(Corrects typo in headline)
Feb 3 (Reuters) - Following a year of grim losses amid pandemic lockdowns that dented demand for fuel as people stuck close to home, the largest U.S. independent refiners are promoting plans to boost production of renewable fuels.
Renewable fuels represent a silver lining for refiners under threat of being left behind by the shift to electric vehicles and away from fossil fuel processing. As the big refining companies in recent days reported year-end results, executives devoted plenty of time to discussing how they will create fuels that emit fewer emissions that contribute to global warming.
“Renewables is the hot topic, and I think we’re in a real good position to put ourselves in a good spot there,” Marathon Petroleum Chief Executive Mike Hennigan said on an earnings call Tuesday.
Marathon reported losses of $12.2 billion for 2020. Hennigan said the company isn’t clear what gasoline and diesel demand will be post-pandemic.
The company is currently converting its Martinez, California, refinery to renewable fuels, with plans to spend nearly all of its $350 million 2021 renewables budget on that refinery, which was idled last year.
Marathon’s Dickinson, North Dakota, refinery, started producing renewable fuels sold in California late last year.
Currently, refiners make the most money selling into California as the state’s low carbon fuel standard encourages the production of renewable diesel, which is subsidized by federal and state policies.
Notably, renewable diesel was the only segment that turned a profit for Valero Energy in 2020. The company, the second largest independent U.S. refiner, lost $1.4 billion for the year, but its renewable diesel segment posted a $638 million profit.
“The reality is that cleaner fuels are going to be part of the future. ... The internal combustion engine is far from being extinct,” Valero’s chairman and CEO, Joe Gorder, said on an earnings call last week.
Valero and partner Darling Ingredients are planning a $1.45 billion facility in Port Arthur, Texas, that will be able to process 1.2 billion gallons of renewable diesel per year from sites in Texas and Louisiana.
Phillips 66 reported results on Friday, posting a $4 billion loss for 2020. It, too, talked up its plans to produce renewable fuels at its former Rodeo refining plant in San Francisco, and a joint venture with Ryze Renewables in Nevada to produce renewable diesel.
“We want to participate in energy transition. We want to do it where we can invest and earn returns that are above our weighted average cost of capital,” said Greg Garland, Phillips 66 chairman and CEO. (Reporting by Laura Sanicola; Editing by Leslie Adler)