Fueling Collaboration: A Conversation with Catherine Reheis-Boyd, President & CEO, WSPA

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[Stefan, VP, Euro Petroleum Consultants]
Access to affordable, and reliable energy has never been so pertinent. Without doubt, fossil fuels will continue to play a significant role in the world’s energy mix for some time, and while the world needs energy, there is a role for refineries to play. Each company, each refinery, must come up with own their view of how they best make the transition and how they do this whilst continuing to provide, in a responsible way, communities with the energy that they need. With that in mind, how does the industry differentiate between short-term affordability and medium-long-term decarbonization delivery?

[Catherine Reheis-Boyd]
Thank you, Stefan. That's the question of the day, isn't it? The world needs energy and our role as an industry is to provide it. It's to provide it 24/7 and, as you stated, every company has their own view. That's also an exciting piece of the equation because every company's view of the future is very different, and I find that the most fascinating because it gives the widest breadth of options for all of us to consider, given each of the companies’ expertise. I think that's a really healthy, good thing.

I think that there’s one thing that everybody agrees on, even though we have companies with different views of how to approach the future, I think they all agree that we have to continue to provide communities the energy they need. That balance of affordability and decarbonization is the challenge. I think it’s a misconception to think this industry is opposed to sustainable innovation because that's the farthest thing from the truth. The past and current innovations will go on into the future in the areas of renewable natural gas, renewable diesel, hydrogen, wind, solar, EV's, and carbon capture sequestration (CCS). As I tell the media every day when I speak to them, if not us, then who? We have unique expertise in capitalising on the science and the facts of how one gets from where we are, to where we want to go.

I don't think it's based on emotions and political aspirations, which is some of the challenges we are facing today here in the West. We have aggressive climate goals in all of our Western states, especially California, Washington and Oregan, but we don't oppose the goals, we try to put together a realistic plan to help the states get where they want to go.

And again, that is not based on hopes, dreams and aspirations. It's based on science and facts, and that is one of our biggest challenges, bringing those facts to the table and having people appreciate that it's not an easy fix to go from where we've been for centuries, to where we want to go in the future, because it's very different.

One example I point to is: last summer, we were passing regulations and executive orders through the administration to ban the sale of internal combustion engines by 2035. We were also asking anyone who had an EV to not plug in. We were asking marine vessels at ports to disconnect from the grid. We were considering reversing the decision to decommission Diablo Power plant. We were begging natural gas-powered plants to remain online.

That to me is a not a well thought out plan. So, when you hear our industry talk about an ‘all of the above’ energy strategy, this is because we don't think you should pick winners and losers. We don't think you should focus on one single technology. We think the market is the best course to let it drive the innovation and find consistency in our energy supply as we plan for the future. The other thing I always remind the media, A+B still must equal C.

So, we still have to have a plan that actually works from chemistry, physics, and just pure practicality. I think on your question on affordability, even the California Resources Board scoping plan, which is the blueprint for this transition on the West, actually states its existing goals are going to be very difficult and very expensive and that the cost is going to be borne by the consumers. They'll be job loss and leakage to other states. I think we need a thoughtful plan on how to get from A to B.

We've provided several options for the administration, the Air Resources Board, the Energy Commission to consider, because we do believe you can reach these goals. We just think there's a better way that's more affordable and doesn't have some of the economic implications that we're seeing in the current plans.

Definitely. I think failing to plan is planning to fail. I think people have always said that and also, like you mentioned, I think we need to be seen as part of the solution. It's an ongoing battle to show that we want to make this transition happen. We want to reach those goals, but we should be seen as part of the solution.

I think during your answer you also touched upon the topic of regulations and the importance of legislations. When it comes to regulations, WSPA believes that policymakers should maintain optionality and avoid picking winners and losers. In your opinion, what role has the recent Inflation Reduction Act (IRA) played in changing the conversation and levelling the playing field (at both federal and state levels)?

I think in concept it has some really good aspects in regards to doing anything we can do to benefit the country. The worry I have is that there are several issues related to affordability, cost and how one goes about this. Costs and taxes, in my opinion, and in the opinion of our industry, is a dangerous policy that's not rooted in what we would call energy reality. More taxes on energy companies, especially in an energy crisis mode, imposing, I think, $11.7 billion is going to result in higher prices for consumers, not lower prices.

