Seeing carbon capture as a $2-trillion annual market by 2040, ExxonMobil is organizing its hodgepodge of 20 such projects into a new business unit named Low Carbon Solutions, CEO Darren Woods announced during a 3 March investor presentation.
“Carbon capture” is an increasingly popular area of R&D that extracts carbon dioxide from air and locks it away in long-term storage in an attempt to moderate the climate crisis.
Previously, the company scoffed at the idea of capturing and sequestering carbon dioxide emissions, saying that the notion made no economic sense without massive government subsidies.
However, three things have changed.
First, carbon capture technologies have become more economically efficient.
Second, companies are reaching for those more-efficient technologies as they become more environmentally aware and struggle to meet their emissions-reduction promises to consumers.
In recent days, FedEx announced a $100-million bequest to Yale University to establish the Yale Center for Natural Carbon Capture.
Third, ExxonMobil is beset by increasing pressure from shareholders, including activist group Engine No. 1 and D.E. Shaw & Co., an investment management firm, to reduce its products’ carbon contribution to the atmosphere.
Carbon capture is an easy step for Exxon, which already uses CO2 in oil production: when an oil well stops flowing, oil companies routinely pump CO2 into the underlying rock formations to pressurize them, which drives the last bits of oil to the surface.
Exxon not only collects more oil by gathering and pumping CO2 into the ground but also can claim credit for sequestering a greenhouse gas.
“ExxonMobil’s newly formed Low Carbon Solutions business helps mitigate energy transition uncertainty while also offering new attractive growth options for the company,” analysts at Morgan Stanley wrote in a research note last week.
Woods went so far as to say that Exxon “is supportive of that ambition” to take as much carbon from the atmosphere as its products put in and “the recognition of the challenge is continuing to grow.”
He made the comments in a 3 March interview with The New York Times.
The business of carbon capture “is underpinned by government support and this can be shaky over the long term,” energy analyst Peter McNally at Third Bridge Group, noted in a comment quoted by Business Insider.
Exxon’s share price has gained more than 50 percent this year as crude oil has topped $65 a barrel and returned to its pre-pandemic price range.
TRENDPOST: Exxon’s transformation from denier-in-chief that concentrating carbon in the atmosphere can affect climate to an opportunistic embracer of carbon capture marks a major shift in the oil industry.
Other companies, including BP and Royal Dutch Shell, have begun their transitions from being oil companies to being energy companies. Now that the world’s largest petroleum producer is beginning its own transition, though a small step, no doubt should remain that the Oil Age’s demise is well underway.
