Exxon CEO eyes money-making potential of low-carbon world

Darren Woods, chief executive officer of Exxon Mobil Corporation, Image: Exxon Mobil

Exxon Mobil Corporation sees money-making opportunities in carbon offsets and partnerships with venture funds to finance carbon capture, chief executive officer Darren Woods said in a Bloomberg TV interview on Thursday.

“We’re seeing tech funds, venture funds investing in this space looking for opportunities to invest in carbon reduction,” Woods said. “This I think is an opportunity for our Low Carbon Solutions business.”

Providing more detail on Exxon’s recently-announced efforts to commercialize low-carbon technologies, Woods stressed that partnering with outside investors would be a key objective of the new division. It would also mean Exxon would not need to fund large projects solely with its own cash.

He also stressed the importance of a government-set “transparent and explicit price on carbon” that rewards projects designed to bury greenhouse gases, an area in which Exxon sees itself as a leader.

 “Part of what our Low Carbon Solutions business is really going to be focused on is finding people who are potentially interested in partnering and leveraging the capabilities that Exxon Mobil can bring to this space to make the investments and reduce the amount of carbon in the atmosphere,” Woods said.

Exxon will “see if we can’t put those together and have a successful business that grows shareholder value,” he said.

U.S. rival Occidental Petroleum Corp. has plans to build the world’s biggest facility to capture carbon dioxide directly from the air and then pump it into the ground for storage or to enhance oil recovery. Crucially, it’s funding the venture partly with other people’s money, capitalizing on the boom in clean energy investing. Rusheen Capital Management LLC and United Airlines Holdings Inc. have committed money to the project.

Under pressure from investors to reduce its own emissions and ready itself for the energy transition, Exxon launched the Low Carbon Solutions business earlier this year and is ready to spend $3 billion on it through 2025. While this is less than five per cent of Exxon’s total capital spending, most of which goes toward fossil fuels, it marked a shift in tone for the U.S. oil giant, which has been criticized for lagging its European peers on climate change.

Exxon has been in the carbon-capture space for more than a decade but has been unwilling to commit significant amounts of capital to projects due to low returns, regulatory uncertainty and technological constraints. Bloomberg Green reported in December that Exxon indefinitely delayed a $260 million carbon-capture project in Wyoming due to the financial fallout from plunging oil prices in 2020 despite its clear environmental benefits.

The recently expanded 45Q tax credit makes the technology more appealing, but a carbon tax or other proposals being put to the Biden administration could dramatically boost the sector’s profitability.

The American Petroleum Institute, of which Exxon is a member, is considering throwing its weight behind a government-imposed price on carbon emissions, according to people familiar with the discussions, in what would be a major policy shift by the oil industry’s top trade group. That would help create a market for carbon offsets, which could be used by used by airlines, cement manufacturers and other industries with limited options for reducing emissions.

“Companies that are in sectors that are difficult to decarbonize are looking for opportunities to offset their carbon emissions and we think that’s an opportunity,” Woods said. “We’ll be looking at that angle as well as well as the investment angle.”

© 2021 Bloomberg L.P.

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