ESG Report - Report - Page 78
Notes
Carbon intensities for ethanol and renewable diesel are benchmarked against
gasoline and petroleum diesel, respectively. Carbon intensity of gasoline and diesel
are approximately 100 gCO2e/MJ based on the life cycle analysis models sourced
from Argonne National Laboratory and California Air Resources Board. The carbon
intensity of Valero's ethanol is up to 70 gCO2e/MJ, which results in at least 30% lower
life cycle GHG emissions, compared with petroleum gasoline. The carbon intensity
of Valero's renewable diesel can be as low as 20gCO2e/MJ, which results in up to 80%
lower life cycle emissions, compared with petroleum diesel.
2 Industry benchmarking and Valero’s performance statistics from Solomon
Associates and Valero. Personnel index represents annual total company staff
and contractor work hours per refinery equivalent distillation capacity (EDC). EDC
is a measure that equalizes complexity differences among refineries in order
to compare performance. Maintenance index represents the sum of the nonturnaround maintenance costs per EDC and the annualized turnaround costs per
EDC. 2018 is the most reliable industry data set, as the results of Solomon’s 2020 Fuels
Study were impacted by COVID-19-related demand destruction. The 2022 Fuels
Study is expected to be available later in 2023.
3 Refining peer group includes PSX, MPC, DINO, and PBF. 2021 refining cash operating
expenses per barrel of throughput include impacts from Winter Storm Uri.
4 Free cash flow is defined as net cash provided by operating activities less capital
expenditures of VLO and DGD, deferred turnaround and catalyst cost expenditures,
investments in joint ventures, and changes in current assets and liabilities. Average
free cash flow reflects 2012 through the 2022 Form 10-K filing. Refining peer group
includes PSX, MPC, DINO, and PBF.
5 Third-party scenarios and other third-party reports or data discussed in this
document reflect the modeling, beliefs, assumptions and outputs of their respective
authors, not Valero, and their use, reference to, or inclusion herein is not an
endorsement by Valero of their underlying assumptions, likelihood or probability.
Any reference to Valero's support of, alignment with, work with, or collaboration
with a third-party organization within this document does not constitute or
imply an endorsement by Valero of any or all of the positions or activities of such
organization.
6 EV's average carbon intensity in the U.S. is calculated using the U.S. Department
of Energy, Office of Energy Efficiency and Renewable Energy, Vehicle Technologies
Office, FOTW #1208, Oct 18, 2021; and other EV's life cycle analysis calculations
conducted internally by Valero.
7 Half of the SAF project's estimated cost of $315 million is attributable to Valero.
8 Worldwide low carbon fuel standard programs prefer life cycle GHG emissions
analysis over the traditional Scope 1, 2 and 3 metrics.
9 Based on data from the U.S. Department of Energy, agency websites and industry
consultants.
10 International Energy Agency (2021), The Role of Critical Minerals in Clean Energy
Transitions, IEA, Paris. And IEA (2022), Global Supply Chains of EV Batteries, IEA, Paris
https://www.iea.org/reports/global-supply-chains-of-ev-batteries, License: CC BY 4.0.
11 Jenkins Jr., H., July 18, 2023, Of EVs and Heat Waves. The Wall Street Journal.
12 National Renewable Energy Laboratory, June 2023, "The 2030 National Charging
Network: Estimating U.S. Light-Duty Demand for Electric Vehicle Charging
Infrastructure."
13 Pew Research Center, June 2023, "Majorities of Americans Prioritize Renewable
Energy, Back Steps to Address Climate Change."
14 S&P Global Commodity Insights, May 2023. Tracking battery-electric vehicle prices 2023 update.
15 International Energy Agency (2021), Net Zero by 2050. A Roadmap for the Global
Energy Sector, IEA, Paris, last updated July 2021 (3rd version). All rights reserved.
