTRICITY CONSERVATION PROJECTSREDUCE GREENHOUSE GAS EMISSIONS

Caterpillar’s plant in Hosur, India, reduced greenhouse gas emissions in 2011 through a set ofenergy conservation measures, including:• Increasing the efficiency of the operation of pumps• Replacing sodium vapor light fixtures with more energy-efficient fixtures• Improving the operation of cooling tower fans
• Installing 24 LED light fixtures in place of metal-halide light fixtures• Using energy created during generator set testing to power cooling blower fans, instead ofusing power from the facility.
These changes saved approximately 187,000 kWh, equal to more than 5 percent of electricity
consumption at the facility.
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goals & progress

25%

GHG Emissions
Examples

REPLACING PRODUCTION LINE CUTS EMISSIONSAND BOOSTS SAFETY IN BOONVILLE

The Clean and Coat Adhesive Line at Caterpillar’s High Performance Molded Products facility in
Boonville, Mo., is an important production facility that manufactures highly engineered rubber
and plastic component parts. Replacing and redesigning this 17-year-old production line has
reduced reliance on natural gas by approximately 16 percent, cutting greenhouse gas emissions
by approximately 13 percent and saving approximately $50,000 a year in energy costs.
Generation of hazardous waste has also been reduced nearly 60 percent; and the use of cleaningchemicals, solvents and adhesives has been cut significantly.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

20%

Alternative/
Renewable
Energyoperational goal
Use alternative/renewable sources to meet 20% of our energy needs.
overview
An enterprise-level energy management team was formed in 2011.
Individual projects will be launched as identified through research and analysis.

Performance Summary

14.8

Percent renewable energy(Renewable electrical energy use/total
electrical energy use) x 100

13.8

2010

14.8

2011

The 2011 result indicates good progress toward achieving
our 2020 aspirational goal.
Alternative Energy: Caterpillar is defining alternative energy
sources and the calculation methodology.
Renewable Energy: Energy resources that are naturally
replenishing over a short period of time and virtuallyinexhaustible such as wind power, solar power, hydropower, geothermal power, tidal power, wave power,
biomass power and anaerobic digestion.

Note: Data does not include facilities acquired after June 1, 2010, orCaterpillar Japan Ltd – Direct Dealers Operations.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

20%

Alternative/Renewable Energy
ExamplesExamplesINTRODUCING A BIOGAS GENERATION FACILITY IN INDIAManagers at Caterpillar’s facility in Thiruvallur, India, installed a system that turns waste into
biogas. This system converts canteen food waste into energy. This renewable resource is thenused directly in electrical and heating applications back in the company’s canteen.
Thiruvallur has reduced the canteen’s use of electricity and liquefied petroleum gas. The onsite
biogas solution recycles up to 1,000 kg (1 ton) of food waste daily, and eliminates the use ofvehicles that were previously used when disposing of food waste off site.

SOLAR ENERGY SAVES WATER AND CUTS COSTS

Installing solar panels has allowed Caterpillar’s plant in Hosur, India, to recycle the waterused to test engines, significantly reducing the use of resources – and saving approximately$150,000 a year.
Plant managers realized it was wasteful not to reuse the hot water which, after testing, contains
diesel fuel and a chemical that prevents rusting. By installing solar panels that can keep thewater at the required temperature, it can be stored for reuse in testing rather than being allowed
to cool down, after which it is of no use.
The move has cut back on the use of approximately 330 liters (87 gallons) of diesel fuel a day,saved approximately 6,440 liters (1,700 gallons) per day of water, and approximately 1,500 liters(395 gallons) of rust preventive each month.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

operational goal
Eliminate waste by reducing waste generation and reusing or recycling all that remains.

Waste

overview
We continue to make gains in this effort due to the general population at Caterpillar embracing
recycling efforts on a global basis. We reduce the generation of waste as much as possible
and, for the remainder, find types of beneficial reuse (such as waste to energy) or recycle.
111 facilities are recycling at 90 percent or greater. If metals are included, 173 facilities
are recycling at 90 percent or greater.
Performance Summary

90 Percent recycled

Absolute pounds recycled waste/absolute
pounds total waste x 100(Baseline: 2006)

78

80

2008

2009

87

90

64

2006

2010

2011

The 2011 result is 8 percent above our 2011 target. Sustained
improvement was made from 2009 to 2011. If metals are included,
our recycling rate in 2011 was 95 percent. This metric does include
energy recovery from waste to energy incineration. Achieving
such a high percentage on this metric will allow us to look at
unique opportunities to further increase our material efficiency.

