2024 ESG Report FINAL - Report - Page 9
Strategy
Independent
assessments of our
re昀椀ning strategy,
under multiple carbonconstrained scenarios,
found Valero's overall
re昀椀ning portfolio to be
resilient
Responding to the requests of certain
stakeholders regarding independent
assessments of the resilience of
our strategy under hypothetical oil
and biofuel demand scenarios, we
have issued three reports following
the recommendations of the Task
Force on Climate-Related Financial
Disclosures (TCFD) and using multiple
demand scenarios. Our 昀椀rst TCFD
report, the Review of Climaterelated Risks and Opportunities, was
published in September 2018. At that
time, we engaged HSB Solomon
Associates (Solomon), a leading
re昀椀ning benchmarking data provider
and advisory 昀椀rm, to conduct an
independent analysis under multiple
demand scenarios, including the
potential transition to a lower-carbon
economy consistent with one of the
International Energy Agency's (IEA)
2°C scenarios. In the 2021 TCFD Report
and Scenario Analysis, Solomon
examined our re昀椀ning business
and reviewed the resilience of our
strategy under the IEA’s Sustainable
Development Scenario (SDS), referred
to as a well-below 2°C scenario. And
in the 2022 TCFD Report, Solomon
conducted an independent scenario
analysis based on the assumptions
of the IEA Net Zero by 2050 Scenario,
as applied by Solomon. The
assessments in such reports found
Valero’s overall re昀椀ning portfolio to
be resilient.4
The world is calling for low-carbon
alternatives...
Low-carbon fuels and carbon capture and storage (CCS), which
are key components of Valero’s low-carbon fuels strategy and
its GHG emissions targets, are viewed by both the United Nations
(U.N.) Intergovernmental Panel on Climate Change (IPCC)5 and
IEA6 as critical to 1.5°C-aligned, net zero by 2050 ambitions.
Furthermore, the U.N. Climate Change Conference (COP28)
resulted in a multilateral agreement, published on December
13, 2023, that explicitly calls for contributions to rapid and
sustained reductions in GHG emissions with efforts such as:
• “Utilizing zero- and low-carbon fuels”
• “[A]ccelerating zero- and low-emission technologies,
including, inter alia, renewables, nuclear, abatement
and removal technologies such as carbon capture and
utilization and storage, particularly in hard-to-abate
sectors and low-carbon hydrogen production”7
Attended by some 85,000 participants from nearly 200
countries, the COP28 agreement also explicitly “[r]ecognizes
that transitional fuels can play a role in facilitating the energy
transition while ensuring energy security.”8
Additionally, the U.S. Department of Energy recently published a
report on pathways to decarbonize the re昀椀ning industry, which
describes phased approaches for re昀椀ners to achieve net zero by
leveraging technologies such as clean hydrogen, CCS and biobased feedstocks/low-carbon fuels, among others.9
The conclusions from these in昀氀uential organizations and
initiatives that explicitly place importance on low-carbon fuels
and CCS projects have informed and reaf昀椀rmed Valero’s views
on the key role of its current low-carbon fuels strategy and GHG
emissions targets. Low-carbon fuels, CCS and other low-carbon
projects are also supported and incentivized by the regulations,
policies and standards of various government authorities around
the world.
...Valero is answering that call!
We still encounter certain stakeholders who recognize
the value of our low-carbon fuels initiatives and CCS
projects but give no credit to these efforts when
accounting for GHG emissions reductions, and would
like us to exclusively focus on signi昀椀cant reductions
from our re昀椀neries (which can only be accomplished by
curtailing production or closing assets).
Environmental, Social and Governance Report •
9
