Stewardship & Responsibility Report

Page created by Randy Morgan
Stewardship & Responsibility Report
JULY 2021

Stewardship &
Responsibility Report

Stewardship & Responsibility Report
Contents                                                           Guiding Principles

                  3      G u id in g P r i n c i p le s                           OUR VISION
                                                                                  The world requires reliable, affordable and sustainable energy, and
                  4      A L e t t e r f ro m o u r CEO                           we see this as an opportunity.

                  6      W h o We A re                                            We are committed to advancing the future of energy through
                                                                                  innovation, ingenuity and unmatched execution.

                  8      M a p o f O p e r a tio n s
               10        2 0 2 0 E S G S u mmary                                         Safety is our foundation for success.

                12       R e n e w a b l e D i ese l v s. EV s
               14        G H G E m i s s i o n s Targ e ts                               We are committed stewards of the environment.

               16        E n v iro n m e n t
               38        Safety                                                          We will be a good neighbor by sharing our success with the
                                                                                         communities where we live and work through volunteerism,
               52        Community                                                       charitable giving and the economic support of being a good

               72        People
               94        Governance
                                                                                         We consider our employees a competitive advantage

            106          S A S B R e p o r t an d F o o tn o te s                        and our greatest asset. We foster a culture that supports
                                                                                         diversity and inclusion, and provide a safe, healthy and
                                                                                         rewarding work environment with opportunities for growth.
            108          EEO-1 Report

            109          N o n - G A A P D i sc lo su re s an d F o o tn o te s          GOVERNANCE
                                                                                         We view our stakeholders as partners to whom we seek to
                                                                                         deliver operational excellence, disciplined management
    High efficiency cooling towers at                                                    of capital and long-term value on a foundation of strong
    Valero’s Corpus Christi West Refinery.                                               governance and ethical standards.

2                                                                                                 VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •        3
Stewardship & Responsibility Report
A Letter from                                                           “We are on trac k

    our CEO                                                                 to achi ev e our p lan to
                                                                            reduce/offset 63%
                                                                            of gl obal refining
    In 2020, we achieved several      Valero is already a leader in
    operational records, including    the production of renewable           greenhouse g as (G HG )
    best year ever for safety and     fuels, with more than $3 billion
    environmental performance. In     invested. We expect to invest         em i s s i ons b y 2025
    addition, we generated more       almost $2 billion over the next
    than $58 million for charities    three years, expanding our            through existing
    through donations, fundraising    board-approved low-carbon
    and volunteerism. As many         projects. In addition, we are         board- ap p roved p rojec ts.
    people suffered hardships,        evaluating and advancing
    we focused our charitable         investments in sustainable            A nd we are not stop p ing
    contributions on providing        aviation fuel, hydrogen, carbon
    food, shelter, educational        sequestration and more.               there. I am p leased
    resources, fuel and other life
                                      We are on track to achieve
                                      our plan to reduce/offset 63%
                                                                            to announce that w e
    I am very proud of Team           of global refining greenhouse
    Valero. Throughout a year         gas (GHG) emissions by 2025
                                                                            pl an to inc rease that
    like no other, our employees      through existing board-approved
    showed their dedication to our    projects. And we are not
                                                                            percentag e to 100%
    company, and commitment to        stopping there. I am pleased
    operating in an environmentally   to announce that we plan to           by 2 0 3 5 .”
    responsible and safe manner.      increase that percentage to
    I am proud of our efforts in      100% by 2035. The management
    diversity and inclusion, as       team and I recognize low-carbon
    those are strengths of our        fuels will be part of the energy
    Valero team. As part of our       mix. Demand for renewable fuels
    pandemic response, we also        will be driven by low-carbon                          Joe Gorder
    expanded employee physical        fuel policies and stricter fuel-
                                                                                            CHAIRMAN AND
    and mental health benefits,       efficiency standards. We plan to
                                                                                            CHIEF EXECUTIVE OFFICER
    enhanced safety protocols         leverage our liquid-fuels platform
    and maintained high levels        and operational expertise to
    of communication with our         diversify into high-growth, high-
    workforce.                        return, lower-carbon projects
                                      going forward.
    Looking to the future, we
    remain steadfast in our           Thank you for your continued
    energy transition strategy.       support and trust.
4                                                                          VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •   5
Stewardship & Responsibility Report
Who We Are

    Val ero E n e rg y
    Cor p or a t i o n ( N Y S E :
    V LO), t h ro u g h
    its subsidiaries
    (col l ect i v e l y, “ Va l e ro ” ) ,
    i s an i n t e r n a t i o n a l
    man u f a c t u re r
    and marketer of
    transportation fuels and
    p e t roch e m i c a l p ro d u c t s.                  Refining                               Renew abl e Di es el                                       Ethanol

                                              WORLD’S LARGEST                               WORLD’S 2ND LARGEST                             WORLD’S 2ND LARGEST
                                              INDEPENDENT REFINER                           RENEWABLE DIESEL PRODUCER                       CORN ETHANOL PRODUCER
                                                                           15 REFINERIES                                                                                13 ETHANOL PLANTS
                                                                  3.2 MILLION BARRELS PER      CURRENT       EXPANDING TO          AND
                                                                                             PRODUCTION       690 MILLION     1.2 BILLION                1.7 BILLION GALLONS
                                                                  DAY OF HIGH-COMPLEXITY
                                                                                             CAPACITY OF       GALLONS           GALLONS                 PER YEAR OF PRODUCTION CAPACITY
                                                                  THROUGHPUT CAPACITY
                                                                                             290 MILLION        PER YEAR         PER YEAR
                                                                                              GALLONS           IN 2021          IN 2023
                                              MANUFACTURER AND MARKETER
                                                                                                                                               HIGH-OCTANE RENEWABLE FUEL
              HEADQUARTERED IN                OF TRANSPORTATION FUELS                       UP TO 80% REDUCTION       100% COMPATIBLE             OFFERS 30% REDUCTION
                                              ESSENTIAL TO MODERN LIFE                      GHG EMISSIONS            AND INFRASTRUCTURE

                                                   ADVANTAGED REFINING AND LOGISTICS               PRODUCED FROM WASTES SUCH AS
                                                      ASSETS WELL-POSITIONED FOR                                                                   EXISTING               DEVELOPING
                                                                                              RECYCLED ANIMAL FATS, USED COOKING OIL
                                                 FEEDSTOCK AND PRODUCT OPTIMIZATION                                                            LOGISTICS ASSETS      CARBON CAPTURE AND
                                                                                                         AND INEDIBLE CORN OIL
                    ~10,000                                                                                                                  WELL-POSITIONED TO       STORAGE PROJECTS
                                                  SAFETY IS OUR                                                                                SUPPORT EXPORT         TO FURTHER REDUCE
              GLOBAL EMPLOYEES                                             LOWEST-COST                      LOW-CARBON FUEL
                                                   FOUNDATION                                                                                      GROWTH              CARBON INTENSITY
                                                                             PRODUCER             SOLD IN NORTH AMERICA AND EUROPE
                                                   FOR SUCCESS
6                                                                                                                                           VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •   7
Stewardship & Responsibility Report
Map of Operations

      REFINING                                                                                                                       KINGDOM

      Assets:    15 petroleum refineries in the U.S.,                                                           IRELAND
                 Canada and the U.K.

                 Gasoline, diesel, jet fuel and other specialty                                                    PEMBROKE              LONDON
    Products:    products, including asphalt and petrochemicals,
                 that fuel modern life

Throughput       3.2 million barrels per day of crude oil
  Capacity:      and other feedstocks                                                          LOGISTICS ASSETS
                                                                                                         ~3,000 miles of active pipelines
                                                                                                         ~130 million barrels of active shell
      RENEWABLE DIESEL                                                                                   capacity for crude oil and products
                                                                                                         200+ truck rack bays
                 Diamond Green Diesel (joint venture),
                 Norco, Louisiana
                                                                                                         ~5,200 railcars
                                                                                                         50+ docks
    Products:    Renewable diesel fuel                                                                   2 Panamax-class vessels

                                                                                            Includes assets that have other joint venture or
                                                                                            minority interests. Does not include ethanol assets,
    Capacity:    290 million gallons per year                                               except for railcars.

                                                                                 ALTERNATIVE ENERGY GENERATION
                                                                                                         Adjacent to the McKee refinery
                                                                                                         in the Texas Panhandle, 33 wind
      Assets:    13 plants in the Midwest U.S.                                                           turbines with 50 megawatts of
                                                                                                         electricity capacity

                 Ethanol, distillers grains and fuel-grade
    Products:    corn oil
                                                                                                         4 cogeneration plants in the U.S.
                                                                                                         and the U.K.

