Toward a New Energy Paradigm

In the past year, China’s rising thirst for energy, global interest in Russia’s vast oil

reserves and the escalating threat to Alaska’s pristine wilderness areas have placed the

Pacific Rim at the epicenter of a growing debate about our world’s dangerous reliance

on fossil fuels. For nearly two decades, Pacific Environment has supported grassroots

initiatives around the Pacific Rim aimed at mitigating the environmental impacts of our

thirst for oil and gas and developing sustainable alternatives.

During the 2004-05 fiscal year, we intensified our call for a new energy paradigm: In California, we worked to ensureour elected officials keep their promises to move toward a clean energy future; in Russia, we helped a remote commu-nity develop renewable energy alternatives to a proposed dam; and we helped Alaskan and Russian native communi-ties build local economies based on sustainable fisheries, rather than oil extraction.

This past year Pacific Environment also launched a campaign to protect Lake Baikal and the endangered Amur leop-ard from Russia’s proposed Siberia-Pacific Pipeline; we strengthened our campaign against Shell’s irresponsibleSakhalin-II oil and gas project; we joined the Shipping Safety Partnership to protect our oceans from oil spills; andhelped China’s new Petroleum and Environment Network get off the ground.

At the heart of each of these efforts is Pacific Environment’s steadfast commitment to nurturing and supportinggrassroots environmental activism—our only hope for overcoming our addiction to oil and protecting the environ-mental riches of the Pacific Rim.

Annual Report 2004-2005

PACIFIC ENVIRONMENTwww.pacificenvironment.org

Protecting wild places Empowering local communities Building global partnerships

One of the most important challenges we environmentalists face is integrating our desire for a healthy planet with two additional,and equally important, needs—a strong economy and a just society. At Pacific Environment we develop and support initiatives thatincorporate each of these imperatives because it is the best strategy for preserving our environmental treasures for future genera-tions.

Like many environmental organizations, we fight to ensure the survival of endangered species, to protect threatened wildlands, andto preserve our oceans. But we also strive to incorporate the economic security of local people into plans for environmental preser-vation. And we work to ensure that these same people—not all of whom call themselves environmentalists—have a seat at the headof the table when decisions are made that will affect their lives and communities.

I am pleased to present this Annual Report, which describes some of the ways Pacific Environment lived up to this ideal in the pastyear and highlights the donors, colleagues and friends who made this work possible.

If you’re a current supporter, I thank you and congratulate you on what you’ve helped us accomplish. If you’re not yet a supporter, Iinvite you to join us in protecting the living environment of the Pacific Rim.

Sincerely,

David GordonExecutive Director

StaffDavid GordonExecutive Director

Doug NorlenPolicy Director

Jennifer CastnerRussia Program Director

Michael O’HeaneyDevelopment Director

Amy MetzendorfOperations Director

Rory CoxCommunications Coordinator

Misha JonesRussia Program Specialist

Wen BoChina Program Specialist

Sara MooreRussia and Policy ProgramsAssociate

Leah ZimmermanRussia Program Associate

Board of DirectorsDeborah ChapmanBoard Chair

Stephen FowlerSecretary-Treasurer

Kevin Rowney

Phillip S. Berry, Esq.

Eliza Kellogg Klose

Gary Cook

Lisa Tracy

Mary Wells

Shannon Wright

Dr. Thomas B. Gold

Narayanan Murugesan

Hank Cauley

Loretta Lynch

Karen Hoy

Walt Parker

Dear Supporter,

Program Highlights

Alaska Initiative Protects MarineEcosystems

The International Bering Sea Forum islinking indigenous leaders, fisherpeople,scientists, and environmentalists fromAlaska with their colleagues across the

Bering Sea in Russia. This year, webrought Russian and Alaskan indigenous

leaders together to discuss environmental protec-

tion and cultural survival and to build cross-cutting solutions thatprotect the environment. After calling for zoning of the Bering Seato protect sensitive habitat, the North Pacific FisheriesManagement Council closed approximately 375,000 square milesin the Aleutian Island chain to bottom trawling. We’ve alsostrengthened international efforts to protect the Bering Sea frommarine pollution and called on the U.S. and Russian governmentsto sign an international agreement to promote sustainable manage-ment of this important marine resource.

