2024 ESG Report FINAL - Report - Page 15
Low-Carbon
Indirect Land Use Change (ILUC) negatively impacts certain domestic crop-based biofuels, bene昀椀ts
certain imported biofuels, and does not fairly penalize land used for all renewable energy and mining.
Most of the biofuels policies commonly assess ILUC penalties to account for indirect land conversion that potentially
result from increased biofuels demand. These ILUC penalties – which tend to be 昀椀xed values rather than re昀氀ecting
the actual practices of the feedstock producer – can account for more than half of a biofuel's carbon intensity and
be the ultimate determiner of the fuel's quali昀椀cation under low-carbon programs. As shown in the charts below,
the EPA Renewable Fuel Standard (RFS) penalizes soybean with an ILUC of 80% of the entire CI calculation, and corn
ethanol with an ILUC of 36% of the CI. While California’s LCFS penalizes soybean with 47% of the CI and corn ethanol
with an ILUC of 28% of the CI of the fuel. These are among the highest of such penalties imposed on U.S. biofuels
programs. By contrast, the same models assign a much lower ILUC penalty to Brazilian sugarcane ethanol. For
instance, the RFS penalizes sugarcane ethanol by only 13% of the CI20 and the LCFS assigns the lower penalty of all
biofuels to sugarcane ethanol. 21
Corn Ethanol/SAF
Soybean Oil BD/RD/SAF
EPA RFS
EPA RFS
CA LCFS
CA LCFS
Canada CFR
Canada CFR
ICAO CORSIA
ICAO CORSIA
40B BTC
40B BTC
0
20
40
60
80
0
100
10
non-ILUC
Potential reduction for ag practices
20
30
40
CI (gCO2e/MJ)
CI (gCO2e/MJ)
ILUC
non-ILUC
50
60
70
Potential reduction for ag practices
ILUC
See Notes 22 , 23 , 24 , 25, 26 , 27 and 28 on page 78 for chart details.
Canada’s CFR excludes ILUC from the model due to limitations such as lack of data and high uncertainty. 24 25
Inconsistently, ILUC penalties are not extended to the installation of solar arrays, wind turbines, or the extraction of
minerals to support EV batteries, despite their potential for signi昀椀cant direct and induced land use changes. For
instance, the Department of Energy projects that 10.4 million acres of solar arrays will be needed to help decarbonize
the nation’s power grid – as much as 83% of that acreage will likely be farmland, 29 which will need to be replaced.
Valero supports policies that eliminate inconsistencies in emissions calculations that disadvantage
U.S. domestic crop-based biofuels. If ILUC is not entirely excluded (as in the case of solar arrays and
stripped mining), at least, long-standing farmland in the U.S. Midwest should not be treated unfavorably
compared with foreign crop-based fuels coming from potentially new deforested land.
Global SAF Mandates30
SAF Mandates
Jurisdiction
CORSIA
EU
France
Program aims to offset growth in CO2 emissions from international aviation above 85% of 2019 CO2 emissions. Participation is
voluntary over 2021-2026 and becomes mandatory for participating nations starting in 2027.
SAF mandate of 2% in 2025, 6% in 2030, 20% in 2035, 34% in 2040, 42% in 2045 and 70% in 2050.
SAF mandate of 1% in 2022, 1.5% in 2024 and 2% in 2025.
Germany
National implementation of RED II includes power-to-liquid. SAF sub-mandate of 0.5% in 2026, 1% in 2028 and 2% in 2030.
Malaysia
SAF mandate of 1% in 2026 and 47% in 2050.
Norway
Singapore
Sweden
British Columbia
(Canada)
UK
SAF mandate of 0.5% in 2020 and 30% in 2030.
SAF mandate of 1% in 2026 on outbound 昀氀ights, possibly rising to 3%-5% in 2030, depending on availability and adoption.
SAF mandate of 1% in 2021 and 30% in 2030.
SAF mandate of 1% in 2028, 2% in 2029 and 3% in 2030.
SAF mandate of 2% in 2025, 10% in 2030 and 22% in 2040. Expected to be adopted in 2024.
Environmental, Social and Governance Report •
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