    Capacity:    1.7 billion gallons per year of ethanol;
                 4.5 million tons of distillers grains             PERU   LIMA                           Expanders at 6 of our refineries

8                                                                                     VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •         9
Stewardship & Responsibility Report
                                                                                                                • World’s 2nd largest renewable diesel producer
                                                                   On track to achieve 63% global refining
     We b el i e v e t h a t p ro a c t ive                        GHG emissions reduction/offset target
                                                                                                                • Renewable diesel and ethanol reduce life cycle GHG emissions up to 80% and 30%, respectively
     a n d con s i s t e n t d i a l o g u e                                       by 2025                      • World’s 2nd largest corn ethanol producer
     wi t h s t a k e h o l d e r s h e l p s
                                                                    2020 best year ever for environmental       • Growth projects in low-carbon fuels as well as carbon capture and storage
     u s a d d re s s e n v i ro n m e n ta l ,                                 performance
     s oci a l a n d g o v e r n a n c e
     p r i or i t i e s , w h i c h e n h a n ce
     o u r b us i n e s s .

                                                               2020 best year ever for safety performance       • ~10,000 global employees1                             • 29% of our global professional employees are women1
                                                              Surpassed $58 million in community donations      • 35% of our U.S. workforce are minorities1             • Named to Forbes 2020 World’s Best Employers
                                                              and fundraising, with more than $12 million for
                                                                        COVID-19-related support

     Our Sustainability Accounting Standards Board                                                                                                                                                               As of Jan. 31, 2021.

     (SASB) report, which aligns Valero’s performance
     data with the recommendations of SASB’s
     framework in the Oil and Gas – Refining and
     Marketing industry standard, can be found on
     pages 106 and 107.

     In 2018, we published our Review of Climate-                               GOVERNANCE                      • Board and committee oversight of risks and compliance, including climate-change risks, GHG reductions and
                                                                                                                  renewable fuels strategy
     Related Risks and Opportunities assessing
     the resilience of our business strategies under a
                                                                 Diverse, independent board of directors:
                                                                                                                • Compensation aligned with performance: all-employee bonus program includes ESG efforts and improvements;
     potential transition to a lower-carbon economy
                                                                5 of 11 represent diversity of race or gender     and executive performance shares include an Energy Transition performance measure (as a modifier to relative TSR)
     consistent with a 2°C scenario. We intend to
                                                                  3 of 11 are women • 10 are independent          linking compensation to the company’s progress toward its publicly announced 2025 GHG emissions reduction/offset
     present an updated report following the Task
                                                                       3 fully independent committees             target and percentage of growth capital deployed for low-carbon initiatives
     Force on Climate-related Financial Disclosures
     (TCFD) recommendations later in 2021. We
     are participating in the CDP Climate Change
     Questionnaire 2021.
                                                         See page 107 for notes regarding this page.            See page 107 for notes regarding this page.

10                                                                                                                                                                       VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •           11
Stewardship & Responsibility Report
Electric                                                                                                                           Renewable Diesel
      Vehicles (EVs)
                                                                                                                                         A n affo rdable so lu tio n to im m e diate ly
                                                                                                                                         re du ce tran spo rtatio n GHG e m issio n s.                                                                   U.S. LIGHT-DUTY VEHICLE
                                                                                                                                                                                                                                                          LIFE CYCLE EMISSIONS
      A b e t t e r u n d e r s t a n d i n g of
      e l ect r i fi c a t i o n .                                                                                                       BENEFITS OF RENEWABLE DIESEL                                                                                                            40% less
                                                                                                                                         COMPARED TO EVs                                                                                         300                             emissions
                                                                                                                                                                                                                                                                                                    Even lower

                                                                                                                                                                                                                                   g CO2 /mile
                                                                                                                                                                                                                                                                                 than an EV
      • EVs will be part of the energy mix to achieve low-carbon                                                                                                                                                                                                                                    waste-based
                                                                                                                                                                                                                                                 200                                                feedstocks
         goals but they are not the single technology solution.                                                                             • Renewable diesel is a drop-in fuel, which means that it is                                                      336

                                                                                                                                                100% compatible with existing infrastructure and diesel                                          100                                  203
      • Before an EV leaves the showroom, it has already emitted                                                                                                                                                                                                                                        150
                                                                                                                                                engines, from light- to heavy-duty long-haul vehicles.                                             0
         twice the CO2 emissions of a car fueled by gasoline.*
                                                                                                                                                This helps make renewable diesel a viable solution to                                                  Battery Electric          Engine with        Engine with
                                                                                                                                                                                                                                                           Vehicle                Renewable          Renewable
      • The mining/extraction and processing of the rare earth                                                                                  immediately reduce transportation GHG emissions without                                                                             Diesel             Diesel
                                                                                                                                                                                                                                                                                 (soybean-based)   (waste-oil based)
         minerals and metals needed to produce an EV battery                                                                                    requiring a costly, time-intensive and CO2-emitting
         result in significant GHG emissions, and often occur                                                                                   infrastructure build-out as with EVs.                                                        U.S. HEAVY-DUTY LONG-HAUL
         in countries with less-stringent environmental and                                                                                                                                                                                 VEHICLE LIFE CYCLE EMISSIONS
         reclamation regulations than North America or Europe.
                                                                                                     ELECTRIC                               • Our renewable diesel is typically made of waste materials
                                                                                                   VEHICLES ARE                                 and manufactured in jurisdictions with strict environmental,                                 1,200
                                                                                                                                                                                                                                                                            49% less emissions than an EV
                                                                                                                                                                                                                                                                             after 1 million miles traveled
      • Once in operation, an EV is still not “zero emissions” as the
                                                                                                    NOT ZERO                                    labor and governance regulations.                                                            1,000
         electricity that powers an EV often is generated by fossil
                                                                                                    EMISSIONS                               • Unlike with EVs, owners of vehicles running on renewable                                           800

                                                                                                                                                                                                                                Tons CO2
         fuels.                                                                                                                                                                                                                                  600
                                                                                               Southwest Research Institute Ted Talk,           diesel do not incur a high up-front cost to replace their
      • The infrastructure build-out necessary to support an                                      Presented by Graham Conway
                                                                                                                                                current vehicles, nor the expenses related to charging and

         increase in EVs will be costly, time-intensive and fossil-fuel                                                                                                                                                                          200
                                                                                                                                                other new infrastructure needed to support an EV.
         dependent, thus emitting a large amount of CO2 itself.
                                                                                                                                                                                                                                                           Embedded                500,000       1,000,000
                                                                                                                                            • As detailed on the right, because of the feedstocks used to                                                   Emissions           Miles Traveled Miles Traveled
      • According to the IEA’s The Role of Critical Minerals in                                                                                 produce renewable diesel, a vehicle running on renewable                                                (Zero Miles Traveled)

         Clean Energy Transition, the world does not have the                                                                                   diesel can significantly cut life cycle GHG emissions                                            Battery Electric Vehicle           Engine with Renewable Diesel

         mineral resource capacity to meet the demand increase of                                                                               compared with an EV**.
                                                                                                                                                                                                                              **Argonne National Laboratory (DOE) and Southwest Research
         renewable technologies, such as EV batteries.                                                                                                                                                                        Institute. See page 109 for notes regarding this chart.

SIGNIFICANT ISSUES AND EMISSIONS FROM EV LIFE CYCLE                                                                                       A single light-duty vehicle running on renewable                          A single heavy-duty long-haul vehicle running on
                                                                                                                                          diesel emits 29 tons less CO2 than an electric                            renewable diesel emits 561 tons less CO2 than an
                                                                                                                                          vehicle**, an amount equal to the benefit of planting                     electric vehicle**, an amount equal to the benefit of
                                                                                                                                          435 trees***                                                              planting 8,482 trees***

       MINING/                   COBALT & RARE                      MANUFACTURING                           POWER
     EXTRACTION                EARTH PROCESSING                          EVs                              GENERATION

12                           *Southwest Research Institute Ted Talk, Presented by Graham Conway.                                        ***Estimated based on the U.S. Environmental Protection Agency (EPA) GHG   VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •                                               13
                                                                                                                                        Equivalencies calculator for urban tree seedlings grown for ten years.
Stewardship & Responsibility Report
GHG Emissions Targets

                                             202 5 TA RGET:                                                                                                                                                              NEW               2035 TARGE T:
     To re d u ce a n d o ff s e t 63% of our g l ob a l refi ni ng Sc op e 1 a nd 2                                                                 We plan to fu rth e r re du ce an d o ffse t 100% o f o ur g lo b al refining
       G H G em i s s i o n s b y 2025 through boa rd -a pp roved p roj ec ts.                                                                         S co pe 1 an d 2 GHG e m issio n s by 2035 th ro u g h b o ard -ap p ro ved
                                                                                                                                                   pro je cts an d carbo n captu re an d sto rage pro je ct s und er d evelo p ment .

