Old guard energy embraces renewables - Kevin Lucke

Paul Yeager   Welcome into the empty om Show podcast. I'm Paul Yeager. And as you can tell, we're out in the cornfield in front of a field, Kevin Lucke from Chevron is joining us, Kevin, what's your title with Chevron?

Kevin Lucke   Yeah. Thanks, Paul. Great to be here today at the fair with the cornfield in the back, right. So I'm the president of Chevron Renewable Energy Group. We're based in Ames, Iowa.

Paul Yeager   So you are based in Iowa, but the company is global. We'll get into some of your background and where you've been with them. We're here at the Iowa State Fair, you're going to see a whole lot of people passing us everywhere we go today. What's your first I was State Fair memory.

Kevin Lucke   So many years ago, when I was a youngster, I was in FFA, and at that time, they have an usher program. And I think it's still exist, but it's changed a little bit. So I'm looking here at the grandstand. And so I spent two weeks here, two different years, right one week or two fairs, here at the grandstand doing ushering in the grandstand for all the events, from tractor pools to car races to country music to rock and roll.

Paul Yeager   We have done a few years ago, this same type of podcast, we interviewed a gal who was this organized Supervisor of them, and all the years and talked about the crowds and trying to be a high school student maintaining someone who's maybe been a little too involved in their in a certain activity when a concert rolls, we can hear and I think you can probably hear it, too. There's music going on in the grandstand. And so we're your setup today at this, Stan, it's right. It's probably really giving you a flashback. Exactly.

Kevin Lucke   And yeah, I can imagine the challenges the she had, I think a listen to it. She's the director of the ushers. They've changed the program a lot, because they used to just let us room free during the day. Now they got a lot more structure. And there's a good reason for that. Paul,

Paul Yeager   you can't all just be hanging out. Exactly. Exactly. That is part of the fair. So that's your first set of memories. And then over time, as you pick up things with Chevron, what was the role of a company prior to renewables? I mean, what did oil in Iowa and agriculture? What was that combination?

Kevin Lucke   Yeah. So, you know, the energy and egg spaces sort of had a rocky relationships over the last several years, right? Clearly, Chevron has been using ethanol for many years in our gasoline. And so we've needed to use that for many different reasons for gasoline. Cool. So there is a long relationship with ethanol and Chevron. But it's really changed a lot with the purchase of renewable energy group really started with Chevron's belief four or five years ago that the future of energy is lower carbon. And so when you go down and think through that process, it really drives you to the things that we're doing and renewable energy and ethanol and all the other things that are happening in this space.

Paul Yeager   Well, when you talk about the rocky relationship, I guess you could say, I mean, I guess I'd asked you, are you working for a big oil company? Is that still a term that when you hear that, does that? Come on? Now? We can do better than talk about that?

Kevin Lucke   Yeah. So there's one that's one of the questions that I've get a lot in the last year since I've been in this role is about big oil, and the relationship hasn't been real strong with agriculture. But that's really changed a lot. And, you know, a little bit later today, I'll talk about some of the joint ventures that Chevron has, particularly with Bungie, and others. And it's really clear that if you believe the future of energies, lower carbon, that it's going to take a leg and energy to be like this, Paul, we can't be really fighting each other, the solutions are going to be complex, difficult, and it's gonna take all of us working together. Just a

Paul Yeager   few days before we recorded this, there was yet another lawsuit. Iowa and Nebraska governor's petitioning the E, the EPA over renewable fuels and e 15. And each hand and so there is still always this constant. battle goes on how political can a group that has interests in Texas and Iowa and Minnesota and Illinois get in the middle of something like that?

Kevin Lucke   Yeah. So I think it comes back to our belief and our belief is the future of energies, lower carbon, then you have to really be positively you know, going in that direction, the e 15. Discussion, we have been on record Paul to say that we support e 15. Right and so, the what the the governors and Attorney General's are doing in this state, we believe that's going to enable lower carbon and so yes, that is very much supported by our company,

Paul Yeager   very much something that you have to do and one of the things you have to do are go along for a crazy ride. So let's go we're gonna you navigate The fair match in a golf cart.

Kevin Lucke   This will be the first. Okay.

Paul Yeager   I'm going to warn you right now we have an opening. We're going to take it. Okay, we're recording this on. Not quite. It's a weekend day. It's not the busiest of weekend days. There was one yesterday, that was ridiculous. We're going to try to make a U turn and go around. So we have the cornfield behind us, what was the cornfield, representing as part of your booth?

Kevin Lucke   Yeah. So it's really the, you know, as I mentioned earlier, the tie between energy and agriculture is really becoming more and more, we've got to work together. And so that's the theme here is, is that energy and egg need to be solving both food challenges that we have as society and the energy challenges that we have as well.