15% tax on adjusted financial statement for corporations with income over a billion is not going to encourage investment. The federal government and the state government wants us to bring more supply to market so that we minimise market volatility. At the same time, they want to heavily tax us for the privilege of doing that. It just does not make sense. So, taxes on methane emissions, I would rather see cost effective regulations as a much better approach than bringing another $6 billion price tag on the very industry who's trying to help get this country from A to B in a transition that's sustainable. I don't think higher cost vehicles versus a technology neutral approach is being considered in a balanced way. I think the bill also emits much of the permitting reform that is absolutely needed for the infrastructure, not just for the critical oil and gas, but the infrastructure that we will need for renewables to make the transition happen and to meet demand. So, I think although in concept, I think it's certainly meritorious, I think its bias is obvious and it has significant economic implications, not only for this industry, but for this industry's ability to invest in the future.

Definitely. I think there needs to be a consistency.

The quality of life of human beings has increased in large part because of fossil fuels. Today, we're trying to imagine a world in which we have all the advancements of fossil fuels without the serious implications of fossil fuels. The challenge ahead of us needs an all-hands-on-deck approach. Why is it so important for WSPA to be a part of the conversation and solution(s)?

Yeah. Thank you. I mean it, obviously we've powered the economy for over a century, so we have to have a seat at the table. It's imperative we have a seat at the table. It's imperative that there's a recognition of the incredible brain trust that really resides in these companies in our members and in our workers. It's just remarkable from my standpoint. I've been in this business now for over 40 years, and so I've seen the innovation. I've been involved in rolling out three cleaner burning gasolines, removing lead from gasoline and going to ultra-low-sulphur diesel. All these innovations and improvements in the fuel that we produce, and the relationship of the automobile and the fuel that moves it, it's incredible. I think we need the recognition that we have to be a partner, we have to be a seat at the table, and we are part of the backbone of the United States economy. We're very forward thinking, we drive solutions, we collaborate, we partner, we use common sense science-based facts. There just seems such a reluctance to have us at the table when we're so willing to be there. That is one of my biggest frustrations in the West; the continued attack on the very industry that wants to help each of our states to get where they want to go. That's just a very big frustration. So, I think we've got to be part of the conversation, we want to be part of the conversation, we have to have a seat at the table. It would just be nice if we were not on the menu.

I totally agree. I think the word I was thinking about how we could term this and I think the word you've used frustration is, is exactly this. Expanding upon the last question, the transition will require partnerships. As an industry, we are not capable of solving this ourselves. Significant opportunities lie in open dialogues and (cross-industry) collaboration. How has WSPA and your members championed collaboration and built partnerships with a common focus of reducing collective carbon emission? 

We know that no one has the corner on wisdom, we think we have a lot to offer, but we also know that everyone has a lot to offer. We work with the environmental community; we work with the environmental justice community; we work in the communities to try to understand really how they view energy, how they view quality of life, and what's important to them. It's not a matter of what's important to us, it's really a matter of what's important to the constituents, to the consumers, to the communities that we serve. Because we have to align with that, we approach everything we do from that lens. The media often ask, aren't you afraid of this transition? And I say, well, this industry has been in transition since horse and buggy. This is not new to us. We've transitioned every step of the way and we will continue to transition because we are involved in energy and all forms of it, and so I think some of the things we've done with the environmental justice community, not to get into too much of the weeds, but AB 617 was a bill that really engaged the environmental justice community throughout the state of California to collaborate on an approach to reduce emissions in their backyard, as we're also looking at greenhouse gas emissions criteria, pollutants are equally as important to the health of these communities, and so we are in big collaboration on that programme. We've been involved in for many years in the Central California ozone and particulate matter study. Again, joining forces with the state, going to Washington DC to get appropriations to get the science in place to tell us and inform us how to solve the problem, not how we think we should solve it, but how the science tells us to solve it, so that we can get to the end point and have a sustainable future within the Central Valley, which is where some of the struggles of the state lie.

