RODEO, Calif., March 21 (Reuters) – In the oldest refining town in the American West, Phillips 66 ( PSX.N ) is promising a greener future as it moves to stop crude oil processing and build a massive renewable diesel plant, leading a global trend.
That plan, announced in 2020, was initially welcomed by residents tired of a history of pollution and toxic leaks. But some have become skeptical as details of the project cast doubt on the environmental benefits of renovating the 127-year-old complex on 1,100 acres in Rodeo, California.
The company’s initial claim that it would cut greenhouse gases in half doesn’t match the project’s environmental impact report, released by county regulators, which shows a 1 percent reduction, according to a calculation from Reuters emissions data in the report. In addition, the refining of petroleum by-products may continue as a side project.
And renewable diesel production will require increased maritime and rail traffic, increasing emissions and the risk of spills. The conversion also requires increasing the use of natural gas to produce the hydrogen needed to produce the biofuel.
Those dynamics and other variables raise questions about Phillips 66’s marketing of renewable diesel as a green fuel and make it impossible to know whether and to what extent the refinery overhaul will reduce community pollution, three independent environmental experts told Reuters.
The project’s environmental impact will be a test case for similar installations around the world. According to energy consultancy Stratas Advisors, several dozen new renewable diesel plants are planned for the United States. Most will be oil refinery conversions. Production capacity could triple to 6 billion gallons by 2026, Stratas says. Europe and Asia are experiencing similar trends.
Rodeo’s conversion could be “a model or a cautionary tale,” said Gwen Ottinger, an associate professor at Drexel University’s Center for Science, Technology and Society who has studied air pollution monitoring in Rodeo
Phillips 66 representatives say the project, called Rodeo Renewed, will significantly reduce certain regulated pollutants and lead to big cuts in greenhouse gases when the biofuel is burned in vehicles. Refinery CEO Jolie Rhinehart said renewable diesel is the cleanest burning option for trucking freight.
“Heavy haulage trucks are a vital aspect of our way of life in this country and in this world,” he said. “And renewable diesel is the lowest-emission way to fuel the energy we need to keep our trucks moving.”
Rhinehart added that emissions directly from the plant, which affect local residents, would be “significantly reduced” by the project.
Some Rodeo residents fear the review could become another chapter in a long history of local pollution. Sitting across the bay from San Francisco’s glittering cityscape, Rodeo is a poster child for post-industrial woes. In addition to the Phillips 66 plant, the area has been home to a second oil refinery, a lead smelter and a dynamite factory. Empty storefronts and rusting cars litter the boulevard that leads to a beach too toxic for swimming. The community, in unincorporated Contra Costa County, has much higher concentrations of blight, poverty and brownfield sites than most others in California.
“It could have been the crown jewel of the county,” resident Janet Callaghan said of Rodeo. But over the years, industrial pollution has “turned Rodeo into the armpit of Contra Costa.”
Maureen Brennan, a member of Rodeo’s air control committee, called the biofuels project an experiment with uncertain environmental benefits. After initially applauding the plan, he said: “I started to realize that we are actually the global guinea pigs here.”
CONTROVERSIAL ESTIMATES OF POLLUTION
Renewable diesel is made from raw materials such as soybean oil, beef tallow or used cooking oil. It can be used in heavy trucks without engine modifications. The Phillips 66 plant can also produce other biofuels.
The county board of supervisors approved the project in May, which is expected to be operational in early 2024.
Phillips 66 spokesman Bernardo Fallas said the difference between the company’s and the county’s greenhouse gas estimates stems primarily from the fact that county regulators included pollution projections for five processing units of fossil fuel refineries for which the company intends to maintain operating permits. The company ruled out those units, which Fallas said would not be in operation when the biofuels project begins. Phillips 66, he said, has not yet decided whether and how fossil fuel units will operate in the future.