                                                                                                                                                                                         32. 3
                                                                                                                                                                                                                  2. 4                 4. 2

                                                                                                                                                        Mi l l i o n Me t r i c
                                                                                                                                                         To n s C O 2 e
                                                                                                                                                                                                                                                        11. 1
On t r a ck t o                                                                                                                                                                                                                                                                                                          100%
ac hi e ve 6 3 %                                                                                         Left to                                                                                                                                                                                                         Reducti on
ref in i ng G H G                                                 59% Reduction                     Reduce and Offset
                                                                   and Offsets                                                                                                                                                                                            10. 9
emis s i o n s
                                                                   Achieved in
redu ct i on/ o ff s e t                                              2020
t arg e t b y 2 0 25.                                                                                                                                                                                                                                                                        3.7

                                                                                                                                                                                          VLO                A bso l u te          2 0 3 5 GH G     2 0 3 5 GH G      2 0 3 5 GH G        2035 GHG        2035 V LO
                                                                                                                                                                                       Re f i n i n g        Emi ssi o n s         Emi ssi o n s    Emi ssi o n s      Emi ssi o n s      E mis s ions     R efining
                                                                                                                                                                                          GH G               Re du cti o n          Off se t by        Off se t        Off se t by        Offs et b y         GHG
                                                                                                                                                                                      Emi ssi o n s           th ro u gh          VLO Eth an o l      by VLO             Gl o bal           Carb on       E mis s ions
                                                                                                                                                                                       in 2011              Eff i ci e n ci e s    Pro du cti o n   Re n e wabl e      B l e n di n g    Cap ture and         after
                                                                                                                              63%                                                       (S co pe               (S co pe                                Di e se l         o f an d          Storag e      R ed uctions
                                                                                                                                                                                         1 & 2)                 1 & 2)                              Pro du cti o n   C re di ts f ro m                    & Offs ets
                                                                                                                              Ta rge t                                                                                                                                Re n e wabl e                         (Scop e
                                                                                                                                                                                  In d e p e n d e n t ly
                                                                                                                                                                                                                                                                          Fuels                              1 & 2)
                                                                                                                                                                                       v e r ifie d

In addition to absolute refining GHG emissions                            reduction targets. This has helped, and should continue
reductions, our production of renewable diesel and                        to help, drive the demand for both renewable diesel and
ethanol offers meaningful reductions in life cycle                        ethanol. Valero believes that the ability to supply these
GHG emissions, compared with traditional diesel and                       renewable fuels could play an important role in helping
gasoline. Blending and credits with respect to renewable                  to achieve such GHG emissions reduction targets.                                        TARGETING TO REDUCE AND OFFSET 100% OF GLOBAL
fuels also provide a displacement of GHG emissions.
                                                                          We have invested more than $3 billion* to date in our                                     REFINING SCOPE 1 AND 2 GHG EMISSIONS BY 2035
Many state, provincial and national governments
                                                                          renewable fuels, and we have allocated almost
across the world have implemented, or are considering
                                                                          $2 billion over the next three years expanding our
implementing, low-carbon fuel policies and stricter
                                                                          board-approved renewable projects.
fuel efficiency standards to help reach GHG emissions

*Our investment to date in our renewable fuels businesses consists of $1.4 billion in capital investments to build our renewable diesel business
and $1.7 billion to build our ethanol business. Capital investments in renewable diesel represent 100 percent of the capital investments made by
DGD (joint venture in which Valero is a 50/50 joint venture partner).
14   See pages 106, 107 and 109 for notes regarding this page.                                                                                       See page 106 and 107 for notes regarding this page.                                                     VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •                  15
Stewardship & Responsibility Report
Valero employees celebrating Earth Day at San Antonio’s
Phil Hardberger Park

                                                          E N V IR ONME NT
                                                                    We are co mmit t ed
                                                                    ste wards o f t he
                                                                    e n v iro n m e n t .
                                                                    Our team works to protect the natural environment by
                                                                    operating in a responsible manner, including utilizing
                                                                    recycling and reusing practices, minimizing waste and
                                                                    investing in our assets. In fact, multi-billion-dollar capital
                                                                    investments to maintain our responsible operations
                                                                    along with continuous improvement in personnel safety,
                                                                    process safety and reliability have driven down our
                                                                    environmental events to record lows.

                                                                      GOVERNANCE AND
                                                                      OVERSIGHT BY THE BOARD
                                                                      The board of directors has oversight responsibility
                                                                      of climate-related risks and opportunities. The
                                                                      Nominating/Governance and Public Policy
                                                                      Committee assists the board in the oversight of
                                                                      risks relating to health, safety and environmental
                                                                      performance, as well as climate-related risks and
                                                                      opportunities. The committee also assists the board
                                                                      in oversight of ESG disclosures. Managed by a senior
                                                                      executive who reports directly to our CEO and with
                                                                      direct reporting opportunities to the committee, our
                                                                      environmental team is responsible for environmental
                                                                      strategy, risk assessment and implementation.

16                                                                  VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •              17
Stewardship & Responsibility Report
ENVIRONM ENT                     S A F ET Y       C OM M U NIT Y                  PEO P LE             GOV E R NANCE

2020 HIGHLIGHTS                                                                                                                                                                                                LOW-CARBON FUELS
                                                                                                                                                                                                               AND PROJECTS
                                                                                                                                                                                                               Ou r in n o v at io n has mad e us
                                                                                                                                                                                                               a le ade r in o ur ind us t r y fo r
                                                                                                                                                                                                               an e n e rgy t r ans it io n.

                  ON TRACK TO ACHIEVE                                                                                                                                                                          We have invested more than $3 billion to

                                                                                                                                                                                                               date in our renewable fuels businesses. And
                                                                                                                                                                                                               we have allocated almost $2 billion over the
                                                                                                                                                                                                               next three years to complete the expansion of
                                                                                   RENEWABLE DIESEL HAS UP TO                                           ETHANOL HAS AT LEAST
                                                                                                                                                                                                               our renewable diesel plant located next to our
                       TARGET BY 2025.
                                                                                              80%                                                             30%                                              St. Charles refinery in Louisiana, and to build
                                                                                                                                                                                                               another renewable diesel plant adjacent to our
                                                                               LOWER LIFE CYCLE GHG EMISSIONS,                                 LOWER LIFE CYCLE GHG EMISSIONS,                                 refinery in Port Arthur, Texas.
                                                                             COMPARED WITH TRADITIONAL DIESEL                               COMPARED WITH PETROLEUM GASOLINE
                                                                                                                                                                                                               Last year, more than 40% of growth capital
                                                                                                                                                                                                               expenditures were invested in low-carbon
                                                                                  RENEWABLE DIESEL                                                              ETHANOL

                                                                                                                                                                                                               projects. In 2021, we are allocating more than
                                                                             • Growing demand and capacity: current                          • World’s second largest producer: 1.7 billion                    50% of growth capital expenditures to low-
                                                                                 production capacity of 290 million gallons,                    gallons per year                                               carbon projects.

          GLOBAL REFINING SCOPE 1 AND 2                                          expanding to 690 million gallons per year in                                                                                  Many state, provincial and national
                                                                                                                                             • Low-carbon fuel: high-octane renewable fuel
        GHG EMISSIONS REDUCTION/OFFSET                                           2021 and 1.2 billion gallons per year by 2023                                                                                 governments across the world have
                                                                                                                                                that lowers life cycle GHG emissions 30%,
                        TARGET BY 2035                                       • Circular economy: produced from used                             compared with gasoline                                         implemented, or are considering implementing,
                                                                                 cooking oil, recycled animal fats and inedible                                                                                low-carbon fuel policies and stricter fuel-
                                                                                                                                             • Innovation to further reduce carbon intensity:
                                                                                 corn oil                                                                                                                      efficiency standards to help reach GHG
                                                                                                                                                large-scale carbon capture and storage pipeline
                                                                                                                                                                                                               emissions reduction targets. These policies
                                                                             • Low-carbon fuel: life cycle GHG emissions                        project underway, expected to be operational in
                                                                                                                                                                                                               drive the demand for both renewable diesel
                                                                                 up to 80% lower than traditional diesel                        2024 with the capability to capture more than
                                                                                                                                                                                                               and ethanol.
                                                                                                                                                3 million metric tons of CO2 emissions per year
                                                                             • Drop-in fuel: 100% compatible with existing
                                                                                                                                                                                                               The growth of our renewable fuels business not
                                                                                 infrastructure and engines, from light- to

                                                                                                                                                                                                               only contributes to substantially lower carbon
                                                                                 heavy-duty long-haul vehicles
                                                                                                                                                                                                               emissions, but also provides a good financial
                                                                                                                                                                                                               return to our stockholders.