Note: Data does not include facilities acquired after June 1, 2010, or Caterpillar Japan Ltd – Direct Dealers operations.
Previously reported data has been restated due to:a) acquisitions,b) data updates realized from improved accuracy,c) divestitures.

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goals & progress

Waste
ExamplesNEW PAINT TECHNOLOGY DRASTICALLY CUTS HAZARDOUS WASTE

Converting paint from liquid to powder coat form has reduced hazardous waste by approximately
99 percent at Caterpillar’s Building Construction Products Sanford facility in North Carolina.
Under the liquid paint regime, it was necessary to clean the paint pistols and the lines that feedthem with a solvent. The solvent then had to be disposed of as hazardous waste, averaging
0.69 gallons/unit (2.6 liters/unit). Converting to powder coating has eliminated this waste
stream. Liquid paint is still used for touch ups but generates only approximately 0.01 gallons(0.04 liters) of hazardous waste/unit.
Emissions of volatile organic compounds and hazardous air pollutants have also been cut by
approximately 98 percent as a result.

RECYCLING OIL SAVES RESOURCES AND MONEY

Caterpillar’s East Peoria, Ill., manufacturing site has been recycling nearly 53,000 gallons(200,600 liters) of oil at a cost avoidance of approximately $358,000 since the project’s
inception in 2010.
The tractor assembly process was wasting hydraulic engine and transmission oil each year
because the different oils being used on the assembly line were drained into catch pans where
they were commingled with other oils generated in the building and then shipped off site
for recycling.
The new system catches the oil at the point of generation and immediately pumps it into oil
reclamation units. This has also reduced the need to buy approximately 23,800 gallons (87,500
liters) of new oil, cutting carbon emissions associated with processing and delivery.

REDUCING OIL WASTE IN INDIA

Caterpillar’s machines division in Thiruvallur, India, has been looking carefully at how oil
waste can be reduced when assembling off-highway trucks on its production line.
Improvements to date include carrying out oil-level checks in more efficient ways that allow oil
to be recycled, filtering used oil during operations and implementing safe storage and handlingprocedures. Such innovations have reduced the amount of waste oil by approximately 70 percent
so far.

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operational goal
Hold water consumption flat.

Water
Consumption

overview
In 2011, we continued to execute the water plan and tools developed in 2008. Mapping thetrue cost of water use is in progress for our two largest water use facilities. We continue tolook for replication opportunities at other sites.
Performance Summary

5.16 Absolute billion gallons used
(Baseline: 2006)

5.89

2006

5.54

2008

4.94

4.82

2009

2010

5.16

2011

The 2011 result is 12.4 percent better than our 2011 target.

Note: Data does not include facilities acquired after June 1, 2010, or Caterpillar Japan Ltd – Direct Dealers operations.
Previously reported data has been restated due to:a) acquisitions,b) data updates realized from improved accuracy,c) divestitures.

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goals & progress

Water Consumption
Examples

NATURAL LANDSCAPING IS HEALTHIER FOR LOCAL WATER

Our manufacturing site in East Peoria, Ill., has replaced its traditionally managed turf grass witha natural landscape regime eliminating the need to use toxic substances such as fertilizers,
herbicides and pesticides. This is better for the environment as nutrient run-off from fertilizers
can have a detrimental effect on local surface water. Producing and transporting the fertilizer
also consumed significant amounts of energy.
The natural landscaping has the additional benefit of cutting C02 emissions from mowing
machines by an estimated 70 percent per year [up to 76 lbs. (0.04 metric tons) C02e], as well
as approximately $60,000 in maintenance cost savings.

SIMPLE SOLUTIONS SAVE WATER IN MEXICOOur Remanufacturing site in Nuevo Laredo, Mexico, saved a total of approximately 385,000
gallons (1.5 million liters) of water in 2011 by implementing some simple savings measures.
The site replaced electric flushing systems for the toilets with a manual, dual-flush toilet, saving
up to half a gallon per flush. Water flushing urinals were also replaced with dry urinals, which
saved approximately 53,000 gallons (200,000 liters) of water per urinal per year.