16 U.S. Light-Duty Vehicle (LDV) Life Cycle Emissions study conducted by Southwest
Research Institute – “Life Cycle Analysis Report” (2022) based on simulations
performed using the GREET life cycle analysis tool. LDV with 12 year life and 160,000
miles travel, renewable diesel emissions are based on 100% waste oil based
renewable diesel blend, electricity based on 2019 EIA average mix, and no battery
replacement for 300 mile range electric vehicle. Vehicle class mix of 30% sedans,
20% crossovers, and 50% pickup/SUV trucks. Embedded emissions captures the
emissions involved in the manufacturing, assembly, and production of the vehicle
as well as maintenance items over the lifetime of the vehicle i.e. battery, fluids, ADR
(assembly, disposal, and recycling), and components.
U.S. Heavy-Duty Long-Haul Vehicle (HDV) Life Cycle Emissions study conducted by
Southwest Research Institute – “Life Cycle Analysis Report” (2022). Class 8 heavyduty truck with a 1,000,000-mile (~15 years) lifetime, electric truck with a 500-mile
battery range, electricity based on 2019 EIA average mix, one battery replacement,
and diesel engine running on 100% waste oil based renewable diesel. Embedded
emissions capture the emissions involved in the manufacturing, assembly and
production of the vehicle as well as maintenance items over the lifetime of the
vehicle such as battery, fluids, ADR (assembly, disposal and recycling), and
components.
17 We believe our targets and 2050 ambition related to GHG emissions reductions/
displacements reflect our current business strategy and related projections,
estimates and assumptions, and are reasonable as of the date this document
is published, but they should not be considered guarantees. As our business or
applicable methodologies, processes, assumptions, standards, or regulations
develop and evolve, we may revise or cease reporting or using certain disclosures
and methodologies, including our current GHG targets and 2050 ambition, if we
determine that they are no longer advisable or appropriate. See Forward-Looking
Statements at the beginning of this document.
18 A total of 24.2 million MT of CO2e were reduced and displaced in 2022, including
absolute reductions of Scope 1 and 2 as well as avoided emissions from the use of
low-carbon fuels that substituted fuels from other refining producers. Based on this
result, the 2025 GHG Emissions target was achieved and surpassed, three years
early. See code EM-RM-110a.2 of the SASB Report in this document for details.
19 See code EM-RM-110a.2 of the SASB Report in this document for details.
20 Valero's 2050 GHG ambition to reduce and displace more than 45 million MT CO2e
of companywide Scope 1, 2, 3 and 4 emissions includes absolute refining emissions
reductions, avoided emissions from the production and blending obligations of
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low-carbon fuels, and emissions reductions from CCS. Calculations for
avoided emissions are detailed on footnote 22. Valero’s 2022 companywide
Scope 1 and 2 of 32.17 million MT CO2e includes GHG emissions related to our
Refining, Ethanol and Renewable Diesel segments. Scope 1 and 2 emissions
attributed to Ethanol and Renewable Diesel in 2022 were 2.40 million MT CO2e
and 0.15 million MT CO2e, respectively. Refining emissions are provided in the
Environmental Metrics table on page 19.
21 Valero's Scope 3 intensity (equivalent to category 11) represents the GHG
emissions that result from the complete combustion of each petroleum
product and natural gas liquid produced, used as feedstock, imported, or
exported during the calendar year per barrel of refining throughput, ethanol
production and renewable diesel sales. GHG emissions from the use of these
products were calculated based upon the carbon content of each material
according to U.S. 40 CFR Part 98 (Subpart MM) and we included the GHG
emissions reductions from low-carbon fuels displacement of petroleum fuels
(avoided emissions) and carbon capture. Calculations for avoided emissions
are detailed in footnote 22. GHG emissions from the use of products for the
refineries in Canada and the U.K. were calculated in conformance with U.S.
