Valero recognizes that reduction of greenhouse gas emissions is a significant challenge confronting our society, and developing a regulatory framework to address the challenge is a  complex undertaking.  Policy must be calibrated appropriately in order to stimulate innovation while maintaining energy security and protecting consumers and the economy. The regulatory framework that results should be:

• Fair and comprehensive in approach, reaching all economic sectors, including imports

• Recognize the importance of energy security for the United States

• Encourage innovation

• Balance emission reductions with the economic impact to the consumer

• Include emission reductions over time frames that are reasonably achievable

• Adjustable if technology advancements are not yet available to address the issue

Valero will work to:

• Continue to improve energy efficiency and conservation at our facilities;

• Continue to pursue recovery projects that will help mitigate CO2 emissions

• Include "carbon costs" in the financial evaluation of and decision-making related to strategic capital projects; and,

• Evaluate low-carbon opportunities for the production of transportation fuels, electricity and chemicals.

Greenhouse Gas Inventory
Valero has prepared an annual GHG emission inventory.  In the interest of ensuring consistency and transparency, we submit our inventories for third party verification.  This process is still in development and may not be complete until late 2008 or 2009.  However, our pre-verified, direct emissions estimate from 2007 is 34,700,000 metric tons of CO2 equivalents.  As a “draft” number, revisions will likely occur pending further review and verification.

Valero also participates in the California Climate Action Registry (CCAR-http://www.climateregistry.org/), a voluntary registry to protect and promote early actions to reduce GHG emissions.  Valero’s California facilities participate annually in this registry, with submittals certified by third party audits.  Both of our California facilities have submitted their 2006 reports and, after passing their audit, received their 2006 certification statement.  2007 reports have been prepared and submitted to the Registry with certification statements expected late 2008.  

Finally, Valero addresses the risk factors that we face as an independent, petroleum refiner and marketing company in our public filings with the Securities Exchange Commission.  These filings are available through the SEC’s EDGAR filing service located at www.sec.gov.