Jan 18, 2022 - Energy & Environment

Exxon sets 2050 net-zero goal

Photo of an Exxon refinery in Louisiana
An ExxonMobil refinery in Baton Rouge, Louisiana. Photo: Barry Lewis via Getty Images

ExxonMobil on Tuesday announced a target to achieve "net-zero" emissions by 2050, a pledge that arrives as the oil industry faces activist and investor pressure to act more aggressively on climate change.

Why it matters: The non-binding target, which follows a net-zero goal set last fall by U.S. rival Chevron, marks a reversal of sorts for one of the world's most powerful multinational oil-and-gas companies.

  • Almost two years ago, as midcentury goals were taking hold among European giants, Exxon CEO Darren Woods dismissed the idea of a "beauty match" over long-term targets.
  • More broadly, Exxon has long faced criticism from environmentalists and some investors and lawmakers as a laggard on climate.

Driving the news: Exxon vowed a "comprehensive approach" to slash emissions from the projects and assets it operates.

  • The plan, contained in a report Tuesday, covers so-called Scope 1 and Scope 2 emissions, which refers to direct emissions from its operations, as well as emissions from energy that powers them.

Yes, but: Unlike several European peers, Exxon is not setting targets for "scope 3" emissions, which is CO2 from the use of its products (like gasoline) in the economy.

  • Scope 3 emissions are the largest slice of CO2 linked to the oil-and-gas industry, but they're the farthest removed from its direct control.

What they're saying: “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," Woods said in a statement.

  • Exxon is "committed to playing a leading role in the energy transition," he added.

The big picture: Tuesday's move is the latest step in Exxon's evolving plans to do more on climate via updated emissions targets and larger investment plans for carbon capture, hydrogen and biofuels.

  • Some of the moves have come after climate-focused activist hedge fund Engine No. 1 stunningly succeeded last spring — over Exxon management's resistance — in placing three new members on Exxon's board.

Catch up fast: While Woods was dismissive of midcentury net-zero targets two years ago, the company's posture has been shifting.

  • Last month, Exxon laid out 2030 targets to cut emissions "intensity" — that is, emissions per unit of output — and estimated the goals would bring down absolute emissions levels.
  • It also announced a 2030 net-zero target for operations in the massive Permian Basin oil-and-gas field that spans swaths of Texas and New Mexico.
  • In November, Exxon said it planned to invest $15 billion-plus over six years, with much of the money going toward a business unit created in early 2021 to commercialize low-emissions tech.

But, but, but: Those investments are a small slice of the company's overall spending, which remains focused on its traditional fossil fuel business lines and long-term hydrocarbons production.

  • Overall, Exxon is planning $20-$25 billion annually in capital investment through 2027.

What we're watching: The market and stakeholder reaction to the news.

  • Activists are critical of Exxon on several fronts, ranging from its lobbying posture to past funding of climate denial groups to the viability of large-scale carbon capture.
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