*Performance measures include environmental scorecard incidents,
including flaring, spills and wastewater incidents.
See pages 106 and 107 for notes regarding this page.               By planting trees in wetlands and restoring swamps in front of levees,   See page 109 for notes regarding this page.
                                                                   employees at the Valero St. Charles Refinery help protect the area
                                                                   from hurricanes.
18                                                                                                                                                                                                     VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •              19
ENVIRONM ENT                      S A F ET Y                 C OM M U NIT Y                   PEO P LE                   GOV E R NANCE

RENEWABLE DIESEL                                                                     ETHANOL
Our renewable diesel uses a combination of used                                      A clean-burning, high-octane renewable fuel, ethanol
cooking oil, recycled animal fats and inedible corn oil                              has 30% lower life cycle GHG emissions, compared with
to produce low-carbon-intensity renewable diesel that                                gasoline. Our total ethanol production capacity is
reduces life cycle GHG emissions up to 80%, compared                                 1.7 billion gallons per year.
with traditional diesel.
                                                                                     In order to continue reducing the carbon intensity of
In a joint venture that started operations in 2013 at                                ethanol, we have implemented additional processes         LARGE-SCALE CARBON CAPTURE AND STORAGE TO FURTHER
a plant adjacent to our St. Charles refinery, we have                                using enzymes to further break down the corn kernel to    REDUCE THE CARBON INTENSITY OF ETHANOL
capacity to produce 290 million gallons per year with a                              produce cellulosic ethanol. This type of ethanol offers
planned expansion to 690 million gallons by late 2021.                               lower life cycle GHG emissions compared with corn         T h is pro je ct 1
Another renewable diesel plant was approved by our                                   ethanol.                                                  in v o lv e s captu rin g                                  Separation of CO2 at
board to start operations in the second half of 2023,                                                                                          h igh -co n ce n tratio n                                    our ethanol plants
adjacent to our refinery in Port Arthur, Texas. This will                                                                                      CO 2 stre am s
result in a combined annual capacity of about 1.2 billion                                                                                      pro du ce d in th e
gallons of renewable diesel.                                                                                                                   fe r m e n tatio n
                                                                                                                                               pro ce ss at o u r
                                                                                                                                                                                                                                                                 Once separated, the CO2 is
                                                                                                                                               e th an o l plan ts.
                                                                                                                                                                                                                                                                dehydrated and compressed,
                                                                                                                                                                                                                                                                then transported via pipelines
                                                                                                                                               The removal of CO2 from our
                                                                                                                                               ethanol plants has the potential
          LIFE CYCLE GHG EMISSIONS OF RENEWABLE FUELS                                                                                          to further reduce the carbon
   Life cycle GHG emissions of low-carbon fuels are expressed in carbon intensity and represent a cradle-to-grave                              intensity of this low-carbon fuel by
                                                                                                                                               more than 40% and significantly                            CO2 is injected into an
  analysis, including feedstock production and transportation, fuel production and distribution, and use of finished
                                                                                                                                                                                                         underground formation

                                                  Developing Economic Paths to Further Reduce the Carbon
 fuel. When compared with traditional fuels, life cycle GHG emissions of low-carbon fuels include all the traditional                          contribute to our GHG emissions
                                                                                                                                                                                                           for safe, secure and
                                                                     scope emissions.                                                          reduction/offset target.
                                                                                                                                                                                                           permanent storage

                                                  Intensity of Our Products
                                                                  FUEL PRODUCTION                                      USE OF THE
                                                                                                                                                                                                             Working with BlackRock Global Energy & Power Infrastructure Fund III
                                                                                                                                                                                                            and Navigator Energy Services expected to be completed.

    & TRANSPORTATION                                              AND DISTRIBUTION                                   FINISHED FUEL
                        ts            Che                                       ss Energy U                                                                                                                                                     Valero is expected to be the anchor
                   pu                       m                             oce
                                                  • Partnering with BlackRock and Navigator for a large-scale
              In                 ic                                  Pr     A BL E F                                         PORTAT
          y         O RESTRY SE a                                         EW         UE                                    NS      IO                                                                                                           shipper with eight of its ethanol
                   F           C                                        N                                                 A
                                                    carbon capture and storage project
     AG r g


              &                                                        E                                                 R

                                                                                                                                                                                                                                                plants connected to the 1,200-mile



                                                       − 1,200 mile pipeline is expected to span across five Midwest states

                                                                                                                                                                                                                                                carbon capture pipeline across five
                                                                                                                                                                                                                                                Midwest states.
                                                       − Valero is expected to be the anchor shipper with eight of its ethanol plants
                                                         connected to the carbon capture pipeline
          A                                            − Navigator is expected to lead the construction and operations of the system,


              N                 G
                   D U
                       SE CHA
                              N                          with operationsFAanticipated
                                                                           CILI T Y
                                                                                      to begin late 2024 F UE L
                   Ag                                                  Ma
                             C o pro d ucts                                              uts
                                                  • Project driven by   strong economic returns
                                                                   erial Inpt

                                                                                                                                                                                                                                                Map is indicative only. Exact pipeline route
                                                       − 45Q Tax Credit of $50 per metric ton of CO2 captured and stored(1)

                                                                                                                                                                                                                                                subject to change following the conclusion

                                                                                     ER                                                                                                                                                         of open season.

                                                       − Approximately 50 cents per gallon
                                                                                         C Ouplift
                                                                                             P R O on the lower carbon intensity
                                                         ethanol in LCFS markets
20                                                                                                                                             Map is indicative only. Exact pipeline route subject to change following the conclusionVALERO
                                                                                                                                                                                                                                      of Open Season.
                                                                                                                                                                                                                                                  STEWARDSHIP AND RESPONSIBILITY REPORT •      21
                                                                                                                                               (1) Typical CO production from ethanol plants is 0.003 metric tons per gallon of ethanol produced.
ENVIRONM ENT                    S A F ET Y             C OM M U NIT Y              PEO P LE              GOV E R NANCE

                                                 1                                          2                                          3
                                                       COMMITMENT                                   FUELS                                       ENVIRONMENTAL EXCELLENCE                                   EERA PROCESS:
 MANAGEMENT                                            TO EXCELLENCE                                COMPLIANCE                                  AND RISK ASSESSMENT (EERA)
                                                       MANAGEMENT                            Our Fuels Compliance program              Created in 2020, EERA elevated the environmental
 Rob u s t Op er a t i o n a l                         SYSTEM (CTEMS)                                                                                                                                                     Self-assessment is conducted by refinery
                                                                                             provides operational safeguards,          audit and compliance functions to an environmental
 and Envi ro n m e n t a l                                                                                                                                                                                                leadership. Each refinery compares itself
                                                CTEMS provides the policies                  software, auditing, training and          excellence vision. Its main goal is to assess the design
 M an ag e men t                                and procedures used to achieve               protocols for uniformity across our       and effectiveness of environmental management
                                                                                                                                                                                                                          to rating criteria.
 Sy st ems f ol l o w i n g                     operations excellence and to manage          labs to reinforce our compliance with     systems under specific excellence objectives, and to
 t hre e p ro g r a m s :                       our business in a safe, reliable and         all fuels regulations across the globe.   return an assessment per site to enable continuous
                                                                                                                                                                                                                          Third-party and in-house subject matter
                                                environmentally responsible manner.          Our fuels compliance efforts also         improvement across the company. EERA defines more
                                                                                                                                                                                                                          experts conduct an extenisve deep-dive
                                                A proprietary systematic approach            include evaluating low-carbon-intensity   than 100 expectations and involves a five-step process
                                                                                                                                                                                                                          review of refinery environmental data
                                                unlike third-party management                value generation opportunities by         using a combination of external assessors and internal
                                 S ELEMEN
                                                                                                                                                                                                                          and reports in a due-diligence-style
                                MS ELEMENTTSS
                                                systems, CTEMS focuses on results            finding carbon intensity optimization     subject matter experts.
                                                   and not exclusively on planning           investments and strategies. Together
                                                                                                                                        At the Corpus Christi West
                                                          and documentation.                 with the innovation team, fuels            refinery, leak detection and
                                                                CTEMS adheres to a           compliance supports projects that          repair (LDAR) equipment is                                                        TECHNOLOGY:
                           ACCOUNTABILITY              PL
             T                                                                                                                          used to detect emissions.
                                                                  plan>do>check>act          directly benefit carbon intensity,                                                                                           Technical field assessment is conducted


                  CONTINUAL                PEOPLE &                 model to achieve         including:                                                                                                                   using industry standards and advanced
                 IMPROVEMENT             ENVIRONMENT
                                                                      excellence in nine                                                                                                                                  technology to evaluate effectiveness in
                                                                                               • Energy conservation efforts in
                                                                       critical elements,                                                                                                                                 controlling emissions.
                                                                                                  the feedstock supply chain
                                                  & SKILLS
                                                                        driving safe
      & REVIEW                                  DEVELOPMENT
                                                                        and reliable           • Sustainable corn crop practices                                                                                          INSPECTION:
                         IMPLEMENTATION                                 operations,            • Plant and terminal certifications                                                                                        Results from the technology review and
                             PROCESS              OPERATIONS
                                                                        and minimizing            and audits                                                                                                              due-diligence process are used by a
 STAKEHOLDER                                      RELIABILITY &
 RELATIONSHIPS                                    MECHANICAL
                                                                        impacts on                                                                                                                                        team of experts in a substantive on-site
                                                   INTEGRITY                                   • Clean-fuel regulatory compliance
                                                                       communities                                                     When combined with CTEMS, EERA is much more                                        inspection and cultural assessment.
                                              TECHNICAL               and the                  • Cellulosic ethanol production         relevant and effective for our complex refining business
            BUSINESS                         EXCELLENCE

         COMPETITIVENESS                    & KNOWLEDGE              environment.              • Innovation projects, including        than generalized management systems such as ISO

                                                                                                  renewable naphtha, sustainable       14001.                                                                             Final gap assessment report is produced


                                 CHANGE                     D
                                                                                                  aviation fuel (SAF), renewable                                                                                          by experts and leadership team
                                                                                                                                       In 2020, EERA was implemented completely at several
                                                                                                  hydrogen and carbon capture                                                                                             with mitigation pathway and scoring
                                                                                                                                       of our refineries. By focusing on results in the field,
                                                                                                  opportunities                                                                                                           improvement actions.
                                                                                                                                       and not exclusively on regulatory compliance, EERA
                                                                                                                                       promoted our excellence vision in 2020.