Paul Yeager   I'm going to do my best to listen to everything you say, Kevin? So but if you feel that I'm a little distracted, I don't want to hit anybody, and you'd be in the spot. So it's a good idea. We've got a tractor. Yes. And then we have some of the folks from the company that are here today. So what's the goal of the booth?

Kevin Lucke   Yeah, so maybe I'll just start with a little bit with the tractor. Paul, over 25 years, Chevron has sponsored tractor restoration competition for high schoolers. And so that is the winning competition. Our competitor, he's from Texas, first time out of Texas, visiting our Iowa State Fair. And so it's a competition that really showcases young students abilities. To be able to refurbish tractors. It's a great program, we've been sponsoring it for 25 years, the rest of the booth really focuses on sort of our renewable energy, the things that we're doing in the renewable energy space starts with our belief that the future of energy is lower carbon, and then you start seeing some of the goals that we have in there to produce 100,000 barrels a day of renewable fuels by 2030. And then we talk about the feedstocks that we're using the raw materials started with soybean oil, now we're used used cooking oil, we use canola oil, we use corn oil from ethanol companies. It's a byproduct. And then last, but not least, we're using animal fats and greases from from slaughterhouses as well, all to make renewable fuels. Well,

Paul Yeager   and that's and that's the concept I've heard over the years, kind of the way the industry has evolved with renewables of will take any source, the feedstock, the you know, you've had that technology come with some companies where they take bio switchgrass, yeah, those types of things. So you're saying restaurants have waste, but it still doesn't mean it's the end of the line for that product.

Kevin Lucke   For example, US cooking oil, we partner with a company that collects it from restaurants, we transform it into biodiesel, and now we're using that biodiesel in the trucks by the company that's going out collecting for us cooking oil. So it's really a circle of used cooking oil, starting with soybean oil as their original original source. So it's an amazing story. These feedstocks were all byproducts and original state and you know, over the years, are he really found ways to convert them into fuel, using sort of the innovation that we have in Ames

Paul Yeager   Renewable Energy Group is your RTG that you're referring to that as a recent acquisition. That's right, our eg has Iowa roots for a while and had some pretty high profile board members. What was the reasoning the targets? And how did that relation and how have the two grand come together?

Kevin Lucke   Yeah. So again, it starts with the belief of the future of Energy's lower carbon Chevron's started to look around. How do we how do we advance that in the in a pretty fast way, and Renewable Energy Group as a company kind of rose to the top of the list? And why is that? Over 20 years, they started in Ralston, Iowa using soybean oil. Now we have a plant in Ralston in New, and Mason City, and Albert Lea, Minnesota, and Madison, Wisconsin. And we have two in Illinois, one renewable diesel plant in Louisiana, a couple in Europe, and so that our ag put all these facilities together and was developing the technology, Chevron looked around and said, Holy cow, this is a great company, great people who are doing the stuff that we want to enable lower carbon fuels. It's

Paul Yeager   common in in any line of business, not just agriculture. Somebody is an expert in in an area that you would like to get into for acquisitions happens in equipment all the time. That's right, energy is no different. Right? It sounds like you're saying that's

Kevin Lucke   exactly right. And that was the strategy and it really, you know, I talked about a goal of 100,000 barrels a day by 2030. Or he alone is 30,000 barrels a day of renewable fuels that they're producing. We have an expansion in Louisiana. It's a billion dollars to be done next year. That's gonna get us over 50,000 barrels a day. And so this company, our ag really had a lot of the things that Chevron needed to advance their

Paul Yeager   lower carbon future. And sounds like it's a way that you can be an expert in something. Yes, not parachuting from the outside, but coming inside. Because if I was an Iowa Illinois company, saying, I'm going to Texas to start prospecting for oil drilling, they're gonna look at me like I'm like, I don't know what I'm doing.

Kevin Lucke   And that's, that's exactly what Chevron seen with our Eg is a company of experts based in the location where the feedstocks, and the innovation occurred all along. So it's been a really strong match. And, you know, we've been at it two together for a year, the culture has have been very, very similar very trusting culture based on teamwork. And so I dare say that it was really a match made in heaven, okay to speak for, for both of us, right. So what is

Paul Yeager   also at this booth is I'm looking at the stems over your shoulder to work in any of the facilities, you do need to have a strong STEM background. So is that part of the thought of celebrating the science and technology?

Kevin Lucke   Yeah, especially here today, it's Chevron day at the fair, right. And so Chevron has been a large sponsor of STEM, when you think about what it's going to take in the renewable energy or traditional energy, really society in general, we need strong technology backgrounds. And so this is a booth that that has been put together to advance STEM education, you'll see lots of kids, but you see lots of grownups here as well. And it's a way for folks to get interested in something that's vital for our business and really, for the business in general.

