ExxonMobil has broadened goals to reduce the amount of carbon dioxide released with each barrel of oil it pumps, applying them across company operations but avoiding deeper emissions cuts endorsed by rivals in Europe.
The US energy supermajor said it aimed to reduce company-wide greenhouse gas intensity by 20-30 per cent by 2030. Exxon’s previous target was an intensity reduction of 15-20 per cent by 2025 for its “upstream”, or oil and gas production, business, which it said was achieved this year.
The updated emissions and capital spending plans released on Wednesday are the first since Exxon lost board seats in a proxy battle with the activist hedge fund Engine No 1, which had argued the company was ill prepared for a lower-carbon future.
Andrew Logan, senior director for oil and gas at Ceres, which co-ordinates investor action on climate change, said the new emissions targets were “grossly inadequate” and argued Exxon was “losing ground relative to its peers” that have more ambitious goals.
“It’s hard to find any signs that the company’s fundamental approach to addressing climate change has changed with the addition of new board members,” Logan said, though he added it was “still early days”.
Carbon intensity is a measure of emissions per unit of output. Activists have criticised Exxon for using this yardstick, rather than absolute emissions, because it allows total emissions to rise if fossil fuel output climbs. However, Exxon said its updated plans would lead to “corporate-wide” emissions 20 per cent lower by 2030.
Exxon’s targets are limited to emissions that come from its operations, not from consumers burning the fuels it sells. BP and Royal Dutch Shell, Exxon’s European peers, have said they will cut oil and gas output over time to meet emissions targets that encompass fuel combustion.
Texas-based Exxon intends to spend $15bn cumulatively on new emissions-reduction efforts to the end of 2027, or about $2.5bn a year. Its total planned capital spending is between $20bn and $25bn a year to the end of 2027, up from about $16bn in this year’s pandemic-hit budget.
Charlie Penner, who ran Engine No 1’s campaign against Exxon before recently leaving the fund, said the increased low-carbon spending is positive “if the focus is building scalable and profitable businesses, versus generating advertising.”
Chevron, Exxon’s biggest US competitor, said in September it would spend $10bn on low-carbon ventures up to the end of 2028. Both companies have pledged a much lower share of total spending to cleaner energy than their European rivals.
The planned capital expenditures at Exxon are still far below the $35bn in annual spending the company had planned before the pandemic pushed down world oil demand. Engine No 1 argued in its proxy campaign earlier this year that management was overspending, putting Exxon’s prized dividend at risk.
The oil supermajor has enjoyed a surge in profits this year, thanks in large part to higher oil and natural gas prices. Darren Woods, Exxon’s chief executive, said the company’s “improved financial outlook” supported more investment in “high-return projects, and a growing list of financially accretive lower-emission business opportunities”.
Much of Exxon’s future spending will be focused on projects in Guyana, where the company has discovered vast reserves of crude off the South American country’s coast, and in the Permian basin in Texas and New Mexico, the largest US oilfield.
The company says the plans will allow it to double earnings by 2027 compared with 2019’s $14.3bn.
The $15bn in low-carbon spending will be split between efforts to slash emissions from the company’s own operations, largely through reducing methane leaks and gas flaring, and on new carbon capture and storage, or CCS, hydrogen and biofuel projects.
The company has outlined a number of potential carbon capture and biofuel projects this year, such as the construction of a $100bn CCS mega-hub in Houston, but many of those projects will need government subsidies or a carbon price to be built.