 OUR APPROACH TO                                    Risk Assessment: formal risk            Compliance: assurance with legal           Record Keeping: ensure documents             Monitoring and Communication:           Audits and Assessments: internal
                                                    assessments documented,                 requirements, communicating and            identified, managed and maintained           operations and activities measured      and independent audits and
                                                    implemented and maintained              monitoring changing regulations                                                         and monitored, assessing the            verifications conducted to identify
 MANAGEMENT                                                                                                                            Training: ensure all employees
                                                    at sites, including hazard                                                                                                      implementation and effectiveness of     the adequacy and effectiveness of
                                                                                            Objectives and Continuous                  necessarily skilled, trained and
 Responsibility: refinery staff                     identification, risk evaluation,                                                                                                operational controls, and tracking      environmental controls, regulatory
                                                                                            Improvement: progress on                   competent to perform duties in an
 dedicated to environmental                         analysis and mitigation                                                                                                         and evaluating environmental            compliance and excellence vision
                                                                                            environmental management,                  environmentally responsible manner
 excellence and risk mitigation                                                                                                                                                     performance
                                                                                            including strategic planning, goals
                                                                                            and objectives, is reviewed at least

 22                                                                                         annually                                                                                                   VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •             23
ENVIRONM ENT                S A F ET Y              C OM M U NIT Y                PEO P LE                GOV E R NANCE


     Fo r Va l e ro , b e i n g t h e m ost effi c i ent a nd rel i a b l e opera tor                                    Ou r o pe ratio n s are alway s lo o kin g fo r w ays t o co nt inue
       i n a hi g h l y c o m p e t i t i v e i nd ustry mea ns bei ng a b etter                                             re du cin g e m issio n s an d waste , re u sin g energ y and
                              e n v i ro n menta l p erfor mer.                                                          by pro du cts, re cy clin g m ate rials an d re pur p o s ing w as t es .

           97% FLARING-FREE OPERATIONS IN 2020                                                                      Recovered material is inserted back into the refining process to create fuels and other products.
           More than 79% of Valero’s large process flares are equipped with flare-gas recovery systems. These       Alternatively, the recovered material is also used to fuel third-party facilities, avoiding landfill
           systems reduce flaring and recover fuel gases, which are used to fire heaters and boilers, reducing      waste.
           natural gas consumption.

           SULFUR REMOVAL                                                                                           WASTEWATER MANAGEMENT
           Sulfur obtained from the refinery process unit is removed for a variety of beneficial                    Process water and stormwater are managed at our wastewater treatment plants. We use
           uses, including crop fertilizer.                                                                         specialized bacteria to naturally digest oil and treat wastewater streams to purify the water
                                                                                                                    before returning to the ecosystem.

           MARINE VAPOR RECOVERY UNITS                                                                                                    WATER RECYCLING
           At certain refineries, captured vapors generated when loading ships                                                            With innovative approaches, we use each gallon of water more than 18.5
           with gasoline and other light products are routed back into the                                                                times prior to evaporation or return to the environment.
           refinery’s gasoline pool.

           FUEL FROM OIL WASTE                                                                                                                  REUSING EXHAUST GASES TO REDUCE ENERGY
           Recovered usable oil and oily solids are reprocessed into high-value
           fuel and byproducts through refining processes, including “coker                                                                     Installed at six of our refineries, expanders are designed to convert
           injection,” avoiding the generation and disposal of wastes.                                                                          kinetic energy into electricity by reusing exhaust gases to spin

           We are focused on improving process
           monitoring and control systems to reduce
           energy consumption.

24                                                                                                                                                                             VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •              25
ENVIRONM ENT                     S A F ET Y                  C OM M U NIT Y                    PEO P LE    GOV E R NANCE

Valero volunteers from the
Houston and Texas City
refineries planted 140 trees                                                               CARBON CAPTURE                                               HAZARDOUS WASTE MANAGEMENT PROGRAM
during a habitat restoration
event for the Galveston Bay
                                                                                           SINCE 2013                                                   We focus on reducing the generation of wastes across all media, including air, water and
Foundation in Kemah, Texas.
                                                                                           MORE THAN 1 MILLION TONS                                     solid streams. Recycling, reusing and repurposing activities are essential components of our
                                                                                           OF CO2 EACH YEAR                                             program. The program also includes regular waste reviews, risk assessments, waste stream
                                                                                                                                                        prioritization and training.
                                                                         Carbon capture opportunities include capturing
                                                                         the carbon dioxide associated with hydrogen
                                                                         production at refineries.                                            2020 RESULTS
                                                                         In 2013, our refinery in Port Arthur, Texas, became
                                                                         the first industrial site in the U.S. to host a large-
                                                                         scale carbon capture project, and it remains the only
                                                                         U.S. refinery doing so, with more than 1 million tons          2.5 million
                                                                         captured each year. Two steam methane reformer             GALLONS OF WASTE REPURPOSED
                                                                         units, owned by a business partner that produces                  AS FUEL AT THIRD-PARTY
                                                                         hydrogen from natural gas for the refinery, were               FACILITIES, DISPLACING THE
                                                                         retrofitted to capture the carbon dioxide generated        EQUIVALENT OF MORE THAN 8,500
                                                                         from hydrogen production.                                  TONS OF COAL AND PREVENTING
                                                                                                                                           35,800 TONS OF CARBON

                                                                             1 million
                                                                                    TONS PER YEAR CAPTURED
                                                                                                                                        OF ALL REFINERY EXEMPTED
                                                                                                                                          AND HAZARDOUS WASTES
                                                                                                                                                 WERE RECYCLED*
                                                                             IS EQUIVALENT TO THE BENEFITS OF
                                                                                                                                                                                                Wastewater treatment plant at Corpus
                                                                                        PLANTING EACH YEAR                                                                                      Christi West refinery, where we use
                                                                                                                                                                                                specialized bacteria that naturally digest

                                                                                                                                                                                                oil and other components in our waste

                                                                                                                                     OF ALL HAZARDOUS WASTE WAS
                                                                                                                                             RECYCLED, INCLUDING
                                                                                                                                  15.6 MILLION POUNDS OF CATALYST*

                                                                                 16.5 million                                                           SPILL PREVENTION
                                                                                            TREE SEEDLINGS
                                                                                       GROWN FOR 10 YEARS*                                              Valero is focused on reducing spills from its manufacturing and processing facilities, pipelines
                                                                                                                                                        and vessels, and thoroughly investigates spills to reduce recurrence.

                                                                                                                                                        We protect our people and the environment through operational excellence and technology,
                                                                                                                                                        always with the goal of zero spills.

26   *Source: U.S. Environmental Protection Agency (EPA) Greenhouse Gas Equivalencies Calculator                                  *Refers to exempted hazardous waste as per regulatory classifications   VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •     27
                                                                                                                                  and per footnote EM-RM-150a.1 on page 107.
ENVIRONM ENT                S A F ET Y               C OM M U NIT Y              PEO P LE               GOV E R NANCE

Galveston Bay Tree Planting

     A t Va l ero, w e p ro m o t e b i o d i versi ty a nd p rotec t wi l dl i fe
     hab i t at t h ro u g h a n u m b e r of p roa c ti ve mea sures.
     We engage in diverse ecological projects with state and federal regulatory agencies, as well as with
     neighbors and indigenous communities.

     Our campaigns promoting wildlife conservation and biodiversity enhancement include working together
     with local and regional organizations that provide a variety of environmental services ranging from the
     protection of endangered species, restoration of wetlands and reforestation, to rehabilitation of former
     industrial sites, and promoting environmental awareness through educational programs.