So those are some of the examples. We are also very involved in the CAP and trade programme. We supported the CAP and trade programme in California and helped design it so that it would be a premier programme that the rest of the nation could learn from and evolve into. So those are just some of the things that we've been involved in, but our members are involved across the spectrum in all of these things and I think also in just collaborating with higher education institutions, we've done a lot of work with Stanford, with Berkeley, with Davis, with UCLA. I mean, we try to engage Lawrence Livermore Labs, we try to engage all of the resources we have in the academic community because that's an a very important stakeholder as we talked prior to everyone having a seat at the table. The whole academic and research side of this equation is absolutely critical, and so we do a lot of work with them and partnering on biofuels, alternative fuels, and on battery technology. Again, I'm so excited about the innovation from our companies. It just is really incredible the minds that we have at our disposal to help really build these partnerships and this collaboration. We have to have it to advance into the future. So, I think we have a rich story to tell there. I think our innovations are off the charts and I've been capturing all of those from our companies and using it as we explain our desire to not just talk about innovation but actually, do it and make the significant improvements in going forward from getting from A to B.

It's great to hear all these different developments and innovations like you said, which are very much needed if we want to reach, you know, the objectives that we've set ourselves.

Turning to technologies, whilst longer term the industry continues to innovate in pursuit of the next generation, leaders must also focus on the near-term to decarbonize where possible and build clear plans towards abatement. What are the lower-hanging fruit efficiencies and incremental benefits are still available to the industry?

Yeah, certainly efficiencies in the CAFE standards on the vehicle side certainly is of interest. The hybrid technology is way overlooked. We have hybrid vehicles that I think in the short term bring such a benefit because they deal with the challenge of just pure electrics which ranges from anxiety to cost to availability. Hybrids can really all these things and serve such a significant role in that gap. So I think they're overlooked, frankly, and I think that's a low hanging fruit we should continue to focus on.

I think the other one that is frustrating in California is our ability to actually move forward on carbon capture sequestration. We have companies around the world, as you know, that are successful in this technology and want to deploy it in California, but the opposition to this technology is very strong here, not necessarily from the government side, but certainly from the environmental justice community who are trying to work with on understanding what the concerns of that technology are because it is a known technology. It certainly can help us, and actually in California to meet our 2045 carbon neutrality goals, the Lawrence Livermore Labs did a complete study funded with DOE that said California cannot meet their carbon neutrality goals completely, if we do not do CCS in the state.

So that is one area in the short term that we have been working on for six years to try to get California to move forward. So that's been a frustration, but I think it's moving now. I think there's much more support for it and hopefully we'll get projects going. I think the other area is in hydrogen and renewable, natural gas and renewable diesel. In renewable diesel, two of our major refineries in the Bay Area are converting completely to a renewable diesel facility, and that is exciting. I didn't know if I'd see that in my lifetime. So, I think that's a wonderful step in the right direction and then on renewable natural gas and hydrogen, our companies have huge interest in that space. Little longer term probably for hydrogen, but not necessarily more on the heavy duty side is a little more challenging. But, moving on the light duty side, the heavy duty side, the industrial side, I think hydrogen we will see will play a continued increased role in our energy future.

Thank you very much for that. Finally, what do you hope the discussion from a conference like ESF North America will help your members and the wider industry to achieve over the next 12 months?

That's a very good question. I think most importantly, what I hope comes out of the conference is a recognition that we share the same goals, that there's more that unites us than divides us, that we trust in each other's expertise and desire to move towards a sustainable energy future together, not apart, and that everybody does actually have a voice at the table and a seat at the table.

And that we don't demonise any party and welcome them to the table to try to solve these problems together, because again, we don't think we have the corner on wisdom, but we do believe we have a lot to offer, and I hope out of the conference that we can have a renewed interest in really working together on the environment, the economy and our decarbonization because I think they go hand and glove. When either one of those is out of balance, we won't get to a sustainable future. So we've got to have them both, so the balance between the economy, the environment and energy equity, are very critical so I'd love to see us come out of the conference with a renewed desire to work together. I’m really hoping for that and what our next steps will be.

Thank you. I totally agree with that sentiment, Catherine. A huge thank you for taking the time to talk to us today and really looking forward to meeting you in person and continuing the discussions at ESF North America, which will be in San Francisco a little bit later on in the year. So a big thank you to you.

Well, thank you, Stefan, and thanks to ESF.

Join us in San Francisco this May and don’t miss the opportunity to hear more from Catherine during her keynote speech on pathways to carbon neutrality in California. For more info, visit europetro.com/esfnorthamerica