2026 Valero Report on Guiding Principles - Report - Page 13
Introduction
Safety
Environment
Employees
Community
Governance
Appendix
In 2025, we engaged Solomon again to assist us in independently evaluating the resiliency of our global re昀椀ning
strategy and our alignment with the goals of IEA Net Zero by 2050 Scenario (NZE), as updated by the IEA and
applied by Solomon. Solomon compared the competitiveness of re昀椀neries around the world based upon their
cost to produce transportation fuels.
Solomon’s independent scenario analysis assumptions included:
• Solomon locked in the GHG emissions reduction goals from NZE and attempted to 昀椀t re昀椀nery yields to the
product demand assumptions as provided.
• Data gaps in NZE assumptions, as well as the unrealistic re昀椀nery product yields that did not align with product
demand assumptions, prevented the balancing of the scenario.
• To bridge these data gaps and to ensure feasible re昀椀nery production, Solomon reverted to regional product
demand assumptions for 2030 and 2040 from the more detailed IEA Sustainable Development Scenario18
regional oil demand projections and held these assumptions until 2050 in the NZE analysis.
• Solomon mitigated the increase in GHG emissions resulting from closing the data gaps and demand
assumptions by applying a designated CCS scenario.
• Solomon determined that the re昀椀ners with the highest cost to produce transportation fuel would close as
demand fell.
Independently of Valero, Solomon’s conclusions under Net Zero are:
• Valero’s overall re昀椀ning portfolio would be resilient in the low-carbon marketplace of NZE as applied by
Solomon.
• Valero’s strategy of continuing to operate one of the most competitive and ef昀椀cient re昀椀ning 昀氀eets would be
aligned with the net zero goals of the Paris Agreement.
• Solomon’s analysis identi昀椀ed that conditions for our re昀椀neries in California could be challenging under
certain assumptions of the hypothetical scenario on an individual or regional basis.
California’s strict legislation and regulations are behind re昀椀nery
production reductions.
In recent years, California's increasingly strict legislation and regulations have subjected our
re昀椀ning and marketing operations to potential increased operational restrictions and new
reporting requirements. The considerable uncertainty and potential adverse effects on our
operations and 昀椀nancial performance resulted in the evaluation of strategic alternatives for our
operations in California.
In March 2025, we approved a plan to idle the processing units and cease re昀椀ning operations
at the Valero Benicia Re昀椀nery by the end of April 2026. Subsequently, we evaluated the Valero
Benicia and Wilmington Re昀椀neries for potential impairment and concluded that their carrying
values were not recoverable.
While we evaluate potential redevelopment options for the future use of the Benicia re昀椀nery
property, we plan to maintain all required operating permits and keep the facilities in a safe,
clean, and idled condition. In addition, we expect to continue to ful昀椀ll our contractual obligations
to customers in the Northern California market through imports or other alternative supply
arrangements.
Valero Report on Guiding Principles •
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