IMPROVED WASTEWATER TREATMENT REDUCES DEMAND ON LOCAL SUPPLY
Until recently, Caterpillar’s joint venture AsiaTrak in Tianjin, China, which makes undercarriages
for various vehicles, could treat only up to 70 m3 of the wastewater it generated each day.
The hurdle that they faced was that the current quality of treatment system provided was
not high enough to allow the water to be recycled within the plant. Rebuilding the water
treatment plant brought about a major change. The new wastewater treatment facility
doubled treatment capacity to approximately 150 m3 per day, and was able to meet higher
wastewater treatment standards.
As a result of meeting these standards, wastewater at AsiaTrak Tianjin can now be fully recycledwithin the facility. Caterpillar is saving approximately $22,000 a year in water bills and has reduced
its demand on the local water supply.

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goals & progress

LEED

Leadership in Energy
and Environmental
Designoperational goal
Design all new construction to meet Leadership in Energy and Environmental Design (LEED)or comparable green building criteria.
overview
The collection of buildings or projects represents varying degrees of certification or certifiable
status attained or sought, or that are targeted, in accordance with either the U.S. Green
Building Council’s New Construction, Existing Buildings, or Commercial Interiors certification
processes, or comparable green building criteria.
The total of 33 buildings/projects consists of 31 new construction and two existing buildings.

Performance Summary

33

Buildings/projects designed
to LEED or comparable criteria

ExamplesCaterpillar 2011 LEED Status

The following facilities received certification in accordance with the U.S. Green Building
Council’s LEED-NC (Leadership in Energy and Environmental Design – New Construction)
certification process or comparable criteria:• SILVER – Seguin, Texas, Engine Facility
The following new facilities are seeking certification in accordance with the U.S. Green Building
Council’s LEED-NC (Leadership in Energy and Environmental Design – New Construction)
certification process:• Target GOLD – Peoria, Ill., Caterpillar Visitors Center• Target SILVER or Certified – Clayton, Ohio, Cat Logistics
Distribution Center• Target Certified – Rayong, Thailand, Underground Mining Facility• Target Certified – Rayong, Thailand, Medium Tractors Facility• Target Certified – Winston-Salem, N.C., Axle Manufacturing Facility• Target Certifiable – Wuxi, China, Upper & Lower Power Train Facility• Target Certifiable – Wuxi, China, Hydraulic Cylinder Manufacturing Facility

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

ProductS, Services And Solutions Goal
Provide leadership in the safety of people in, on and around our products.

Health and
Safetyoverview
Caterpillar offers a suite of safety services to customers either individually or as partof a Fleet Management Services agreement and remains committed to expanding theavailability of safety information and materials.

performance summary
Operator and jobsite health and safety is promoted at SAFETY.CAT.COM™ to help our customers use our products safely and improve their safety
performance. This dedicated website includes safety culture solutions that offer assessments, coaching and training to develop a stronger
safety culture.

Examples
REFINED DESIGN DELIVERS SAFETY FEATURES

The refined design for the Cat® D11T and D11T Carrydozer includes a new operator-presence
system that locks out the power train and hydraulic system to avoid unintentional machine
movement when the operator is entering or exiting the cab. Entering and exiting can also bedone via an optional hydraulically actuated access ladder that deploys and stores in seconds.
An optional sound-suppression package reduces average spectator sound power levels, a benefit
to both the operator and the surrounding environment. Operator comfort features include ergonomic
joystick steering, automatic climate control and precision blade control and positioning.

WHEEL LOADER OPERATOR COMFORT

Improved production and efficiency can be achieved if the operator is comfortable and does not
become fatigued. The operator sound level on the new Cat® 980K Wheel Loader has been
reduced by approximately 50 percent. New cab mounts decrease noise and vibration for theoperator. The result is a comfortable work environment, helping the operator remain efficientand productive. A joystick steering system combines operator comfort and precision control toprovide a sustainable work environment for the operator. The system automatically adjusts theeffort needed to tilt the ergonomic joystick based on ground speed, resulting in superior control
in all applications and climates.
(continued)

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals/progress

Health and Safety
Examples

OBJECT DETECTION

The more equipment operators know about the working environment around them, the moresafely they will be able to operate their equipment. Object Detection enhances visibility of
the near vicinity surrounding large machines by providing visual indications of objects in close
proximity. A combination of cameras, radars and in-cab display automatically detect hazards
such as other equipment or vehicles within critical zones around the machine – in front, at therear or within the turning radius on each side, depending on machine type.

