2026 Valero Report on Guiding Principles - Report - Page 8
Do low-carbon fuels have tailpipe emissions? Yes, low-carbon fuels combust just like their fossil fuel counterparts.
However, low-carbon fuels have lower life cycle emissions than fossil fuels due to the biological or waste origins of
the feedstock. For instance, in life cycle GHG emissions calculations, the tailpipe emissions released from combusting
ethanol are offset by the carbon uptake during new corn crop growth. As a result, vehicles running on low-carbon
fuels produce less net CO2 per mile traveled than vehicles running on conventional fuels.
Can low-carbon fuels displace fossil fuels? Yes. According to the U.S. Energy Information Administration, renewable
diesel made up nearly 65% of California's transportation distillate consumption in the third quarter of 2024. In addition,
the key driver of GHG emissions reductions in California is the displacement of petroleum diesel by renewable fuels,
which made up 71% of the total diesel pool by 2025.8
Where are Valero's low-carbon fuels sold? Our low-carbon fuels are sold around the world, including continental
Europe, Scandinavia, the U.K., South America, Canada and the United States, especially in California, Oregon and
Washington. We believe that our ability to supply these low-carbon fuels can play an important role for governments
and others to achieve their GHG emissions reduction targets.
Why don’t you use the GHG Protocol to measure the carbon content of your low-carbon businesses?
We are informed by the GHG Protocol but we don’t use it because of the complexity of our business, especially for
low-carbon fuels that have to comply with global low-carbon fuel standards and policies that base CI calculations
on LCA and account for the full fuel life cycle. For instance, combustion of biofuels is not part of the accounting of
Scope 3, Category 11 in the GHG Protocol but it is counted by global LCA methodologies.
Global Low-Carbon Fuel Regulations Driving Demand Growth for Renewable Diesel10
2030 GHG
Emissions
Reduction Target
Net-Zero GHG
Emissions
Target
Primary Transportation Fuel
Policy Mechanism
2030 Transportation Fuels Goal
California11
40%
Net-zero by 2045
Low Carbon Fuel Standard (LCFS)
Reduce the carbon intensity of transportation
fuels by at least 30%
Canada
40 to 45%
Net-zero by 2050
Clean Fuel Regulations (CFR)
Reduce the carbon intensity of transportation
fuels by 15%
EU
55%
Net-zero by 2050
Renewable Energy Directive III (REDIII)
Replace 29% of transport fuels with
renewable energy, or reduce sector GHG
intensity by 14.5%
UK
68%
Net-zero by 2050
Renewable Transport Fuel Obligation
(RTFO)
Replace 19% of transport fuels
with renewable fuels
Oregon
New Mexico
Clean Transportation Fuel Standard, targeting a 20% carbon intensity reduction by 2030
Washington
State
Clean Fuel Standard requires a 45% carbon intensity reduction by 2038 (may be as high as 55% if certain conditions met)
British
Columbia
Low Carbon Fuel Standard requires a 30% carbon intensity reduction by 2030
Norway
Biofuel for road transport mandated at 20% in 2026 and 21% in 2027
U.S. Federal
Policies
8
Clean Fuels Program requires a 20% carbon intensity reduction by 2030 and a 37% reduction by 2035
Renewable diesel demand is also driven by the EPA’s Renewable Fuel Standard (RFS) and the IRS Production Tax Credits (PTC) included
in the One Big Beautiful Bill (OBBB)