Con s i d er a t i o n o f B i o d i v e r s i ty                  The following natural and cultural resource         In the construction phase, for site preparation                  Pipe lin e Pu b lic Aw arenes s
I mpact s                                                      considerations are part of the evaluation process:      and other related soil-disturbing activities, we                 Pro gram
                                                                                                                       initiate stormwater management controls to
Valero’s growth capital projects often require thorough                                                                                                                                 With more than 3,000 miles of active pipelines, Valero
                                                                                                                       reduce impacts to lakes, rivers, streams and
evaluation of potential biodiversity impacts as part of          • Locations of surface waters and wetlands                                                                             has programs in place to inform the public, emergency
                                                                                                                       other surface waters. These controls consist of a
their planning, approval and implementation phases,              • Threatened and endangered species habitats                                                                           responders and other key stakeholders about the
                                                                                                                       variety of best management practices integrated
particularly when greenfield sites are being considered,                                                                                                                                status of the pipelines, and offers resources to
                                                                 • Previously recorded archaeological sites,           into our Stormwater Pollution Prevention Plans,
or at locations where existing assets may have sensitive                                                                                                                                residents and businesses. We also provide training to
                                                                    historic structures and areas of tribal interest   which comply with federal, state and local
natural or cultural considerations.                                                                                                                                                     emergency response personnel in the community.
                                                                    or significance                                    stormwater pollution control requirements,
In the pre-construction or planning phase of                                                                           including planning, temporary and permanent                      Because digging or other
                                                                 • Existing developed areas versus
such capital projects, we perform environmental                                                                        sedimentation and erosion control measures,                      excavation, construction or
                                                                    undeveloped greenfield sites
due-diligence as part of location selection. Once                                                                      stream- and wetland-crossing procedures,                         farming activity can potentially
environmental reviews and virtual data gathering are             • Public lands, including parks, nature               inspections and general good housekeeping                        damage a pipeline and have
performed, Valero’s environmental team works closely                preserves and wildlife conservation areas          practices.                                                       both safety and environmental
with the engineering and commercial departments to                                                                                                                                      impacts, Valero encourages
                                                                 • Federal Emergency Management Agency                 During major construction, we also
determine the best preliminary location for the project.                                                                                                                                the public to contact their state’s one-call center, from
                                                                    floodplains                                        provide applicable training on threatened
                                                                                                                                                                                        the “811: Call Before You Dig” resource on its website.
                                                                 • Surface water intakes                               and endangered species awareness and
                                                                                                                       identification, stop-work protocols and reporting.
                                                                                                                       To protect ecosystems from unintended releases
                                                                                                                       of materials, we implement comprehensive
For significant projects, alternative locations are considered. In these cases, we perform environmental field
                                                                                                                       pollution prevention and incident response
studies on the most viable locations to verify and delineate natural resources within proposed project areas.
This data further drives project decisions on avoidance of sensitive features and habitats.

28                                                                                                                                                                                   VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •            29
ENVIRONM ENT                 S A F ET Y              C OM M U NIT Y           PEO P LE                GOV E R NANCE

Biod i ver s i t y a n d H a b i t a t C o nserva ti on                                                             Wildlife an d Plan t Pro te ctio n

                                                                                                                    Our Pembroke refinery in the United Kingdom creates and
                                                          Our staff biologist identifies endangered species
                                                                                                                    sustains habitat for wildlife and plants with a Biodiversity
                                                          and critical habitat in the vicinity of our facilities,
                                                                                                                    Action Plan on 500 acres it owns outside its fence line.
                                                          and documents ecological projects conducted
                                                                                                                    This includes work with the Bumblebee Conservation
                                                          by our plants and Valero volunteers.
                                                                                                                    Trust to create habitat for the rare shrill carder bee, at
                                                          Valero sponsored the Texas Butterfly Ranch
                                                                                                                    the site of a removed tank storage farm. Valero volunteers
                                                          Caterpillar Condos for Classrooms program to                                                                                            Shrill carder bee
                                                                                                                    have cleared and planted wildflower meadow seed, and
                                                          teach second grade students the life cycle and
                                                                                                                    also have created safe nesting areas in earthen banks for
                                                          migration patterns of monarch butterflies.
                                                                                                                    shelduck waterfowl, secure from predators.
                                                                                                                                                                                                                      Shelduck waterfowl

  American burying beetle

                                                          For a pipeline replacement project between                At our Benicia refinery near the San Francisco Bay, Valero
                                                          our Ardmore refinery and Wynnewood terminal               placed straw “wattles,” or interwoven natural material,                                               Salt marsh harvest mouse
                                                          in Oklahoma, Valero conducted surveys on the              over pipelines to allow small mammals, including the
                                                          rare American burying beetle and provided                 threatened salt marsh harvest mouse, passage over the
                                                          critical data to the U.S. Army Corps of Engineers         pipes. The wattles serve as bridges and provide critical
                                                          and the U.S. Fish and Wildlife Service on area            access for the mouse to the dense ground cover and
                                                          populations of the beetle.                                adjoining grasslands it is dependent upon.

                                                                                                                                                                                                                      Peregrine falcon
                                                          We also work with indigenous tribes to preserve
                                                                                                                    Valero’s Jefferson, Wisconsin, ethanol plant is creating
                                                          sites with biodiverse, historical, cultural and
                                                                                                                    habitat for peregrine falcons, on the state’s endangered
                                                          spiritual significance. During the construction
                                                                                                                    list, to nest and reproduce. Parent falcons return each year
                                                          of the Diamond Pipeline in Oklahoma and
                                                                                                                    to the plant, where volunteers have built a nest box and
                                                          Arkansas, 23 indigenous communities were
                                                                                                                    placed it high up in an old grain elevator stairway, with
                                                          contacted to participate in the permitting
                                                                                                                    window access. In 2020, three chicks hatched and fledged
                                                          process. After a consultation process, more than
                                                                                                                    successfully. The plant regularly has invited employees
                                                          200 locations were identified to require tribal
                                                                                                                    and their families to watch as a researcher bands the small
                                                          and archaeological surveying along the 440-mile
  Consultation process with indigenous                                                                              chicks for tracking.
  communities as part of the Diamond Pipeline.

30                                                                                                                                                                                 VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •           31
ENVIRONM ENT                      S A F ET Y                 C OM M U NIT Y               PEO P LE              GOV E R NANCE

Wet l a n d s R e s t o r a t i o n                                                                                           L an d Re m e diatio n , Man age m e n t
                                                                                                                                                                                     At the site of a closed refinery in Michigan, Valero conducted a wetland
                                                                                                                                                                                     restoration project to provide physical characteristics essential in
             For more than 10 years, the St.                          For more than 10 years, the St. Charles refinery                                                               developing vegetation and wildlife along the Pine River. The wetland
             Charles refinery has worked                              has worked closely with the Pontchartrain                                                                      was redesigned to contain multiple habitats prior to seeding the area
             closely with the Pontchartrain                           Conservancy. As part of wetlands and swamp                                                                     with a diverse group of native plant species as well as adding multiple
             Conservancy. As part of wetlands                         restoration, together we have planted                                                                          wildlife habitat structures. Wildlife, including bald eagles, turtles,
             and swamp restoration, together                          approximately 5,000 trees in front of levees                                                                   multiple species of ducks and a variety of aquatic species, have used
             we have planted 5,000 trees in                           to help protect the area from hurricanes.                                                                      this restored wetland area. The project was successfully completed in
             front of levees to help protect                                                                                                                                         conjunction with state and local agencies, and continues to flourish as a
             the area from hurricanes.                                                                                                                                               vital habitat.

                                                                                                                              As part of Pembroke’s construction of a cogeneration unit, it converted
                                                                                                    Valero Benicia Refinery   a former residence into habitat for local populations of bats relocated
                                                                                                                              because of the new unit. The bat house has attracted a number of new
                                                                                                                              residents. The refinery also is looking to “re-wild” areas of land it owns,
                                                                                                                              a conservation effort aimed at restoring and protecting natural areas
                                                                                                                              through the planting of native broadleaf woodland. Re-wilding is a
                                                                                                                              process that promotes nature-based carbon storage. The refinery also
                                                                                                                              operates an Environmental Education Program and hosts students at its
                                                                                                                              nature boardwalk to explore aquatic plants and animal species.

          134,000                                     AN AMOUNT
                                                                                   6.4 million                                                                                                         The Galveston Bay Foundation, a nonprofit conservation
                                                                                                                                                                                                       organization serving the area since 1987, partnered
      CUBIC YARDS OF CLEAN                                                              50-POUND BAGS
                                                        EQUAL TO                                                                                                                                       with Valero’s Houston and Texas City refineries for tree
        DREDGED MATERIAL                                                                    OF SAND
                                                                                                                                                                                                       planting and habitat restoration events.

