ExxonMobil has set a far reaching goal to reduce carbon emissions from its major operated assets by 2050, a strategy that it said has been “tested for resiliency” against a range of scenarios.
The reduction in direct and indirect greenhouse gas (GHG) emissions across the operations pares with a plan unveiled in December to reach net-carbon neutrality in the Permian Basin by 2030.
ExxonMobil is taking a “deliberate approach to helping society reach a lower-emissions future,” CEO Darren Woods said. “We are developing comprehensive roadmaps to reduce greenhouse gas emissions from our operated assets around the world, and where we are not the operator, we are working with our partners to achieve similar emission-reduction results.”
The operations-wide plan to cut GHG emissions to net zero by 2050 centers on electrifying operations and directing more funding to methane mitigation and detection technology. Routine natural gas flaring is to be eliminated, equipment upgraded and emissions offset technology deployed, including bio-based solutions.
The ambitious strategy to reach net-zero carbon was “tested for resiliency against a range of net-zero scenarios,” management said as detailed by the International Energy Agency and the United Nations’ Intergovernmental Panel on Climate Change. The goals were outlined in ExxonMobil’s Advancing Climate Solutions – 2022 Progress Report.
Last fall the Irving, TX-based producer boosted its annual spending on low-carbon ventures to $3 billion a year over the next five years. The budget is four times higher than initially planned. The initial capital expenditure plan through 2027, unveiled in December, would hold spending steady at $20-25 billion/year, while carbon-reduction funding is increased.
ExxonMobil’s annual Outlook for Energy, based on current policy and technology trends, continues to be the basis for the business plans and investment decisions, management noted. In the Advancing Climate Solutions report, the company outlined how its short- and medium-term business plans are adjustable to developments in policy and technology. It also used signposts and leading indicators to evaluate the need for any future changes.
“Sound government policies will accelerate the deployment of key technologies at the pace and scale required to support a net-zero future,” management noted.
With that in mind, the company said it continued to “support an explicit price on carbon to establish market incentives and encourage investments in lower-emissions technologies.”
ExxonMobil would help customers reduce their GHG emissions by investing in carbon capture and storage, hydrogen and biofuels. Bio-based feed and plastic waste streams would provide other opportunities to lower carbon emissions.
“As we invest in these important technologies, we will advocate for well designed, high-impact policies that can accelerate the deployment of market-based, cost-effective solutions,” said Woods. “We believe our strategy is unique among industry and enables us to succeed across multiple scenarios. We will create shareholder value by adjusting investments between our existing low-cost portfolio and new lower-emission business opportunities to match the pace of the energy transition.”
To help reach net zero for operated assets by 2050, the company has identified more than 150 potential steps and modifications that could be applied to assets in its upstream, downstream and chemical operations.
ExxonMobil already has prioritized energy efficiency measures, methane mitigation, equipment upgrades and eliminating venting and routine flaring. Further high-impact reduction opportunities include power and steam co-generation and electrifying operations, using renewable or lower-emission power.
Finalized, detailed road maps are expected by the end of this year that address around 90% of operations-related GHG emissions. The remaining strategy is set to be completed in 2023.
Notably, ExxonMobil’s 2050 “pledge is limited to emissions generated by its operations (Scope 1 and 2), unlike net-zero pledges by several of its peers,” including BP plc, Royal Dutch Shell plc and TotalEnergies SE, said Moody’s Investors Service’s John Thieroff, senior credit officer.
Last October, ExxonMobil’s top U.S. rival Chevron Corp. set a 2050 target to reach net-zero carbon from its equity upstream operations.
However, BP, Shell and TotalEnergies, all based in Europe, included in their 2050 pledges the emissions generated from consuming their products, aka Scope 3, Thieroff said. Scope 3 emissions “present a much greater climate challenge to the industry” than the Scope 1 and 2 emissions.
“The long-dated nature of these pledges, their dependence on technologies that aren’t likely to be commercially available at scale for many years, if at all, and the immense uncertainty regarding future demand for oil and natural gas underscore the obstacles net-zero ambitions pose to the sector.”
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