Paul Yeager   Kevin, let's keep moving. Because, you know, I'm probably cutting off people from the booth. Now, if you've been to the fair, and you've watched anything that we do on Iowa, PBS, we have different features that happen, and I can hear what's going on, which is going to alter where we go, I hear the legendary bands. Aloni is up there playing. Paul is Canadian. What is Chevron's relationship like with your neighbors to the north and south? Because renewable fuels? Corn, all of this stuff is a hugely I mean, those are our two biggest trading partners. What's the relationship like now with our neighbors to the north and south in the industry the way you say it?

Kevin Lucke   Yeah. So I'll just talk maybe a little bit of about the renewable fuels part of the industry, Paul, we have a plant in Washington of the state of Washington. It uses canola as a feedstock to make renewable diesel or biodiesel as well, right. And so all of that tunnel, all of it comes from Canada. And so we're getting feedstocks today, from Canada, on the southern borders, we're getting animal fats, Reese's Kallos, from Brazil, from Latin America, those are coming into our plants in Louisiana. And again, we're making those renewable diesel there. Now, on the flip side, where our products are sold, yep. Many of the products that we sell are enabled by government policies. And that has been very much an evolving space. And so California was really a starter for low carbon fuels and the standards. It's moved to Oregon to Washington. And now, Canada is very active in the space. And so we're selling products produced in Albert Lea Minnesota, Mason City, selling those in Canada as we speak. So it goes both ways. We're using those as feedstock sources and places to sell our products.

Paul Yeager   The hog industry just had a major sea change from California helped me out on understanding energy. How does they How does California whatever happens there affect your company as a whole on the renewable side?

Kevin Lucke   Yeah, so maybe one of the positive things I won't get into much on the pork part, but I mentioned they have a lower carbon fuel standard that is trying to get lower carbon fuels. I spent a lot of the time today discussing biodiesel and renewable diesel. We also make renewable natural gas. And so we have 30 dairies where we're using digesters started in California, but now they're in the Midwest, where we're actually producing renewable natural gas, and then selling that largely in California because it's a very incentivized market for that status. That product for us as well. So so it's a real win for us in that state. To use agriculture, agriculture, byproducts, manure to make energy.

Paul Yeager   Do you find that the company in renewables has to be more in tune with what governments do? Or what customers do?

Kevin Lucke   Yeah, so it's a both. It's an ad world and that space, right? I'll just use many of our customers and one of our large customers is you Union Pacific Railroad and the Union Pacific is made commitments, how much that they were going to lower the carbon of the fuels that they use. And so they come to us. And we're working today with them. And they're a great partner for our biodiesel and renewable diesel to lower the carbon or greenhouse gases of the fuel that they use. So that's on the customer side of it yellow on the on the policy side, our business really needs policy support to be able to survive. It's not economic yet to be able to produce all of these products without policy support. And so that's where working with, you know, the states and the federal government is so so important for our industry.

Paul Yeager   I guess you bring up a point that I hadn't thought of, but outside of ag state, we'll just take Nevada, not, you know, an Oregon or something. I mean, Oregon's agriculture is huge in a lot of states. But what's the is that an opportunity that Chevron sees for both, I guess, educating, informing opportunity for growth? How do you see those states that don't have a huge footprint in a cornfield or a soybean field?

Kevin Lucke   Yeah. So what you see and we see this in the Northeast of the United States right now, a lot, Paul is folks are trying to, you know, just use fuel oil for their furnaces in the wintertime. They're trying to figure out how do I have a lower carbon fuel to be able to be used to lower my greenhouse gas emissions. And so you have an unlikely bedfellow in some sense, where you got the state of New York or the state of New Jersey, needing to find a solution, or a lower carbon fuel, hence, the corn and the beans and things that produce those lower lower carbon fuels. And so we are finding many states that are traditional agriculture, like maybe Iowa or Illinois, to be able to be a partner with us in really providing fuels that they need. And we need to lower carbon footprint.

Paul Yeager   What's the biggest challenge that you're going to face as a renewable side of the ledger here in the next two years? Two to four years?

Kevin Lucke   Yeah. So I think there's a couple of them, right. We need to make sure that we're educating the public on the food and fuel discussion. Oftentimes, I hear that, oh, all of the soybeans or corn, or diverting, you know, food

Paul Yeager   from long time, it's long been a criticism.

Kevin Lucke   Yeah. And so that education needs to continue to make sure that it's a really it's an animal world, we need the food, and we need the fuel fuel. And both can survive. And it's okay. And it's the right answer. I think the other area, Paul is to be able to have the debate on on, we want to have sort of, during this energy transition, a lower carbon solutions. And what we're seeing in some places is, guess what? Electric vehicles are the solution, they are a solution, but not the only solution. And so finding the debate with the policy makers to be able to say, hey, let's figure out what our in use goals are, and not have a solution dictated to us, is going to be very, very important. Going forward in the next couple of years.