[1/6] General view of the Phillips 66 refinery as seen from Rodeo, California, the oldest oil refining town in the American West, U.S., March 2, 2023. REUTERS/Nathan Frandino
Fallas confirmed, however, that Phillip 66 is considering a plan to process slurry oil, a by-product of heavy residual crude, using the refinery’s coke. Fallas said processing slurry oil would produce materials needed for electric vehicle batteries.
The county said in a statement that processing slurry oil “would not be consistent” with the refinery renovation it approved in May and would require additional regulatory review.
The county’s environmental impact report estimated greenhouse gases assuming emissions from coke and the other four units would remain unchanged, an approach the study called conservative. It also included emissions from the expected increase in natural gas use and projected increases in transportation at the plant.
The claim has also been filed with the Securities and Exchange Commission (SEC), including an annual proxy statement and a handful of 8-K disclosures.
The company’s disclosures to the SEC, however, reduced the claim by 50% after the release of the draft environmental impact report in October 2021. The company said it updated its message to “ensure consistency” with the report.
While Phillips 66 and the county made strikingly different projections of the biofuel plant’s greenhouse gas pollution, they agreed that the project would have a climate benefit that extended beyond the facility’s local emissions. lation They said biofuels produce fewer greenhouse gases than traditional gasoline or diesel when burned in vehicles. This reduces emissions during the total “life cycle” of the fuel, which includes all aspects of exploration, production and consumption. Considering only the plant’s local pollution, the county said, underestimates the potential reductions in greenhouse gas emissions by “orders of magnitude.”
Some researchers, however, dispute this claim. They argue that the carbon emissions from clearing and cultivating land to grow biofuel feedstocks, such as corn or soybeans, offset any reduction in tailpipe emissions.
TRUCKS, TRAINS REPLACE A DRIVING
Phillips 66 projects that the conversion will reduce emissions of certain federally regulated air pollutants, such as benzene, sulfur dioxide and particulate matter. Sulfur oxide emissions are expected to drop 80 percent from 2019 levels and particulate pollution is expected to increase by 20 percent, Fallas said, citing the environmental impact report.
Three independent environmental experts said some of those emissions, along with greenhouse gas emissions, are likely to decline simply because of a reduction in overall capacity after the transformation. As an oil refinery, the plant processed nearly 120,000 barrels per day (bpd) of crude, far more than the planned capacity of 80,000 bpd of biofuel feedstock.
The plant’s emissions after the conversion are difficult to predict, environmental experts said, because of a lack of research on pollution from large-scale renewable diesel processing and because the company has not publicly described which materials first will use The Phillips 66 operation could lead to reductions in some pollutants, compared to oil refining, but increases in others, said Mark Jacobson, a professor of civil and environmental engineering at Stanford University and director of the Atmosphere Program /Energy of the school.
“I hope to see no improvement,” Jacobson said.
“You’re just going to get a different set of chemicals coming out of (biofuel) refineries compared to traditional diesel and gasoline refineries.”
Also, increased transportation related to biofuel processing could worsen local pollution, said Ron Sahu, an independent air emissions consultant.
According to the environmental impact report, Phillips 66 plans to close a 200-mile pipeline to the plant, which will lead to a doubling of tankers and a tripling of railcar arrivals. Truck traffic will fall overall, but will increase sharply in a part of the refinery complex closer to the most densely populated part of Rodeo, exposing residents there to more particulate matter and other pollution from transportation.
The project will also lead to a projected 29 percent increase in greenhouse gas emissions from the plant, which will use more natural gas to produce hydrogen for biofuel processing, according to the report.
Janet Pygeorge, 87, lives within sight of the refinery’s chimneys. It recalls a 1994 chemical leak at the refinery, then under different ownership, that sickened tens of thousands of people. A predecessor company of Phillips 66 bought the refinery in 2001. Since then, the plant has had seven “major accidents,” including fires and toxic emissions, through 2018, according to the latest available county data.
That history makes the prospect of continued fossil fuel operations unsettling for residents who lived through it, Pygeorge said. “It just doesn’t sound safe to me.”
Reporting by Laila Kearney; edited by Richard Valdmanis and Brian Thevenot
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