Campaign Freezes $5Billion for Sakhalin IIUnder pressure from PacificEnvironment’s ResponsibleFinance Campaign and ourglobal coalition, Shell agreedthis year to move a pipelineassociated with its Sakhalin IIoil and gas project away fromthe feeding habitat of the criti-cally endangered WesternPacific Gray whale. But thatwasn’t enough to convince theexport credit agencies of theU.S., Great Britain and Japanthat the project wouldn’tirreparably harm the environ-ment. Under continued pres-sure from Pacific Environmentand our partners, and alarmedby a fresh warning the projectcould drive the Gray whales toextinction, the banks withheld$5 billion in public financingfor Sakhalin II, a major setbackfor Shell.

ChineseEnvironmentalistsWin Suit, Stop DamChina’s up-and-coming envi-ronmental movement made sig-nificant advances this year withPacific Environment’s supportand encouragement. One ofour long-term partners, thePingnan Green Association ofFujian province, scored twoimpressive victories: first, theirsit-ins and other protests con-vinced the provincial environ-mental authorities to stop theun-permitted construction of adam in the habitat of theendangered Mandarin duck.And earlier in the year, thegroup won a lawsuit filed onbehalf of 1,721 villagers againstChina’s largest chlorate manu-facturer. Our support helpedthe Association organize theiroutreach to the media, resultingin over 60 television new storieson the pollution victims’ strug-gle to win compensation.

Russia ProgramProtects WildsPacific Environment’s 32grantees in Russia run thegamut, from small indigenous-led community groups to thecountry’s most successful pub-lic interest environmental lawfirm. What these partners havein common is their success inprotecting some of the PacificRim’s most beautiful wildplaces. Working together in thepast year, we and our partnershave transformed public opin-ion along the Katun River inthe remote Altai region to sup-port alternative energy insteadof a large dam; overturned theenvironmental impact assess-ment for the proposed Siberia-Pacific Pipeline; won an his-toric agreement with a Russianlogging company to study thecreation of a protected area forthe Samarga Watershed; andlaid the groundwork for fivenew protected areas on theKamchatka Peninsula.

California CoalitionPushes Clean EnergyThirty years after Californiansforced the energy industry toshelve plans for liquefied natu-ral gas terminals on our coast,Pacific Environment is leading acoalition that is fighting newLNG proposals and helping ourhome state chart a renewableenergy path. In the past year,we have shifted the LNG debatefrom “where do we put it?” to“does California need this newsource of fossil fuel?” Wedebunked energy industrymyths about an impendingdomestic natural gas crisis; webarnstormed the state with ourmessage; we garnered coverageof the issue in every majornewspaper in California; and wewon the support of over 50state lawmakers for our call forpublic hearings, including U.S.Congresspeople representing 90percent of the California coast.

Foundation, Corporate andGovernment SupportAlaska Conservation FoundationCatholic Relief ServicesEarth Share of CaliforniaChannel FoundationFoundation for Russian American

Economic CooperationGlobal Greengrants FundGrassroots FoundationISARGordon & Betty Moore FoundationCharles Stewart Mott FoundationOak FoundationPatagonia Inc. The Purple Lady FundRockefeller Brothers FundTrust for Mutual UnderstandingU.S. Environmental Protection

AgencyWallace Global FundWeeden FoundationWestWind Foundation

Individual SupportersHarry AllenElani AquinoXanthippe Augerot & Josiah FisherLon & Natalia BallPeter BergPhil & Carla BerryRuth BillcheckElizabeth BryerBarbara BundyJohn Carroll