STAIRWAY & HOOD LIFT ASSIST RETROFITSCaterpillar is committed to providing customers with safe and reliable products and services.
One key area of focus is preventing slips, trips and falls when mounting or dismounting a pieceof equipment. The new diagonal stairway retrofit for Cat® 777C and 777D off-highway trucks
provides improved access to and from the bumper walkway and cab. Diagonal stairway retrofits
are also available for Cat 785 and 789 off-highway trucks. Powered access systems for selectlarge mining trucks and track-type tractors further improve ingress and egress.
The hood lift assist retrofit for select large mining trucks reduces the effort required to open
and close the front and rear engine hoods. Maintenance-free mechanical spring struts reduce
lifting forces and provide controlled motion for closing the hoods.

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goals & progress

20%

Customer
GHG Emissions

Products, Services And Solutions Goal
Reduce customer greenhouse gas emissions by 20 percent.
overview
We want to help our customers achieve their emission reduction goals, too. Their needs
provide potentially valuable business opportunities for us.

performance summary
Customers are demanding greater fuel efficiency and using our technology to help them reduce GHG emissions.
NEW EXCAVATOR DOES MORE WORK WITH LESS FUELThe new Cat® 349E hydraulic excavator delivers more engine and hydraulic horsepower thanits predecessor, and averages five percent improved fuel efficiency in typical applications.
Decreases in fuel consumption result in a decrease of combustion of carbon, reducing greenhouse gases.
The 349E operates on either ultra-low-sulfur diesel fuel (ULSD), or a blend of ULSD and
20 percent biodiesel, and meets stringent U.S. Environmental Protection Agency Tier 4Interim emissions standards.
Fuel-saving features include:• An engine idle shutdown setting – which allows selection for how long the machine ispermitted to idle before shutting down
• Isochronous speed control – a system that maintains constant engine speed, regardless of load
• An economy power mode used during less demanding applications• A hydraulic system that recycles hydraulic energy and hydraulic oil.

REFINED DESIGN DELIVERS FUEL-EFFICIENT PRODUCTIVITY

The refined design for the Cat® D11T and D11T Carrydozer delivers fuel-efficient productivity.
New for the D11T and D11T CD is the Enhanced Auto Shift (EAS) system, designed to conserve
fuel by automatically selecting the optimal reverse gear and engine speed, based on load anddesired ground speed. When the EAS mode is not activated, an Auto Downshift feature automatically changes gears down to most efficiently handle loads. Decreases in fuel consumption
result in a decrease of combustion of carbon, reducing greenhouse gases.

(continued)
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20%

Customer GHG Emissions
ExamplesWHEEL LOADER FUEL ECONOMY IMPROVEMENTS

A primary advantage of the new Cat® 980K Wheel Loader is fuel economy improvement in typicalloader applications. Furthermore, the fuel that is burned produces 90 percent less particulatematter (PM) and 50 percent fewer oxides of nitrogen (NOx) than its predecessor, the 980H. The
980K was designed to be almost fully reused, with a 96 percent recyclability rate, and provides
the foundation by which resources can be conserved for years to come.

ULTRA LEAN BURN UPGRADE

Retrofits can provide the latest lean burn gas engine technology for Cat® G3500 petroleum
engines in existing gas compression applications. The upgrade for G3508, G3512, and G3516
engines utilizes state-of-the-art electronic controls and sensor technology to improve fuelefficiencies, and reduces oxides of nitrogen (NOx) emissions.

632011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

20%

Customer
Energy Efficiency

Products, Services And Solutions Goal
Increase customer energy efficiency by 20%.
overview
Efficiency gains will vary by product, application and segment. We continue to work with our
product groups and customers to define applicable metrics.

performance summary
We collaborate with our dealers to deliver highly customized and site-specific solutions that result in optimized use of our equipment and an
improved bottom line for our customers. We offer training to our customer operators on how to use our products more efficiently.