40 CFR Part 98 (Subpart MM). Energy densities and emissions factors were
sourced from the CA-GREET3.0 model and U.S. 40 CFR Part 98 (Subpart
MM), respectively. Peer group consists of publicly listed independent pure
play refiners. Scope 3 intensity for the peer group was calculated using
company reported 2022 GHG emissions, if publicly available, or otherwise
2021 GHG emissions (latest reported GHG emissions) under the U.S. 40 CFR
Part 98 (Subpart MM), including avoided emissions from low-carbon fuels,
if publicly available or based on assumed 2021 U.S. national averages of
blending and credits for 10.3% ethanol and 4.6% for biodiesel and renewable
diesel (sourced from the U.S. Energy Information Administration's Monthly
Energy Review) divided by total refining throughput, and actual ethanol,
biodiesel and/or renewable diesel production as disclosed in publicly
available financial statements for the same year as the peer latest reported
GHG emissions. There is not currently any standardized methodology for
calculating Scope 3 emissions, and the inherent unreliability of Scope 3
calculations renders such metric of limited value. Scope 3 intensity itself is
not based on any standardized industry methodology and is not necessarily
calculated in the same manner or comparable to similarly titled measures
presented by other companies, including the peer group, or estimates
published by third parties.
22 Calculations for avoided emissions, commonly known as Scope 4, were
informed by the GHG Protocol for Project Accounting, and are based
upon Valero's total production of, blending of and credits from ethanol,
and sales of, blending of and credits from renewable diesel, renewable
naphtha, and biodiesel. The low-carbon fuels volumes were converted to
energy-equivalent volumes of the corresponding petroleum products and
multiplied by the emissions factors of the petroleum fuels. When projected
SAF production was included, an energy-equivalent volume of jet fuel
was multiplied by its corresponding emission factor. Energy densities and
emissions factors were sourced from the CA-GREET3.0 model and U.S. 40 CFR
Part 98 (Subpart MM), respectively. Cumulative avoided emissions since 2009
include our ethanol and renewable diesel production. As the operator of the
consolidated entity (SASB's Standards Application Guidance 3.0 Reporting
Boundaries), avoided GHG emissions from the lower carbon intensity of
renewable diesel include the entire production of renewable diesel of the
consolidated entities.
23 Based on EPA's WaterSense average U.S. household consumption.
24 Refining industry employees (U.S. Bureau of Labor Statistics, year 2021).
25 Incidents reclassified in 2022 (post publication of the 2022 ESG Report) resulted
in a slight adjustment of this metric.
26 Global refining Tier 1 process safety event (PSE) rate and Tier 2 PSE rate as
defined within API Recommended Practice 754.
27 The Environmental Justice Audit Report can be found on our website at Valero.
com > Investors > ESG > Reports and Presentations.
28 Includes funds donated by Valero and the Valero Energy Foundation.
29 2023 Proxy Statement, page 89.
30 Responses were given by employees in different company surveys, including
the 2022 Annual Benefits Statement Survey, 2023 Valero Fitness Center Survey
and 2023 Employee Wellness Center Survey (Field).
31 Unless otherwise noted, workforce data reflects Valero’s global population as of
December 31, 2022.
32 Voluntary turnover rate, excluding retirement. Data reflects significant efforts
to close the gender gap in attrition over the past five years (5.6% for women vs.
4.7% for men).
33 Average includes salary, health and wellness benefits, financial benefits and
other incentives.
34 Valero's total investment in global employees includes direct compensation;
bonus payments; incentive stock awards; employee benefits, including
retirement, medical and welfare benefits as well as other employment-related
investments and expenses.
35 McAllister, K., Rattner, N., Francis, T., June 29, 2023, Want a job that pays
$200,000? See how much the biggest companies pay. The Wall Street Journal.
36 Includes training related to regulatory compliance, leadership and other topics.
37 Nasdaq; LSEG. As of the second quarter of 2023.
38 Measurements reflect our reasonable determinations based on available
data and information regarding the composition and holdings of our
stockholders over the course of our engagement efforts in 2022.
39 Beginning with 2023 grants, relative TSR performance for Valero’s
performance shares was set at above the median of the peer group.
40 See the Corporate Governance Guidelines in our website for more details on
our Stock Ownership and Retention Guidelines.