Paul Yeager   Two things, carbon we'll get we'll get back to that in a minute. A policy of all so just like we talked about a few minutes ago, the whole will take sources of energy from wherever you're saying that the the the fueling of America in the world is going to be many sources. So you don't see electric as the only answer. No, you don't see oil as the only answer is going

Kevin Lucke   to take us all right, it's gonna take wind, solar electricity, it's going to take bio fuels as well, all of those have to create the chart to meet the challenges that we have in the energy transition and the world economy is growing. So we need more of it, if you will.

Paul Yeager   What do you see on the regionalization of energies? I brought this up before on this podcast. I had a boss a few years ago that said to him, it may energy made sense. Where the energy was created is where it should be consumed more so if it's Texas, Oklahoma oil, if it's Iowa, Indiana, Illinois, it's renewables if it's Nevada, California, it's solar. What do you see of the that thinking? Well, that went out over a different thinking.

Kevin Lucke   So I think it's going to be part of the solution. Paul, it won't be the only solution if you will, right. You know, for example, what we do on the renewable fuels, space with corn and corn oil from ethanol and soybean oil and US cooking oil, a lot of that is is generated here. And we do have uses through biodiesel or renewable diesel for those feedstocks here. And I'll just use sustainable aviation. Right. That's a product that are going to need to be sourced from other feedstocks besides what is available, if you will, right.

Paul Yeager   Anything can happen when you're talking to fair and that's, that's the fun part of the fun part. And to me, I think a discussion with and I've asked this in the past, too, right now, you mentioned about educating folks. You have a good opportunity for mainly, yes, there's a lot of agriculture interest here. There's a lot of city interests too. Yep. Do you find that there is a willingness to learn by those in the city and in the country about and what you're doing? What agriculture is doing? What energies?

Kevin Lucke   Yeah, absolutely. I mean, that's why, you know, we're right on the main drink. Course here today. Right. And it's really to have that conversation with the urban folks and the rural folks. And they're really trying to learn more, they're curious and saying, Who is Chevron? Why are why is Chevron interested in Iowa? Why is Chevron interested in the renewable fuels business? And so people are curious, and they're asking the questions, because it's new, and it's changing, and it will continue to change.

Paul Yeager   And that brings me back to one of the other things you had said was about carbon carbon pipelines are a popular topic in several states right now. Where's Chevron? Where's the renewable line of that? Is that something you're watching? Or involved in?

Kevin Lucke   Yeah. So it goes back to our belief that the future of energy is lower carbon, right. And so what those pipelines are trying to do is to provide lower carbon ethanol to be used the fuels. So in theory, what they're doing is, is the right, the right sort of path that we're on. The question is, you know, how do they get their you know, is it a pipeline? Do they sort of put the carbon in a different form at the ethanol plants? That's something they'll have to sort out through through technology and the rest? Right. So

Paul Yeager   what you have to watch it? Yeah, absolutely. Because you have to figure out where your lanes gonna be in that.

Kevin Lucke   Yeah. And and, you know, you know, we are a large ethanol. Consumer, right. And so we're wanting to understand, as we try and produce lower carbon fuels, can we get lower carbon ethanol along the way? And so that's, that's really part of the part of the things that we need to watch and understand if you will, right. We're not actively involved in those pipelines today. But we are actively watching them.

Paul Yeager   I would think you have to meet Yeah, you can't ignore one of the biggest stories in your key area. That's right, of what your group is the least on the renewable side is understanding agriculture as a whole. As we close up here, do you think the consumer I guess asked you about the consumer and their dictation of things? Today is your is your biggest target those consumers?

Kevin Lucke   Yeah, I think it's a little bit of all of the above. All right. It's, it's our policymakers really need to work with them, educate them, if you will. It's customers. I've talked about people liking Union Pacific, and then it is ultimately the consumers that are really making choices and really helping them understand that there are more alternatives than just buying an electric vehicle, right? What does that mean? And what is the total lifecycle emissions of that whole value chain versus just looking at the tailpipe emissions of electric cars?

Paul Yeager   Well, I appreciate you going along with the crazy idea to ride along in a golf cart for a little bit among the people join us just never know when anybody's gonna stop by and say hello, indeed. And when the sun comes out, and it gets to be a little brighter on things. So Kevin, I appreciate your time.

Kevin Lucke   Absolutely. Great to have so much to chat, Paul.

Paul Yeager   We haven't the time. Kevin Lucke with Chevron on the renewable side president of that group and that's it for this MToM podcast, new episodes each and every Tuesday. You never know where we're going to be in a cornfield or in a golf cart. Andy, thanks for watching. Have a great day.

Contact: Paul.Yeager@iowapbs.org