These Bay Area refineries want to ditch crude oil for biofuels. Critics say that’s a bad idea

Source: By J.D. Morris, San Francisco Chronicle • Posted: Monday, December 13, 2021

An aerial view showing the newest upgrades that process biofuel instead of crude oil (bottom, center) at the Phillips 66 refinery in Rodeo. Phillips 66 plans to continue transforming its facilities from crude oil processing to biofuel production.

An aerial view showing the newest upgrades that process biofuel instead of crude oil (bottom, center) at the Phillips 66 refinery in Rodeo. Phillips 66 plans to continue transforming its facilities from crude oil processing to biofuel production. Carlos Avila Gonzalez/The Chronicle

Two oil companies say they want to transform their Bay Area refineries to aid California’s fight against climate change, but some environmental groups are skeptical and are pushing for closer scrutiny from local officials.

Phillips 66 and Marathon Petroleum intend to convert their respective refineries in Rodeo and Martinez to what they describe as cleaner, greener ways of producing fuel for trucks and other heavy-duty transportation equipment.

Instead of processing crude oil, the refineries would use material such as vegetable oil, animal fats and used cooking oil to create biofuels — mainly what the energy industry refers to as renewable diesel. It’s chemically the same as traditional diesel, except it’s not made from petroleum.

Nationwide, oil companies are beginning to convert refineries to renewable diesel production as part of a government-backed effort to increase its availability — a push the state of California supports. The projects are poised toincrease the country’s renewable diesel production capacity several times over, from 0.6 gallons per year in 2020 to 5.1 billion gallons per year by 2024, according to the U.S. Energy Information Administration.

In the Bay Area, oil companies say their conversion plans fit neatly with California’s goal of moving away from fossil fuels and reducing planet-warming greenhouse gas emissions. While the state tries to get as many gas-powered cars off the road as possible, it also needs to find a cleaner way of powering trucks and other vehicles that won’t be running on electricity anytime soon, companies say. That’s where they see renewable diesel playing a key role.

“It’s a great way to reduce carbon emissions right away as the state moves toward electrification,” said Nik Weinberg-Lynn, the Rodeo-based manager of renewable energy projects for Phillips 66.

But local activists and environmental organizations are voicing reservations as Contra Costa County officials consider whether they should grant permits in the coming months.

Brent Maxwell, Hydro-Cracker operator, stands near the newest upgrades that process biofuel instead of crude oil at the Phillips 66 refinery in Rodeo.

Brent Maxwell, Hydro-Cracker operator, stands near the newest upgrades that process biofuel instead of crude oil at the Phillips 66 refinery in Rodeo. Carlos Avila Gonzalez/The Chronicle

One of critics’ concerns is that the projects could rely heavily on soybean oil, which could cause harmful land use changes overseas and make the product more expensive and less available to companies that currently rely on it. That may cause current soybean oil users to switch to palm oil, which has been linked to deforestation and worker exploitation in other countries, environmentalists say.

Some are pushing for public officials to shut down the refineries as soon as practicable instead of helping them tap into government incentives that will prolong their operations.

“We see this as really a false solution that is being subsidized with public dollars,” said Andres Soto, Richmond community organizer for the green group Communities for a Better Environment. “That money should be going into further research to develop the transportation of the future, which is electric.”

Contra Costa County has released draft reports on the environmental impacts of the refinery proposals, and public comments are due Dec. 17. The reports generally upheld the refineries’ position that converting to biofuel production would lower the facilities’ greenhouse gas emissions.

Soto’s organization and other groups think the county needs to conduct a closer examination of the impacts than it has so far.

“We really see the purported benefits as being illusory,” said Gary Hughes, California policy monitor for Biofuelwatch. “These are not as green as they are being sold to the public as being.”

Marathon halted production at its Bay Area refinery last year after fossil fuel demand plummeted during the early months of the pandemic. The company said it was contemplating converting the refinery to produce renewable diesel.

Marathon says its converted Martinez plant would reduce greenhouse gas emissions at the refinery by 60% and slash other pollutants by 70%. Phillips 66 says its proposal would cut carbon emissions associated with the fuel made at the site by about 60% while other pollutants at the facility would drop by more than 50%.

Ann Alexander, a senior staff attorney for the Natural Resources Defense Council, is worried that retooling the refineries, both of which are more than 100 years old, could have unintended consequences for public health. She said the equipment changes could generate more heat faster, possibly leading to an uptick in flaring, a safety measure when refineries burn off excess gas into the atmosphere.

“The refineries have already had flaring problems and there is a real concern that this could make it worse,” Alexander said.

Phillips 66 and Marathon said they had no reason to believe that the projects would lead to an increase in flaring.

Regardless, the debate is adding another layer to California’s complicated push to slash emissions from transportation, the state’s largest source of greenhouse gases.

Gov. Gavin Newsom has tried to escalate the transition to clean energy, directing the state to ban the sale of gas-powered cars by 2035.

At the same time, however, Newsom and other state officials have acknowledged that combustion fuels will continue to play a role for some time. Newsom has pointed to the Phillips 66 and Marathon projects at a news conference as proof of “the opportunity to transition, create jobs and do so in a sustainable way.”

In his executive order enshrining the 2035 ban on gas car sales, Newsom also told state agencies to fast-track regulatory processes “to repurpose and transition upstream and downstream oil production facilities, while supporting community participation, labor standards, and protection of public health, safety and the environment.”

State clean air regulators share Newsom’s view.

“As we transition away from fossil fuel production and use, we must ensure ongoing energy needs are being met through clean fuels, such as renewable diesel, that deliver both air quality and greenhouse gas benefits,” said Dave Clegern, spokesman for the California Air Resources Board, in an email.

One motivation for the refinery conversion projects is California’s low-carbon fuel standard, designed to reduce how much the state relies on fuels derived from petroleum.

Under the policy, the state sets benchmarks for how much carbon can be emitted for big companies to produce fuel. Companies can meet the benchmarks by producing and selling renewable fuels themselves or obtaining credits from other businesses that make them. Phillips 66 and Marathon’s proposals would turn their Bay Area refineries into producers of those credits.

“It certainly incentivized our project,” Weinberg-Lynn of Phillips 66 said of the low-carbon fuel standard.

Michael Wara, director of the climate and energy policy program at Stanford University’s Woods Institute for the Environment, said the refinery projects are also clearly “a way to extend the useful life of facilities that would otherwise be economically marginal.”

“Whether that’s a good thing or a bad thing probably depends on where you sit,” he said. “If you’re the company, it’s a logical step to take advantage of these incentives that have been created by California. If you’re a member of the community that lives around the refinery, it might not be so great, because you may have been hoping for a while that the refinery might close as we decarbonize the transportation fleet.”

Contra Costa County officials expect that the refinery projects’ environmental impact reports will go to a public hearing before the county’s planning commission in the first quarter next year. If the commission approves the reports, the vote could be challenged and sent to the Contra Costa County Board of Supervisors at a later date.

Chevron has indicated that it wants to eventually supply all of its West Coast customers with renewable diesel. While Chevron hasn’t announced any plans to overhaul its Bay Area operations, it will need to use multiple facilities to achieve its renewable diesel goal — and the company’s Richmond refinery could, in theory, be one of them.

J.D. Morris is a San Francisco Chronicle staff writer. Email: Twitter: @thejdmorris