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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | 13. FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The following tables present information (in millions) about our assets and liabilities recognized at their fair values in our balance sheets categorized according to the fair value hierarchy of the inputs utilized by us to determine the fair values as of September 30, 2021 and December 31, 2020. We have elected to offset the fair value amounts recognized for multiple similar derivative contracts executed with the same counterparty, including any related cash collateral assets or obligations as shown below; however, fair value amounts by hierarchy level are presented in the following tables on a gross basis. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.
| September 30, 2021
|  |  | Total Gross Fair Value |  | Effect of Counter- party Netting |  | Effect of Cash Collateral Netting |  | Net Carrying Value on Balance Sheet |  | Cash Collateral Paid or Received Not Offset
| Fair Value Hierarchy |
| Level 1 |  | Level 2 |  | Level 3 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivative contracts | $ | 785 |  |  | $ | — |  |  | $ | — |  |  | $ | 785 |  |  | $ | (677) |  |  | $ | (48) |  |  | $ | 60 |  |  | $ | — |
Physical purchase contracts | — |  |  | 6 |  |  | — |  |  | 6 |  |  | n/a |  | n/a |  | 6 |  |  | n/a
Foreign currency contracts | 4 |  |  | — |  |  | — |  |  | 4 |  |  | n/a |  | n/a |  | 4 |  |  | n/a
Investments of certain benefit plans | 84 |  |  | — |  |  | 6 |  |  | 90 |  |  | n/a |  | n/a |  | 90 |  |  | n/a
Total | $ | 873 |  |  | $ | 6 |  |  | $ | 6 |  |  | $ | 885 |  |  | $ | (677) |  |  | $ | (48) |  |  | $ | 160 |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivative contracts | $ | 736 |  |  | $ | — |  |  | $ | — |  |  | $ | 736 |  |  | $ | (677) |  |  | $ | (59) |  |  | $ | — |  |  | $ | (55) |
Environmental credit obligations | — |  |  | 94 |  |  | — |  |  | 94 |  |  | n/a |  | n/a |  | 94 |  |  | n/a
Physical purchase contracts | — |  |  | 5 |  |  | — |  |  | 5 |  |  | n/a |  | n/a |  | 5 |  |  | n/a
Foreign currency contracts | 5 |  |  | — |  |  | — |  |  | 5 |  |  | n/a |  | n/a |  | 5 |  |  | n/a
Total | $ | 741 |  |  | $ | 99 |  |  | $ | — |  |  | $ | 840 |  |  | $ | (677) |  |  | $ | (59) |  |  | $ | 104 |  |  |
| December 31, 2020
|  |  | Total Gross Fair Value |  | Effect of Counter- party Netting |  | Effect of Cash Collateral Netting |  | Net Carrying Value on Balance Sheet |  | Cash Collateral Paid or Received Not Offset
| Fair Value Hierarchy |  |  |  |  |
| Level 1 |  | Level 2 |  | Level 3 |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivative contracts | $ | 403 |  |  | $ | — |  |  | $ | — |  |  | $ | 403 |  |  | $ | (373) |  |  | $ | (18) |  |  | $ | 12 |  |  | $ | — |
Physical purchase contracts | — |  |  | 13 |  |  | — |  |  | 13 |  |  | n/a |  | n/a |  | 13 |  |  | n/a
Investments of certain benefit plans | 74 |  |  | — |  |  | 8 |  |  | 82 |  |  | n/a |  | n/a |  | 82 |  |  | n/a
Total | $ | 477 |  |  | $ | 13 |  |  | $ | 8 |  |  | $ | 498 |  |  | $ | (373) |  |  | $ | (18) |  |  | $ | 107 |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity derivative contracts | $ | 405 |  |  | $ | — |  |  | $ | — |  |  | $ | 405 |  |  | $ | (373) |  |  | $ | (32) |  |  | $ | — |  |  | $ | (44) |
Environmental credit obligations | — |  |  | 96 |  |  | — |  |  | 96 |  |  | n/a |  | n/a |  | 96 |  |  | n/a
Foreign currency contracts | 4 |  |  | — |  |  | — |  |  | 4 |  |  | n/a |  | n/a |  | 4 |  |  | n/a
Total | $ | 409 |  |  | $ | 96 |  |  | $ | — |  |  | $ | 505 |  |  | $ | (373) |  |  | $ | (32) |  |  | $ | 100 |  |  |
A description of our assets and liabilities recognized at fair value along with the valuation methods and inputs we used to develop their fair value measurements are as follows: •Commodity derivative contracts consist primarily of exchange-traded futures, which are used to reduce the impact of price volatility on our results of operations and cash flows as discussed in Note 14. These contracts are measured at fair value using a market approach based on quoted prices from the commodity exchange and are categorized in Level 1 of the fair value hierarchy. •Physical purchase contracts represent the fair value of fixed-price corn purchase contracts. The fair values of these purchase contracts are measured using a market approach based on quoted prices from the commodity exchange or an independent pricing service and are categorized in Level 2 of the fair value hierarchy. •Foreign currency contracts consist of foreign currency exchange and purchase contracts and foreign currency swap agreements related to our international operations to manage our exposure to exchange rate fluctuations on transactions denominated in currencies other than the local (functional) currencies of our operations. These contracts are valued based on quoted foreign currency exchange rates and are categorized in Level 1 of the fair value hierarchy. •Investments of certain benefit plans consist of investment securities held by trusts for the purpose of satisfying a portion of our obligations under certain U.S. nonqualified benefit plans. The plan assets categorized in Level 1 of the fair value hierarchy are measured at fair value using a market approach based on quoted prices from national securities exchanges. The plan assets categorized in Level 3 of the fair value hierarchy represent insurance contracts, the fair value of which is provided by the insurer. •Environmental credit obligations represent our liability for the purchase of (i) biofuel credits (primarily RINs in the U.S.) needed to satisfy our blending obligation under the U.S. federal Renewable Fuel Standard (RFS) and similar biofuel blending programs, such as the U.K. Renewable Transport Fuel Obligation, (collectively, the biofuels programs); and (ii) emission credits needed under various other environmental emissions programs (collectively, the other environmental emissions programs). To the degree we are unable to blend biofuels (such as ethanol and biodiesel, including renewable diesel) at percentages required under the biofuel programs, we must purchase biofuel credits to comply with these programs. Under the other environmental emissions programs, we also must purchase emission credits to comply with these programs. These programs are described in Note 14 under “Risk Management Activities by Type of Risk—Environmental Compliance Program Price Risk.” The liability for environmental credits is based on our deficit for such credits as of the balance sheet date, if any, after considering any credits acquired or under contract, and is equal to the product of the credits deficit and the market price of these credits as of the balance sheet date. The environmental credit obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based on quoted prices from an independent pricing service. Nonrecurring Fair Value Measurements There were no assets or liabilities that were measured at fair value on a nonrecurring basis as of September 30, 2021 and December 31, 2020. Other Financial Instruments Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the following table along with their associated fair values (in millions):
|  |  | September 30, 2021 |  | December 31, 2020
| Fair Value Hierarchy |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | Level 1 |  | $ | 3,498 |  |  | $ | 3,498 |  |  | $ | 3,313 |  |  | $ | 3,313 |
Financial liabilities: |  |  |  |  |  |  |  |  |
Debt (excluding finance leases) | Level 2 |  | 12,573 |  |  | 14,574 |  |  | 13,013 |  |  | 15,103 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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