ExxonMobil CEO: World in need of plan to address climate change alongside energy needs

U.S.-headquartered energy giant ExxonMobil is taking several steps to slash its greenhouse gas emissions. The oil major’s CEO believes that renewables are not up to the task of handling emissions on their own, thus, the use of other technologies is seen as key to curbing emissions during the transition to a low-carbon and green world.

Darren Woods, ExxonMobil's CEO; Source: ExxonMobil

At the APEC Summit in San Francisco last week, ExxonMobil’s Chairman and CEO, Darren Woods, pointed out that the plan to tackle climate change and energy needs simultaneously would need to go beyond expanding wind, solar, and EVs. With the need for more technologies at the forefront, ExxonMobil is developing – what is said to be – the world’s largest, low-carbon hydrogen plant capable of producing 1 billion cubic feet per day, investing in lithium production, and expanding carbon capture and storage (CCS) solutions.

Woods explained: “I’m fully aware that there are many who question ExxonMobil’s commitment because of what was said over 30 years ago or what they think Exxon knew back then. Frankly, I’m more interested in what ExxonMobil knows today. So, allow me to share this with you – here’s what ExxonMobil knows:

“Climate change is real, human activity plays a major role, and, it is one of the major problems facing the world today – the need to address the very real threat of climate change. But it’s not the only one. Here’s another global problem, equally important – the need to continue producing affordable energy to maintain and raise living standards around the world.”

According to ExxonMobil’s CEO, the world needs to commit to solving its “energy and emissions challenges simultaneously” to bridge the global North-South divide. He sees oil and gas are at the center of both and elaborates that combusting them is “a leading source of man-made greenhouse gas emissions. That’s the societal cost, and it’s real. At the same time, the societal benefits of oil and gas are unmatched in human history. They’ve done more to grow economies, eradicate poverty and improve quality of life than anything else.”

Furthermore, Woods highlights that the bulk of the world’s energy-related emissions, or more than 80%, comes from commercial transportation, heavy industry, and power generation. While wind and solar have “great utility” as a source of low-carbon electricity, ExxonMobil’s CEO underlines that “they just can’t get the job done in these hard-to-decarbonize sectors.

“We need to open the aperture to a much broader set of solutions. While renewable energy is essential to help the world achieve net zero, it is not sufficient – wind and solar alone can’t solve emissions in the industrial sectors that are at the heart of a modern society. The technologies ExxonMobil is pursuing can.”

The U.S. energy giant is pursuing decarbonization in line with its five-year corporate plan, revealed in December 2022, when the firm announced its intention to ramp up its spending on greenhouse gas emission-reduction projects to $17 billion over the next five years while maintaining disciplined capital investments in its portfolio.

The company has been investing in CCS to capture emissions at the source, transport them by pipeline, and permanently store them deep underground. In line with this, the oil major acquired Denbury in an all-stock transaction valued at $4.9 billion to further accelerate its Low Carbon Solutions business and create an even more compelling decarbonization proposition with the largest pipeline system in the U.S. for transporting and storing CO2 at its disposal.

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Woods further outlined: “Despite progress toward net zero, serious obstacles remain. Many of the ideas being put forward to accelerate the energy transition are not based in economic, technological, or political reality. To get serious about net zero, the world needs to get real.

“We cannot replace overnight an energy system that took 150 years to build. The size and complexity are simply too vast. Those who would tear down the existing energy system have the wrong problem statement. The problem is not oil and gas. It’s emissions. Never before have we stopped using an energy source because of the byproduct it produces.”

This is an echo of what Kevin Gallagher, Santos’ Managing Director and Chief Executive Officer, said while addressing a WA Energy Club luncheon in Perth, Western Australia, when he underscored that “the climate enemy is emissions, not fossil fuels.” At the time, Gallagher emphasized that shutting down traditional energy industries was bound to drive energy prices up and drag energy security down while slowing the pace of the energy transition engine. Therefore, he urged governments to engage with oil and gas companies to drive the energy transformation forward.

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In a similar fashion, Woods stated: “The solutions to climate change have been too focused on reducing supply. That’s a recipe for human hardship and a poorer world. Leaving oil in the ground does nothing to stop the demand for it. It simply raises the price and makes it harder to alleviate poverty around the world. The global North grew vastly wealthier because of economic growth powered by oil and gas.

“The story is very different in the global South. In non-OECD countries, income per person is still only 11,000 dollars a year. No country has ever joined the developed world without access to oil and gas. The countries of the global South have every right to lift their people out of energy poverty and into the global middle class.”

With the Intergovernmental Panel on Climate Change and the International Energy Agency warnings that the world is not on the path to meeting the goals of the Paris Agreement, ExxonMobil’s CEO is adamant that three things are needed to push net zero forward.

These entail supportive public policy, significant technology advancements, and “a smooth transition” from government subsidies to market-based mechanisms while governments of Asia-Pacific, and elsewhere, need to embrace “constructive policy” to encourage the shift to a lower-emissions future, based on Woods’ assessment.

While noting that no government can afford to subsidize the energy transition forever, ExxonMobil’s CEO calls for a concentrated effort on advancing technology with collaboration as a key pillar of bolstering the net zero agenda.

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Woods concluded: “Oil and gas companies reliably provide affordable products essential to modern life. Making them into villains is easy. But it does nothing – absolutely nothing – to accomplish the goal of reducing emissions. In fact, it puts the reliable supply of energy at risk…destabilizing global economies, degrading people’s standards of living, and, as we saw in Europe, actually raising emissions.

“The better approach – the constructive approach – is to harness the industry’s capabilities for change. Put us to work. We’ve got the tools – the skills, the size, and the intellectual and financial resources – to bend the curve on emissions.”

While working on decarbonizing its operations, ExxonMobil is also embarking on a search for more hydrocarbons and working on bringing new projects online. Last week, the U.S. giant started production from its third oil development at the Stabroek block offshore Guyana, boosting total production capacity in the country to approximately 620,000 barrels per day.

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ExxonMobil Guyana Limited operates the block and holds 45% interest while its partners, Hess Guyana Exploration and CNOOC Petroleum Guyana Limited, hold 30% and 25% interest, respectively.