ExamplesTECHNOLOGIES FOR EFFICIENCYCaterpillar is constantly developing and refining advanced technologies to make equipment
more productive and efficient, and to effectively manage equipment fleets and operations.
Cat® products for earthmoving solutions, including AccuGrade™ Grade Control System andComputer Aided Earthmoving System, combine the latest global positioning system technology
with sophisticated electronic control modules and database tools to help customers increase
productivity, lower costs, improve accuracy and sustain natural resources by increasingfuel efficiency.
Cat® mining technologies, including Cat® MineStar™ System and Product Link, improve
productivity and enhance safety and are building blocks for autonomous mine sites of the future.
Cat® products apply advanced technologies and state-of-the-art information systems to provide
updated minute-by-minute fleet and ongoing operations information – including machine locationand status, equipment health and more – to assist in the most efficient operations.
Cat® engines meet tough emissions standards while delivering performance and efficiency.
(continued)

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20%

Customer Energy Efficiency
Examples988H WHEEL LOADER EXEMPLIFIES ENERGY EFFICIENCYThe Cat® 988H Performance Plus Wheel Loader update exemplifies energy efficiency.
Fuel/Energy Efficiency:• The 988H Performance Plus with the new Performance Series Bucket offers the benefit of
up to 10 percent increase in productivity• The new Positive Flow Control hydraulics has demonstrated fuel savings of up to 5 percent• Factoring in the combination of productivity and fuel savings, improvements of up to 10 percent
can be realized• At a minimal sacrifice to productivity (5-10 percent loss), customers may realize an additional
15-20 percent in fuel savings with the Fuel Management System (FMS).
New with the 988H Performance Plus are two additional fuel-saving modes of operation available
that allow the operator to choose the level of fuel savings to be achieved. The operator can easily
accommodate changing production demands by moving between three modes of operation:
Full Power (FMS not engaged), Balanced Power and Maximum Fuel Savings. Additionally, the988H Performance Plus introduced Auto Idle Kickdown and Idle Shutdown features to minimize
fuel burn, and reduce gaseous emissions.

GENERATOR HYBRID POWER SOLUTION

Telecommunications operators are rapidly moving to employ generator hybrid power solutions
that blend energy storage, solar photovoltaic (PV) panels and small wind turbines into a solutionthat could save hundreds of millions of liters of diesel fuel annually and avoid millions of tonsof CO2 emissions. Caterpillar recently piloted a hybrid system consisting of a Cat® generator
set, PV solar panels and small wind turbines integrated into a complete solution. The solution
is expected to reduce fuel consumption by more than 95 percent, also resulting in reduced
emissions and owning and operating costs.
The Caterpillar hybrid power solution has the potential to increase operating efficiencies, aswell as meet or exceed stringent environmental requirements. Hybrids are particularly well
suited for applications in remote areas, where electric utility service does not exist or would
be too costly to extend. In comparison with the costs of grid extension or the high costs of fueldelivery to remote locations, hybrids can offer several benefits to off-grid customers:• Decreased fuel consumption by 30-100 percent• Extended maintenance and replacement intervals• Payback periods of three years or less in many instances• Configurability to provide the optimal solution for quickest payback, or minimum (or zero)fuel consumption.
Global customer interest in hybrid power solutions has grown significantly in the last few years,
not only in telecommunications, but also in other segments such as off-grid village power andmilitary applications. It is expected that hybrid solutions will continue to grow into many applications where Cat® generator sets are used today, from telecommunications to mine sites.

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2011 Sustainability Report –CATERPILLAR ON ENERGY

goals & progress

20%

Products, Services And Solutions Goal
Increase customer materials efficiency by 20 percent.

Customer
Materials
Efficiency

overview
Remanufactured, rebuilt and certified used parts provide cost savings to our customers andhelp us achieve our goal of using materials more efficiently. Retrofits and upgrades provide
significant customer benefits through the avoidance of obsolescence of older generation parts.

performance summary
We work to enable our customers to conserve and reuse resources.

ExamplesCAT® CERTIFIED REBUILDCat® machines are so durable that instead of scrapping older models, rebuilding them toexcellent reliability, performance and durability is possible, providing a second lease on life.
Rebuilding customer equipment requires 50 to 60 percent less energy by reusing 85 to 95 percent
by weight of the materials from the original product. By restoring used equipment, Cat® dealers
minimize waste while offering high-quality, cost-effective solutions to our customers. It’s goodfor business and for the environment.
BeforeRebuild

After
Rebuild

Cat Certified Rebuilds are also available for power trains, hydraulics and machine components.

