2024 ESG Report FINAL - Report - Page 21
GHG Emissions
GHG Emissions Methodologies
There is not currently a standardized methodology for calculating GHG emissions. For instance, direct GHG
emissions that result from on-site sources controlled and owned by the 昀椀rm, commonly referred to as Scope 1,
can be calculated using different parameters and methodologies. Another well-known example is the calculation
of Scope 3, which is inherently unreliable because of the varying interpretations of indirect emissions that are a
consequence of the activities of the company, but are outside of its control.
At Valero, we have complied with mandated GHG emissions reporting requirements for more than a decade. As a
result, we have established a robust process to disclose our GHG emissions inventory following the GHG emissions
regulatory frameworks in the U.S., Canada and the U.K., and global LCA regulations applicable to low-carbon fuels.
The methodologies we use to calculate our GHG emissions reporting are described below:
Direct GHG emissions (also known as Scope 1): corporate
disclosure of our Scope 1 GHG emissions from fuel combustion
and hydrogen production sources at our 15 petroleum re昀椀neries
can be estimated following the GHG reporting program
obligations under U.S. 40 CFR Part 98 (Subparts C, P, Y and PP);
the Commission Implementing Regulation (EU) 2018/2066 of 19
December 2018 on the monitoring and reporting of greenhouse
gas emissions pursuant to Directive 2003/87/EC of the European
Parliament and of the Council; and Quebec – Q-2, r. 15 Regulation respecting mandatory reporting of certain emissions
of contaminants into the atmosphere.
We also calculate and separately disclose the direct GHG
emissions (Scope 1) from our 12 ethanol plants and 2 renewable
diesel plants following the GHG emissions reporting program
obligations under U.S. 40 CFR 98 (Subpart C).
Indirect GHG emissions from the consumption of energy and
steam purchased by the organization for its use (also known
as Scope 2): to calculate Scope 2, we follow the guidance
from two approaches in the GHG Protocol: market-based and
location-based. We calculate Scope 2 for our three segments:
re昀椀ning, ethanol and renewable diesel.
Scope 1 Intensity: to calculate the GHG emissions from the
re昀椀nery process per unit of throughput, we divide the global
re昀椀nery Scope 1 in million metric tons CO2e (as described above)
by thousand BOE. Re昀椀ning peer group includes PSX, MPC, DINO
and PBF. Similarly, we calculated peers' Scopes 1 intensity by
dividing re昀椀ning Scope 1 by re昀椀ning throughput disclosures,
which were sourced from public 昀椀lings, such as annual reports
on Forms 10-K and sustainability reports.
Indirect GHG emissions intensity from the use of products
on a per barrel or per unit of energy basis: there is not
currently a standardized methodology for calculating Scope
3 GHG emissions, and the inherent unreliability of Scope 3
calculations renders such metric of limited value. At Valero,
we have complied with mandated GHG emissions reporting
requirements for more than a decade related to GHG emissions
of the use of our products, as required by the EPA. Therefore, for
the calculation of the numerator we follow the U.S. 40 CFR Part
98 (Subpart MM), which includes the complete combustion
of each petroleum product and natural gas liquid produced,
used as feedstock, imported, or exported during the calendar
year, based upon the carbon content of each material. The
numerator includes both the disclosure from our U.S. re昀椀neries
as required under U.S. 40 CFR Part 98 (Subpart MM) and from
our re昀椀neries in Canada and the U.K., in conformance with
U.S. 40 CFR Part 98 (Subpart MM). Because it is a companywide reporting, the calculation of this metric includes the GHG
emissions from low-carbon fuels displacement of petroleum
fuels (“displacements”) and the absolute GHG emissions
reductions from CCS, if any.
The denominator in the intensity calculation in kg CO2e per
thousand BOE is the company’s re昀椀ning throughput, ethanol
production and renewable diesel sales. The denominator in
the intensity calculation per megajoule (MJ) is the total energy
from the company’s re昀椀ning throughput, ethanol production
and renewable diesel sales using energy factors (MJ/gal)
from the California Air Resources Board’s Greenhouse Gas,
Regulated Emissions, and Energy Use in Transportation 3.0
model (CA-GREET3.0 model) used by California’s Low Carbon
Fuel Standard (LCFS).
Displacements: this represents the tonnage reduction
of GHG emissions equivalent (CO2e) that result from the
substitution of petroleum fuels with the production of,
blending of and credits from low-carbon fuels, including,
but not limited to, products that we currently produce or
are expected to produce as part of our publicly available
GHG emissions targets (such as ethanol, cellulosic ethanol,
renewable diesel, renewable naphtha, renewable propane
and SPK or neat SAF), as well as low-carbon fuels we procure,
including ethanol and biodiesel. This calculation is based
on a comparison of low-carbon fuels LCA and the fossil fuel
benchmark LCA, which could vary depending on the product
and/or the jurisdiction.
For our production of renewable diesel, the CI estimations
are based on the actual market-based CI assigned to the
product from the veri昀椀cations and audits from jurisdictions
where renewable diesel production was sold. In the case
of our production of ethanol, the CI estimations are based
on the Argonne National Laboratory GREET3.0 2021 model.
Regarding the CI estimations for ethanol and biodiesel
that we procured to ful昀椀ll our blending obligations, we used
the Argonne National Laboratory GREET3.0 2021 (ethanol)
and 2019 (biodiesel) models and published papers. When
calculating the displacements from blending and to avoid
double counting, our low-carbon fuel production that
contributes to our blending obligation is excluded.
Under the Sustainability Accounting Standards Board's (SASB)
Standards Application Guidance 3.0 Reporting Boundaries,
as the operator of the consolidated entity, displacements
include the entire production of renewable diesel, renewable
naphtha, renewable propane and SPK or neat SAF of the
consolidated entities that we operate.
Scope 4: this calculation of avoided GHG emissions is used
only in the 2050 Long-Term Ambition. It is informed by the
GHG Protocol for Project Accounting and does not follow the
LCA methodology. The calculation is 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. Energy densities
and emissions factors were sourced from the CA-GREET3.0
model and U.S. 40 CFR Part 98 (Subpart MM). Under the SASB's
Standards Application Guidance 3.0 Reporting Boundaries,
as the operator of the consolidated entity, our avoided GHG
emissions include the entire production of renewable diesel,
renewable naphtha, renewable propane and SPK or neat SAF
of the consolidated entities that we operate.
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