                                                                                                                               Valero Houston and Texas City Refineries volunteers
The Benicia refinery captures clean sediment dredged        equal to 6.4 million 50-pound bags of sand – for
from its dock area to raise the elevation of nearby         restoration at the Montezuma Wetlands Restoration
subsided wetlands, which helps protect and recover          Project. The effort not only protects habitat but also
                                                                                                                              The St. Charles refinery has partnered with the Coastal Conservation
wildlife and plant species. Over the past four years,       helps ensure safe dock operations, clearing sediment
                                                                                                                              Association, a nonprofit that advises and educates the public on
Valero has contributed approximately 134,000 cubic          to allow ample underwater clearance for large ships.
                                                                                                                              conservation and marine resources.
yards of clean dredged material – an amount roughly

                                                                                                                                                                                     In partnership with the nonprofit Texas Coastal Exchange, Valero
                                                                                                                                                                                     invested in the capture of 10,000 tons of carbon dioxide in marsh,
Our Aurora ethanol plant received the 2019 Brookings County
                                                                                                                                                                                     prairie and woodland habitat in the wetlands of the Texas Gulf
Conservation District Tree Stewardship Award for its stewardship of
                                                                                                                                                                                     Coast near our Port Arthur refinery. Rather than developing the land,
natural resources, including planting 5,500 trees in South Dakota.
                                                                                                                                                                                     landowners commit to preserving the ecosystems to capture carbon
                                                                                                                               Habitat along Texas Gulf Coast                        dioxide underground.

32                                                                                                                                                                                                    VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •          33
ENVIRONM ENT                      S A F ET Y                     C OM M U NIT Y          PEO P LE                GOV E R NANCE

Wetland restoration and tree planting event by
Valero’s St. Charles Refinery volunteers.
                                                     D a ta Veri fi c a ti on                                                Cogeneration unit at the Wilmington
                                                                                                                             refinery, which reduces our reliance
                                                     Valero uses third parties to conduct environmental,                     on the local power grid.
                                                     emissions and fuel compliance verifications. State,
                                                     provincial and national governments across the world
                                                     with cap-and-trade and low-carbon fuel policies require
                                                     independent assurance of our GHG emissions and the
                                                     carbon intensity of our low-carbon fuels. In addition,
                                                     we engaged Lloyd’s Register Quality Assurance Inc.,
                                                     an affiliate of Lloyd’s Register North America Inc., to
                                                     evaluate and issue an assurance statement on the
                                                                                                                            ENERGY EFFICIENCY                                                                      Cogeneration Plants: Fueled by natural
                                                     accuracy and reliability of our global refining Scope 1                                                                                                       gas, our cogeneration plants reduce our
                                                     and 2 GHG emissions. We intend to continue attaining                   Man y o f o u r re fin e rie s u se                                                    reliance on local power grids, which are
                                                     assurance statements on our global refining GHG                        po we r fro m re n e wable so u rce s                                                  often less environmentally friendly and
                                                     emissions each year.                                                   e ith e r fro m lo cal po we r grids                                                   more costly. Cogeneration represents a
                                                     Details on independent verifications and assurance
                                                                                                                            o r fro m o u r o wn pro je cts.                                                       very efficient way of producing electricity
                                                     statements can be found on our website at                                                                                                                     and thermal energy or steam, with the
                                            > Investors > ESG > Reports                             Local power grids can draw from renewable sources,                                     steam recycled back into the refining
                                                     and Presentations.                                                     ranging from hydropower to wind, solar, biogas and                                     process for other uses.
                                                                                                                            geothermal. And we produce some of our own power,
                                                                                                                                                                                                                   Valero has cogeneration systems at
     ENVIRONMENTAL METRICS                                                                                                  from wind or from recycling gases (such as steam and
                                                                                                                                                                                                                   refineries in Wilmington, Benicia, Port
                                                                                                                            exhaust) within our refining processes. Roughly 22% of
   GLOBAL REFINING1                                    2017             2018              2019               2020                                                                                                  Arthur and Pembroke.
                                                                                                                            our total energy consumption originates from renewable
                                                                                                                            sources.                                                                               Expanders: At six of our refineries, we
   GHG Emissions Scope 11                              25.2             25.4               24.8              23.0
                                                                                                                                                                                                                   have installed “expanders” on processing

   GHG Emissions Scope 21                               5.2              5.0               4.7                4.5                             Hydropower: More than 99% of the                                     units that generate power from exhaust

                                                                                                                                              electricity used at our Quebec City refinery                         gases. We have the world’s largest
   NOx   2
                                                       9,300           9,000              8,700             7,900                                                                                                  expander at our Corpus Christi West
                                                                                                                                              comes from renewable sources – mainly
                                                                                                                                              hydropower, with small portions from wind,                           refinery. In all, our expanders are designed
   SOx2                                                8,800           7,700              8,800             7,600
                                                                                                                                              biomass and biogas.                                                  with the capacity to annually displace
                                                                                                                                                                                                                   more than 600,000 tons of carbon dioxide
   PM102                                               2,400           2,300              2,200             2,200
                                                                                                                                              Wind generation: Adjacent to our
                                                                                                                                                                                                                   that otherwise would be generated by
                                                                                                                                              McKee refinery in the Texas Panhandle,
   VOCs2                                               9,500           10,300             7,700             7,500                                                                                                  conventional power plants.
                                                                                                                                              our windfarm was completed in 2009 at
   Fresh Water withdrawn3                              181.2           165.8              164.1             164.6                             an investment of more than $80 million,
                                                                                                                                              and includes 33 wind turbines with 50
   Oil spilled to land (>1 bbl)4                        22               25                 14                21                              megawatts of electricity capacity.

   Oil spilled to water (>1 bbl)4                        0                4                  3                 4
                                                                                                                            COMBINED, OUR COGENERATION SYSTEMS
                                                  Million metric tons CO2e. Scope 1 is defined as the direct GHG                                                                                                                     ENOUGH TO POWER
                                                 emissions from global refinery operations. Scope 2 (market-based) is the
                                                                                                                            AND EXPANDERS ARE DESIGNED TO OFFSET
                                                                                                                                                                                                                                     THE HOMES OF A

                                                                                                                            ~330 megawatts
                                                 indirect GHG emissions from purchased electricity and steam calculated
                                                 using EPA-derived steam emissions factors and energy supplier-specific                                                                                                              CITY THE SIZE OF
                                                 emissions factors.
                                                  Metric Tons                                                                                                                                                                        SAN FRANCISCO*
                                                  Million m3
                                                                                                                            OF ELECTRICITY ANNUALLY.
                                                   Count of oil spill events to land or water of more than one barrel.
34                                                                                                                          * U.S. Census Bureau. Population estimates as of July 1, 2019.            VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •         35
ENVIRONM ENT       S A F ET Y    C OM M U NIT Y                PEO P LE                 GOV E R NANCE

Wate r m a n a g e m e n t i s a c r i t ic a l                                                                                                  Water scarcity can be a risk not only to communities but
comp one n t o f o u r b u s i n e s s                                                                                                           to the refining process. Water is needed for cooling and
and we cont i n u e t o w o r k                                                                                                                  also in the form of steam for heating. In addition, water
with s t a k e h o l d e r s t o i m p ro ve                                                                                                     plays an important role in removing impurities from
our p e r f o r m a n c e , w h i l e a l s o                                                                                                    feedstocks.
redu ci ng co n s u m p t i o n , b y :
                                                                                                                                                 Our water-risk-based approach is integrated into our
                                                                                                                                                 operational and long-term planning to mitigate and
                                                                                                                                                 reduce water risks.

                                                                                                                                                 We have taken several steps we believe are necessary to
  • Taking a risk-based approach to water
     management and integrating water strategy and          At Va l e ro, w e w ork                                                              secure our operations in conditions of water scarcity.

     water security into our long-term planning and                                                                                                • At our Wilmington refinery we have a signed
     business processes                                     w i th i n n ov a ti v e                                                                   contract to take treated municipal wastewater to
                                                                                                                                                       supplement our cooling tower makeup water. Upon
  • Engaging with local governments, industry
                                                            a p p roa c h e s a n d                                                                    project completion, we will save up to 420 million
     associations, suppliers and regulatory agencies
                                                                                                                                                       gallons of potable water per year. That is roughly the
     to develop innovative solutions in water
                                                            a d v a n c e d te c h nol ogy                                                             annual amount consumed by 9,000 U.S. households.*
     management and conservation

  • Assessing and managing regional water risks             to mi n i mi z e u s e                                                                 • Our Three Rivers refinery sends treated wastewater
                                                                                                                                                       for use in irrigation.
     through sustainability assessments

  • Protecting existing water resources through sound
                                                            a n d e l i mi n a te                                                                  • Our Corpus Christi refineries pay into a broad
                                                                                                                                                       industry fund that provides water-supply security and
     water management policies
                                                            w a s te .                                                                                 supports research and plans for the construction of a
  • Recycling and reusing water to minimize demands                                                                                                    desalination facility to serve industrial users.
     on fresh water sources and improve efficiency                                                      In 2020, we re cy cle d
                                                                                                        m o re th an 18.5 tim e s                  • Our Welcome ethanol plant was one of the
Most of our water consumption takes place in our                                                                                                       industry’s first operators to achieve “zero discharge”
                                                                                                        th e am o u n t o f fre sh
refining operations.                                                                                                                                   of wastewater by recovering and recycling process
                                                                                                        wate r we with dre w
Based on the World Resources Institute’s (WRI) Water                                                    to su ppo rt o u r                             water and stormwater.
Risk Atlas tool, Aqueduct, we determined that only                                                      re fin e ry o pe ratio n s,                • Process water and stormwater are treated as
two of our 15 refineries are located in regions with high                                               prim arily th ro u gh th e                     necessary before discharging or reusing. Our
baseline water stress.                                                                                  re circu latio n o f wate r                    wastewater treatment plants are generally
Reduction and mitigation initiatives include the                                                        in h igh -e fficie n cy                        comparable to those operated by most cities.
evaluation of reused municipal wastewater for cooling                                                   co o lin g to we rs.
tower purposes and acquisition of secured water rights.     High efficiency cooling towers at
                                                            Valero’s Corpus Christi West Refinery.