John CastnerHank CauleyDeborah ChapmanBJ ChisholmRichard CiminoSusan CoburnSandra & Michael ColemanBrigitta CookGary CookChris Coulson & Katsue YoshimuraJohn CourtneyFred & Ruth CoxRory Cox & Krista BrownHarriet CrosbyPatricia DanielsKim DesenbergSibyl DiverJohn DoyleJennifer DresenRuth DyerElizabeth EconomyRobert EllisTom EngLois EpsteinJeffrey FairbanksPascal FantauzziGordon FiresteinDodd & Nancy FischerMichael Fischer & Jane RogersMortimer FleishhackerStephen FowlerSonja FranetaChris & Julie FranklinYves FranquienTony Gantner

Keith GaylerGrace GellermanEric Gerber & Viki MaxwellTanya GesseKate GessertRose GlickmanThomas Gold & Lucy HarrisMichael GoldsteinRobert GoodlandIngrid GordonDavid Gordon & Lysbeth RickermanJames GrahamHugh Graham & Kevin GoldsackJohn GussmanAlan Harper & Carol BairdEdward HasbrouckPete HendricksonAlice HengesbachMelinda Herrold & Nick MenziesDon HesseKaren HoyEvelyn HurwichMaile JohnsonCynthia JosaymaLarry KaneStuart KaplanJunse KimEliza KloseCarl & Marilyn KocherSteven KohlLaura Kurre & Michael O’HeaneyAndrew LawtonEdwin LeeWilliam LeeGeorge Leeson

Nick LisewskiLi Miao LovettLoretta Lynch & John DavisFrancis MacyEdward & Jocelyne MainlandSuzanne MarcyJason MarkOlga McAllisterDoug McConnell & Kathleen TaftShawn & Nora McGrathBarbara MeislinMarla & Anita Meislin-DietrichKatie & Steven MessickJim & Amy MetzendorfPhilip & Connie MicklinRay & Anja MillerJoan Miller & Richard SinrichCharles MooreViola MooreOctavia MorganMatt MumperMichael & Mary MurphyDoug Murray & Peggy BlumenthalNana MurugesanElaine NonnemanGail Osherenko & Oran YoungWalter ParkerRuth PickeringBrian PieriniPaul PitlickWelling PopeDarren PoseyTheodore RaabPeter RiggsMichael RobinHeather RosmarinKevin RowneyEnid SchreibmanEva Schweber & David KominskyMichael ScottDan SilverPeter SlatteryToni SmithGreg SmithStuart SmitsMark SpaldingLauren SteeleMary StraussSusan SygallSteve Tidrick & Laurie LittlepageKaren TozerAlan TracyLisa TracyMojgan VijehStan & Carl WeidertMary WellsElizabeth WilkieDavid WimpfheimerShannon WrightSusan & Masatoshi YamanakaRoy YoungLee & Peggy ZeiglerMichael Zwirn

For a complete financial report contact Michael O’Heaney, Development Director, at (415) 399-8850, ext. 313.

Support and RevenueGrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,844,704

Contributions . . . . . . . . . . . . . . . . . . . . . . . . . .$49,731

Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . .$6,535

Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . .$6,157

Gains (Losses) on Investments . . . . . . . . . . . . .($5,192)

Total Support and Revenue . . . . . . . . . . . .$1,901,935

ExpensesProgram Services . . . . . . . . . . . . . . . . . . . . .$1,178,329

Support

Management and General . . . . . . . . . . . .$156,320

Development . . . . . . . . . . . . . . . . . . . . . . . .$75,990

Total Expenses . . . . . . . . . . . . . . . . . . . . . . .$1,410,639

Grants

Contributions

Other Income

Interest Income

Gains (Losses) on Investments

Program Services

Support - Management and General

Support - Development

Increase in Net Assets . . . . . . . . . . . . .$491,296

Net Assets, April 1, 2004 . . . . . . . . .$1,025,901

Net Assets, March 31, 2005 . . . . . . .$1,517,197

2004-2005 FINANCIAL STATEMENTSTATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

311 California St., Suite 650 • San Francisco, CA 94104 • 415-399-8850 • info@pacificenvironment.org