HollyFrontier

HollyFrontier has launched an initiative to establish scope 1 and 2 emissions reduction targets, but it has not yet disclosed these targets. The company has the opportunity to set targets aligned with its 1.5°C pathway to drive decarbonisation within its refining activities. The company should also raise its ambition by setting scope 1, 2 and 3 emissions reduction targets to reduce emissions throughout the life cycle of its energy products, particularly as the intensity of these emissions is projected to increase. The company should set both short-term targets to drive ongoing accountability for managing emissions and long-term targets to guide strategic decisions.

HollyFrontier does not have a long-term transition plan or strategy for decarbonisation. Although the company recognises climate change risks and is investing in renewable diesel production, it does not undertake climate scenario analysis or have a long-term strategy to transition away from fossil fuel refining. The company’s executive compensation is coupled to operational performance and financial metrics, with no indication of a link to climate change. HollyFrontier will need to develop a long-term strategy and substantially change its business to align with the low-carbon transition.

HollyFrontier has opposed climate policy in the past, demonstrating its unwillingness to support a rapid transition to a low-carbon economy. The company is represented on the board of the American Fuel and Petrochemical Manufacturers (AFPM), a trade association which in 2018 spent USD 1.25 million funding a campaign against Washington State’s Initiative 1631, which aimed to impose a carbon fee on fossil-fuel emissions. The company also directly donated USD 250,000 to fund the campaign. HollyFrontier can increase the credibility of its climate rhetoric by defining a clear position on climate change and by implementing processes to manage engagement with associations that oppose climate policies.

HollyFrontier is planning to spend USD 800-900 million, around one-third of its 2020-2022 capital expenditure (CapEx), on constructing a renewable diesel unit to be co-located at its Navajo refinery and on converting its Cheyenne Refinery into a renewable diesel unit. The project is designed to treat unrefined soybean oil, distillers corn oil and tallow feedstock. For this to be a viable low-carbon business model, the company should be using only second generation tallow feedstock, rather than the first generation soy and corn feedstocks. The company plans to start production at these units in 2022 and aims to produce over 200 million gallons of renewable diesel per year, which is only a small proportion of the approximately 4 billion gallons of throughput the company produced in 2019.

HollyFrontier has not set any emissions reduction targets and lacks a long-term climate strategy. It plans to invest USD 800-900 million to develop two renewable diesel units to produce over 200 million gallons of renewable diesel by 2022. The company has no significant climate commitments beyond this.

HollyFrontier’s transition plan is limited to improving operational efficiency and developing units to produce renewable diesel. The company does not report plans to achieve decarbonisation in the long-term, but merely states that it will manage climate risks and ‘prudently’ invest in a low-carbon future.

HollyFrontier has invested USD 10 million in 2019, 3% of its total capital expenditure (CapEx), to start constructing a renewable diesel unit. This may help the company achieve some improvements in operational efficiency; however, the company’s investment strategy continues to focus on refining fossil fuels and expanding pipelines.

Between 2014 and 2019, there was no change in HollyFrontier product mix or incorporation of low-carbon business activities. The company’s investments in refineries over the last five years has increased its refining capacity by 15%.

The absence of emissions reduction targets and a detailed long-term transition plan suggests that HollyFrontier is currently not on track to achieve a low-carbon transition aligned with its 1.5°C pathway. Despite its commitment to establish two renewable diesel units, the company’s strategy is still largely focused on fossil fuel refining.