                                                                                                                                                                                *Source: Water Footprint Calculator

36                                                                                                                                             VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •                   37
Valero’s St. Charles refinery
laboratory employee

                                S AFE TY
                                            S afe ty is o ur fo und at io n
                                            fo r su cce ss.

                                            OUR OPERATIONS
                                            CONTINUED DURING
                                            THE COVID-19 PANDEMIC
                                            Leveraging our extensive and proven safety and
                                            emergency preparedness protocols, we responded
                                            responsibly and quickly to protect the safety and
                                            well-being of our employees, their families and
                                            communities during the COVID-19 pandemic. As part
                                            of the world’s critical infrastructure, Valero refineries
                                            continued producing transportation fuels and other
                                            products essential to everyday life, while keeping
                                            employees and contractors protected with safe-at-
                                            work protocols, regular communications and response

                                            Corporate and support employees at our headquarters
                                            returned to the office after safe-at-work protocols
                                            were put in place. These measures included increased
                                            frequency and type of cleaning, work-station
                                            modifications, mandatory face masks, safe-return
                                            training and social distancing protocols.

38                                         VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •           39
ENVIRONM ENT           S A F ET Y   C OM M U NIT Y                   PEO P LE                     GOV E R NANCE

                                                                                     Employees with protective equipment
                                                                                                                                                                            2020 SAFETY HIGHLIGHTS
                                                                                     at Valero’s Corpus Christi refineries
                                                                                                                                                                            THREE refineries with no employee recordable injuries
                                                                                                                                                                            (Houston, Pembroke and Quebec)
                      w a s o u r b e s t y e a r ever
                     f o r s a f e t y p e r f o r ma nc e.
                                                                                                                                                                            TWO refineries with neither employee nor contractor
                                                                                                                                                                            recordable injuries (Houston and Quebec)
We believe that safety and                    In 2020, we spent $2 billion in
reliability are extremely important,          capital expenditures to grow
                                                                                                                                                                            NINE refineries with no contractor recordable injuries
not only to the cultural values we            and sustain our operations,
                                                                                                                                                                            (Ardmore, Corpus Christi East, Corpus Christi West,
aspire to as a company, but also for          including investments in safety,
                                                                                                                                                                            Houston, McKee, Meraux, Quebec, Texas City and
operational success. A decrease in            preventive equipment maintenance,
the number of employee safety                 environmental mitigation and
events and process safety events              reliability. We also implemented new
                                                                                                                                                                            TEN refineries approved as Voluntary Protection
reduces unplanned shutdowns                   programs, procedures and training
                                                                                                                                                                            Program (VPP) Star Sites, the most of any refiner
and increases the operational                 aimed at preventing injuries and
                                                                                                                                                                            (VPP Star Site is OSHA’s highest plant-safety
reliability of our plants. This, in turn,     environmental incidents.
translates into fewer environmental
                                              In 2020, Valero’s refining combined
incidents, a safer workplace, lower
                                              employee and contractor injury                                                                                                TWO international refineries approved as
environmental impacts and better
                                              rate was its best ever with a Total                                                                                           Valero VPP Star Sites (Quebec and Pembroke)
community relations.
                                              Recordable Incidence Rate (TRIR) of
We strive to improve safety and               0.23 incidents per 200,000 working                                                                                            ONE refinery with no unplanned outages two years

reliability by offering year-round            hours, well below the industry                                                                                                in a row (Quebec)
safety training programs for our              average. Our Tier 1 Process Safety
employees and contractors to                  Event Rate was 0.06.                                                                                                          ZERO ethanol plants with Tier 1 process safety events
promote the Valero culture of safety                                                                                                    REDUCTION IN
excellence. Safety compliance is                                                                                               REFINERY COMBINED EMPLOYEE
                                                                                                                                                                            ONE ethanol plant with ZERO employee recordable
achieved with frequent audits and                                                                                             AND CONTRACTOR INJURY RATES
                                                                                                                                                                            injuries in the past three years, ZERO contractor
quality assurance visits as well as                                                                                                         SINCE 2011
                                                                                                                                                                            recordable injuries in the past five-and-a-half years,
comprehensive risk assessments to
                                                                                                                                                                            ZERO Tier 1 process safety events in more than
ensure safety standards are followed
                                                                                                                                                                            11 years (Welcome ethanol plant)
and comply with and often exceed
local, state and federal regulations.
                                                                                                                                                                            SIX facilities earning safety awards from American Fuel
                                                                                                                                                                            & Petrochemical Manufacturers (AFPM) in 2020
                                                                                                                                                                            (Ardmore, Corpus Christi*, Meraux, Three Rivers,
For us , s af e t y m e a n s o u r e m plo y e e s an d c o n trac to rs g o h o me                                                                                        Wilmington and Wilmington Asphalt)
ever y day t o t h e i r f a m ilie s a nd o u r c o mmu n itie s re st assu re d
kn ow i ng we a re d e d i c a t e d t o k eepi ng t hem sa fe.                                                                                                             ONE Elite Silver Safety Award to the Wilmington
                                                                                                                                                                            Asphalt Plant for performance in the top 5% of AFPM

See page 109 for notes regarding this page.                                                                                                                                 *Corpus Christi, with two refineries, awarded as a single facility.

40                                                                                                                                                                        VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •                          41
ENVIRONM ENT               S A F ET Y           C OM M U NIT Y                PEO P LE                   GOV E R NANCE

                                                                                         PERSONNEL SAFETY                                                                                           VALERO REFINERIES VS. OTHER SECTORS
                                                                             REFINERY EMPLOYEES AND CONTRACTORS                                                                                             (INJURIES RECORDED PER 200,000 WORKING HOURS)

                                                                                                                                                                                                             VALERO REFI N ERY
                                                                                                                  Industry                                                                                    EM PLO YEES A N D                     0.23
                                                                                                                                                                                                                CO N TRACTO RS

                                                             Incidence Rate (TRIR)
                                                               Total Recordable

                                                                                                                                                                injuries per
                                                                                                                                                                                                                Account ing/ Tax
                                                                                                                                                                  200,000                                                                            0.3
                                                                                                                                                                                                            Prepar at ion Ser vices


                                                                                                                                                                                                                           Pet roleum
                                                                                                                                                                                                                             Ref ining

                                                                                                Refining Industry Employees                                                                                                                                                  SOURCES: U.S. Bureau of Labor
                                                                                                (U.S. Bureau of Labor Statistics)                                                                              Elect r ic Pow er                                             Statistics, Valero; Industry figures
                                                                                                                                                                                                                                                           1.1               are for 2019; Valero refinery figure,
                                                                                                                                                                                                                  G ener at ion

                                                                                                                                                                                                     Cons t r uct ion                                                  2.8
     GLOBAL REFINING                                                                 2017                  2018                 2019                   2020

     Personnel Safety Employee1                                                      0.28                  0.40                  0.25                   0.34
                                                                                                                                                                                                        Fores t r y and
     Personnel Safety Contractor1                                                    0.36                  0.32                  0.39                   0.15

     Fatality Rate Employee2                                                         0.00                  0.00                  0.00                   0.00
                                                                                                                                                                                                 M anuf act ur ing                                                          3.3
     Fatality Rate Contractor2                                                       0.02                  0.00                  0.00                   0.00

     Process Safety Events Rates - Tier 13                                           0.08                  0.07                  0.05                   0.06
                                                                                                                                                                                          Hos pit als                                                                                          5.5
     Process Safety Events Rates - Tier 23                                           0.18                  0.31                  0.17                   0.17

                                                           Recordable injuries per 200,000 working hours.
                                                           Per 200,000 working hours.                                                                                             Fr am ing
                               Valero Houston Refinery   3
                                                           Global refining Tier 1 process safety event (PSE) rates and Tier 2 PSE rates as                                                                                                                                                              7.0
                                                         defined within American Petroleum Institute Recommended Practice 754.
                                                                                                                                                                               Cont r act or s

42                                                                                                                                                                                                                                          VALERO STEWARDSHIP AND RESPONSIBILITY REPORT •                     43
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