REMANUFACTURING

Caterpillar restores near end-of-life parts to original engineering specifications throughremanufacturing, an advanced form of recycling. This makes both economic and environmental
sense because it reduces waste and consumption of raw materials, and provides a lower cost to
the customer. Through remanufacturing, Caterpillar makes one of its greatest contributions tosustainable development – keeping nonrenewable resources in circulation for multiple lifetimes.
To support the fast-growing Asia-Pacific remanufacturing business, in 2011, Caterpillar opened
remanufacturing facilities in Shanghai, China, and Singapore. The new facility in Shanghai
remanufactures pumps, motors and engine components. The new facility in Singapore
remanufactures major components for large off-highway trucks and other mining equipment,
including engines, transmissions, final drives and torque converters.
(continued)

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20%

Customer Materials Efficiency
ExamplesSUSTAINABILITY IN LARGE MINING TRUCKS

A variety of features in large Cat® mining trucks improve sustainability in areas of decreasing
waste and extending component life, as well as lowering emissions levels. Longer-lasting
components feature state-of-the-art technologies and enhanced electronics. The trucks are
now more serviceable – so less time is spent on maintenance and more time on hauling. Cat®
mining trucks are designed to be rebuilt multiple times with service lives regularly reaching
beyond 100,000 hours. Major parts are reusable, and extensive salvage guidelines have beendeveloped for our dealers to maximize value to customers. Fewer new parts means fewer
resources used. Components are designed for remanufacture to provide multiple service lives.
Sustainability features of the new Cat® 793F include continuous rear axle filtration, extended
life filters and extended maintenance intervals that aid in decreasing the amount of waste oil
generated. Engines with advanced technology maintain fuel efficiency while contributing fewer
emissions to the environment. Advanced Surface Technology replaces hard chrome coatings
on some steel parts. This technology improves wear resistance and reduces repair time.
Elimination of chrome reduces environmental impact.

REBUILDING GENERATOR SETS

Available excess engine cores and market need from Cat® dealers for rebuilt/used generator
sets led to a program to rebuild Cat® generator sets. The rebuilding began early in 2011, anddemand grew throughout the year.
The program enables Caterpillar and Cat® dealers to reduce scrap material, take back usedcore from the market and leverage remanufacturing salvage technology to provide additional
engine and component life. Demand for power continues to increase worldwide, and offeringa low-cost solution to the market provides an additional avenue for customers to purchase areliable Cat® generator set.

BRAKE WEAR INDICATORSCat® Brake Wear Indicators for current and legacy off-highway trucks eliminate the riskof brake fluid loss and reduce service time. Retrofit of the brake wear indicator enables
a noninvasive service procedure to quickly check brake disc wear. With the brake wear
indicator, service technicians no longer need to bleed the brakes for routine wear checks,
eliminating the opportunity for fluid loss and significantly reducing service time.

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goals/progress

Performance at a Glance
These graphs provide a snapshot of performance for certain safety and sustainability indicators.

WORKPLACE SAFETY
Recordable Injury Frequency (RIF)(Recordable injuries per 200,000 hours worked)
2.20

Lost-Time Case Frequency (LTCFR)(Lost-time injuries per 200,000 hours worked)

0.71

1. Data does not include facilities acquired after June 1, 2010, or Caterpillar Japan Ltd –Direct Dealers operations.

1.66
0.48
1.17

1.18

0.36

1.03

2. Data prior to 2011 has been restated due to: a) acquisitions, b) data updates realized
from improved accuracy, c) divestitures.

0.35

3. Percent recycled waste excludes the weight of metal, which is 100 percent recycled.
Including metal raises the level to 95 percent in 2011.

