Meeting Biden’s Climate Goals Requires Giving Exxon a Seat at the Table — New Energy Risk
By Brentan Alexander, PhD; Chief Science Officer & Chief Commercial Officer
Earth Day 2021 saw the release of major climate announcements from players seemingly on opposite sides of the greenhouse gas debate. President Biden took the stage at the Leaders Summit on Climate to pledge a net-zero US economy by 2050. Meanwhile, ExxonMobil published a detailed call to action for wide-scale carbon capture investment with a first focus on the Houston, Texas area. Carbon capture is required to reach the ambitious goals laid out by Biden, and petrochemical majors will most likely be involved. So finding a place for these fossil fuel giants in a low-carbon future will be important, though not clear cut. Whether Exxon’s announcement was a public relations stunt or serious strategic shift, policy makers and environmentalists need to get ready for big oil to pull up a seat at the table.
Competitors big and small, foreign and domestic, have seen the writing on the wall for a few years now: BP has set a 2050 net-zero goal and has been active in shifting to renewable fuels. Royal Dutch Shell has a 2050 net-zero goal of its own and a burgeoning portfolio of biofuels investments, including one that turns trash into fuel. In Exxon’s backyard, Occidental Petroleum’s CEO, noting that the future depends on lower greenhouse gas emissions, has formed a joint venture to utilize technology from Carbon Engineering to suck carbon dioxide directly out of the air and store it permanently underground. To be sure, these companies’ efforts are still a small part of their overall budgets and expenditures, but their growth demonstrates that the energy market is changing. As the world moves on from fossil carbon, business as usual will lead to stranded assets, heavy losses, credit downgrades, and ultimately no business at all. What happened to coal will inevitably come for big oil.
It’s not yet clear if Exxon has come to this realization given that it has no net-zero pledge despite growing shareholder pressure. Its proposal last week read less as a change in strategic thinking and more as a trial balloon aimed at the new power brokers in Washington. Exxon says it is seeking to enable carbon capture and sequestration on the Gulf Coast, but offers no upfront commitment and no further deployment plan, yet asks for significant amounts of public money. Reaction from the climate community, which has spent decades watching Exxon actively bury climate research and gaslight the public, ranged from anger to eye-rolls.
And yet the proposal has merit. The Gulf Coast is home to a concentrated collection of carbon intensive industries. The local geology is perfectly suited for long-duration carbon sequestration. Exxon is well-positioned to enable carbon capture and sequestration given its personnel and expertise. And government action is needed to change the economic balance between clean and dirty energy.
Carbon capture is just one of many approaches needed to reach the ambitious goals laid out by President Biden, as a recent report from Energy Innovation demonstrates. A net-zero economy requires a little bit of everything: renewables, energy storage, electric vehicles, hydrogen, building efficiency standards, advanced nuclear, biofuels, carbon capture and sequestration, and more. It’s hard to pick a winner when everybody needs to finish first. As a result, the Biden administration’s announcement last week was heavy on ambition but light on details, which created a policy void. That allowed others to fill in the blanks, from Exxon’s aforementioned vision for carbon capture, to a relaunching of the Green New Deal by progressives, to a bad-faith effort by Biden opponents to use literal red meat issues to rile up their base.
The fact is that most, if not all, of the technologies and companies best positioned to enable a net-zero future have environmental blemishes (or worse) on their records. It’s possible to find something to like and dislike about nearly every solution. For example, batteries require vast amounts of minerals unearthed in environmentally destructive mines; biodiesel has led to mass deforestation in Asia; the list of companies that can enable the quick and effective deployment of carbon capture technology heavily overlaps with the list of companies most responsible for extracting fossil carbon. Giving money to enable a carbon capture and sequestration hub along the Gulf Coast may make for good climate policy, but the optics are poor when the companies most likely to benefit are Exxon, Schlumberger, Halliburton, Chevron, or another major petrochemical player.
Nearly all solutions to the climate crisis have tradeoffs, but not all are actively embraced by the climate community. So far, carbon capture run by petrochemical majors has been a hard pill for some to swallow. Getting the climate community to come to terms with this is going to be difficult because distrust rightfully abounds. Do these companies truly see a profitable and responsible future in climate-friendly business lines, or are they making a cynical calculation to avoid more drastic regulations that threaten their core business? We don’t know the answer to that yet. What we do know is that the companies most experienced with drilling wells and moving vast quantities of molecules are also the best positioned to help enable the carbon capture sector. They deserve a seat at the table, even if it’s an uncomfortable one.
Originally published at https://newenergyrisk.com on May 4, 2021.