0.28

4. Based only on renewable energy. Alternative energy will be included in the future.
5. Data does not include Progress Rail operations.
2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

environmental impact 1, 2
Absolute GHG(Absolute million metric tons of CO2e)(Baseline: 2006)
2.91(Absolute pounds recycled waste/absolute pounds total waste) x 100

2.99
2.65

2008

2009

87

2.75

78

Water Use

2010

2011

2007

2008

5.43

5.54
4.94

2010

2011

2007

2008

2008

4.82

2010

5.16

(Percent revenue increase over 2001 base)Reman End-of-Life“Take Back” Percent

93

14.8

2,047

2011

2010

2011

2007

Cat® Certified Rebuild 2, 5

(Actual end-of-life returns/eligible returns)
x 100
205

13.8

93

91

94

Reman End-of-Life“Take Back” by Weight(Millions of pounds of end-of-lifematerial received)Cat® Certified Rebuild
Business Growth(Percent revenue increase over 2001 base)

161

95
141

142

160

998

134
122

133
110

607
104
385

388

2008

2009

237

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2008

2010

68

(Dollars of revenue/absolute
gigajoules energy use)
(Baseline: 2006)

1,620

REMANUFACTURING (REMAN) 5
Reman Business Growth

Energy Efficiency(Renewable electrical energy use/total
electrical energy use) x 100

90

80

2009

Percent Alternate/
Renewable Sources 4(Absolute billion gallons used)(Baseline: 2006)

70

2.16

2007

Percent Recycled 3

2011

2007

2010

2011

1,754
1,541

2008

2009

1,639

2010

2011

2011 Sustainability Report –CATERPILLAR ON ENERGY

connections

advisors, comments& affiliations
Caterpillar works with a wide range of individuals and organizations to promotesustainability globally.
Our advisory council of eminent sustainability experts provides us with independent
advice and challenges us to continue improving.

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connections

external advisors& comments
Our thanks to the advisory council of experts who provided their comments on Caterpillar’s sustainability
progress. Inclusion below indicates they provided feedback; it does not indicate they endorse the contentsof the report. Comments below are advisory in nature and do not necessarily reflect corporate policy.

______________________________________________________________

Luke Danielson
Sustainable Development Strategies Group______________________________________________________________

george C. Eads
Senior Consultant, Charles River Associates
Manufacturers tend to concentrate mostly on the efficiency of their equipment in terms of emissions
or energy used over time. Caterpillar is noticeable for its dual focus on the efficiency of the equipment(per unit time operating) AND the amount of time it takes for the equipment to complete the job. This
is not only good business but represents a “win-win” in terms of sustainability.

______________________________________________________________

Bruce M. Everett
Professor, The Fletcher School, Tufts University______________________________________________________________

margaret flaherty
Chief Operating Officer, World Business Council for Sustainable Development
In less than 20 years there will be three billion middle class consumers needing products and services.
This will boost demand for energy and infrastructure. In a resource-constrained world, those companies
that can meet market needs sustainably (low pollution and sustainable use of resources, including
energy) will secure a powerful competitive advantage. Caterpillar stands to be a winner if it continues
on its path to sustainability by leveraging its two main assets: technology and talented people.

______________________________________________________________(continued)

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connections

external advisors& comments (cont.)
bradley googins
Professor, Carroll School of Management;
Former Director, Center for Corporate Citizenship, Boston College
The social, political and sustainability issues bubbling up and over global corporations will only continue
to redefine the boundaries, roles and responsibilities of business in society. The blurring of democracy
and capitalism, the competition between emerging economies and the scarcity of natural resources andthe emergence of a growing awareness and activism around wealth and income inequality, all present
an amazing set of challenges and paradoxes for companies trying to balance growth and sustainable
development. Never has business leadership from companies such as Caterpillar been more critical,
and the challenges and opportunities to step up into these new roles will require the flexibility of aballet dancer and the firmness of a disciplined athlete.

______________________________________________________________

stephanie hanford-hassPresident, Connectivity Consulting, LLC
I congratulate Caterpillar on its efforts to reduce its GHG emissions as well as those of its customers.
I am excited that the company has decided to have a strategic focus on energy this year. I would liketo see the company ramp up sales around renewable energy generation, particularly through methane
capture sources – both big and small. As methane is a fast-acting climate forcer, reducing methane
emissions is of particular importance to help the world achieve near-term gains in climate protection.
Caterpillar should be actively pursuing a wider range of customers for methane capture in the waste
management, mining and agricultural industries.

______________________________________________________________

stuart l. hart
S.C. Johnson Chair in Sustainable Global Enterprise,Johnson Graduate School of Management, Cornell University______________________________________________________________

thomas lovejoy
Biodiversity Chair, Heinz Center for Science, Economics and the Environment______________________________________________________________(continued)
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2011 Sustainability Report –CATERPILLAR ON ENERGY

connections

external advisors& comments (cont.)
mark B. Milstein
Professor and Director, Center for Sustainable Global Enterprise, Cornell University______________________________________________________________

william R. Moomaw
Professor and Director, Center for International Environment and Resource Policy,
The Fletcher School, Tufts University______________________________________________________________

kevin sweeney
Writer and Consultant on Climate Change and Sustainability Issues______________________________________________________________

william A. Wallace
Past President and Member of the Governing Board, Engineers Without Borders – USA
Society has only recently begun to understand that the world’s resources and ecological carrying capacity
are not only finite, but are being used up faster than they can be replaced, replenished or restored.
This situation makes life especially difficult for the developing nations, which may not have sufficienteconomic means nor the technological wherewithal to meet basic needs. If done well, Caterpillar’s global
reach, combined with cost-efficient product and service offerings, can help developing nations makesubstantial progress in improving the quality of life of their citizens.

______________________________________________________________

Durwood Zaelke
President, Institute for Governance & Sustainable Development;
Director, International Network for Environmental Compliance and Enforcement______________________________________________________________

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connections

our affiliations
Dow Jones Sustainability Indexes

Included since 2000; sector leader 2006-2007-2008-2010
sustainability-index.com

Ethisphere

World’s Most Ethical Companies 2007-2008-2009-2010-2011
ethisphere.com

Asia-Pacific Partnership on Clean Development and Climate

Solar Turbines is a task force member for the Asia-Pacific Partnership on Clean Development and Climate, an innovative
effort to accelerate the development and deployment of clean energy technologies.
asiapacificpartnership.org

Business Council for Sustainable Energy

Solar Turbines is a member of the Board of Directors of the Business Council for Sustainable Energy, which promotes
clean energy technologies as solutions to economic, environmental and national security challenges.
bcse.org

Business Roundtable

Caterpillar is a member of the Business Roundtable, which supports sustainable development through its task force on
environment, technology and the economy that sponsors the S.E.E. Change initiative (Society, Environment, Economy)
and through Climate RESOLVE (Responsible Environmental Steps, Opportunities to Lead by Voluntary Efforts).
businessroundtable.org

Diesel Technology Forum

Caterpillar is a member of the Diesel Technology Forum, a leading resource and educator on the importance and uniquevalue of diesel engines, fuels, equipment and emissions control technology.
dieselforum.org

Energy Technologies Institute

Caterpillar is a member of the Energy Technologies Institute, a U.K.-based public-private organization focused on
projects that create affordable, reliable, clean energy for heat, power and transport.
energytechnologies.co.uk

The Nature Conservancy

Caterpillar has an active role on the International Leadership Council and became the lead corporate donor in the GreatRivers Partnership Project in 2005.
nature.org(continued)
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connections

our affiliations (cont.)
Opportunity International

Through the Caterpillar Foundation, Caterpillar collaborates with Opportunity International to provide microfinance loans,savings, insurance and training to over two million people working their way out of poverty in the developing world.
opportunity.org

Tropical Forest Foundation

Caterpillar became a founding member of the Tropical Forest Foundation in 1990. The Tropical Forest Foundation works toadvance environmental stewardship, economic prosperity and social responsibility through sustainable forest management.
tropicalforestfoundation.org

U.S. Green Building Council

In the U.S., Caterpillar is a member of the U.S. Green Building Council, a nonprofit community of leaders working to
make cost-efficient and energy-saving buildings available to everyone within a generation.
usgbc.org

Woody Biomass Coalition

Caterpillar is a member of the Woody Biomass Coalition which provides advocacy, education, information and outreachto public and private entities to promote research, development and funding for sustainable woody biomass utilizationand markets in the U.S.
woodybiomass.net

World Business Council for Sustainable Development (WBCSD)

Caterpillar is a member of the World Business Council for Sustainable Development, a CEO-led, global association ofsome 200 companies dealing exclusively with business and sustainable development.
wbcsd.org

World Food Programme

Through the Caterpillar Foundation, Caterpillar collaborates with the World Food Programme, the world’s largest
humanitarian agency, to fight hunger worldwide, delivering food wherever and whenever it is needed most.
wfp.org

World Resources Institute

Caterpillar’s Chairman and CEO is a member of the Board of Directors of the World Resources Institute, an environmental
think tank that goes beyond research to find practical ways to protect the earth and improve people’s lives.
wri.org

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