Unlike its European counterparts, US oil major ExxonMobil has been relatively quiet about its strategy on how it will play a part in addressing climate change.
In fact it has been critical of the declarations of goals by the likes of Royal Dutch Shell, Repsol and Eni to make large long term reductions in carbon emissions. CEO Darren Woods said in March 2020 that the company was focused on “taking steps to solve the problem for society as a whole and not try and get into a beauty competition.” Companies changing their production mix “doesn’t change the demand” for oil and gas. “If you don’t have a viable alternative set, all you’re doing is moving out from one company or one country to someplace else. It doesn’t solve the problem.”
The key words there are “viable alternative” because for all the obvious benefits of renewables, the technology is not yet sufficiently developed for the kind of scale needed to reliably replace fossil fuels as the world economy’s primary energy supply. For example solar power and wind turbines currently only generate 1.1% of global energy. The International Energy Agency estimates that even by 2040 that will rise to just 5%. Battery storage is a major issue and the capacity needed is massive. As it is total battery storage in the USA can currently provide only 14 seconds of average electricity use. When it comes to electric vehicles they are not the saviors many believe since in many countries they need to be charged by energy produced by fossil fuels and in the case of China that often means coal. Over a ten-year life span an EV produces 26 tons of CO2 compared to 34 tons for a gasoline powered vehicle. That’s not very significant no matter how virtuous you might look to your fellow drivers. Again the IEA is hoping EVs will make up 130M of the total global fleet by 2030. Great, but that only knocks .4% off total global emissions. There is also the danger that by forcing stringent climate policies on developing countries it could slow their efforts to reduce poverty.*
Debates about peak oil demand are all the rage but the general view is that given its efficiency and versatility (from jet fuel to plastics) it will remain the dominant energy source for decades to come. That is why ExxonMobil’s announcement this week of a massive Carbon Capture and Storage (CCS) project is so significant. It is an example of an initiative that can address the key factor in climate change - CO2 emissions -while allowing for the continued use of oil and gas as part of a realistic energy mix that will not hurt global economic growth. That is important as the people of developing nations look to pursue their legitimate path to more comfortable and economically secure lives.
CCS technology is proven and most importantly can be done at scales that actually make a difference. According to Euro News “Put simply, emissions are injected into an absorber that contains a solvent which collects the CO2, while other components are released in the air. The captured CO2 is then separated by the solvent using heat, so it can be transported by pipeline or ship and placed in underground geological formations, such as oil and gas reservoirs, unmineable coal seams and deep saline repositories.” The Global CCS Institute says currently, “almost 40 million tonnes of carbon dioxide are being captured annually from 26 commercial CCS facilities currently in operation.”
ExxonMobil’s project which is envisaged as a joint venture with refiners, power plants and manufacturers in the Houston Ship Channel with support from the federal government is on another scale altogether with the target of 50M tonnes by 2030 going up to 100M tonnes by 2040. That's equivalent to 1-2% of the US' climate emissions of 5 billion tonnes per year.
In announcing the project earlier this week Joe Blommaert President of ExxonMobil Low Carbon Solutions said “CCS will need to play a critical role if the United States and other countries are to meet the emissions-reduction goals outlined in the Paris Agreement. CCS could enable the United States to safely capture and store hundreds of millions of metric tons of carbon dioxide (CO2) each year that otherwise would be released into the atmosphere. It’s one of the few proven technologies with the potential to significantly lower emissions from certain hard-to-decarbonize sectors, such as manufacturing and heavy industry.
Blommaert went on to say “For the past three years, ExxonMobil has been assessing the concept of multi-user CCS “hubs” in industrial areas located near geologic storage sites, such as depleted oil and gas reservoirs. We believe the time is right for a large-scale collaboration in the United States between government at every level, private industry, academia and local communities to create an “Innovation Zone” approach to dramatically accelerate CCS progress. And we think Houston is the perfect place for such a concept.
Houston has two features that make it an ideal site for CCS: It has many large industrial emission sources, and it’s located near geologic formations in the Gulf of Mexico that could store large amounts of CO2 safely, securely and permanently. The U.S. Department of Energy estimates that storage capacity along the U.S. Gulf Coast is enough to hold 500 billion metric tons of CO2 — more than 130 years of the country’s total industrial and power generation emissions, based on 2018 data.
ExxonMobil believes the United States could establish a CCS Innovation Zone along the Houston Ship Channel and surrounding industrial areas with the potential to effectively capture all the CO2 emissions from the petrochemical, manufacturing and power generation facilities located there. The CO2 would be piped into natural geologic formations thousands of feet under the sea floor.
It would be a huge project, requiring the collective support of industry and government, with a combined estimated investment of $100 billion or more.
But the benefits could be equally big: early projections indicate that if the appropriate policies were in place, infrastructure could be built in Houston to safely capture and permanently store about 50 million metric tons of CO2 annually by 2030. By 2040, it could be 100 million metric tons.
This concept could be a game-changer for deployment of CCS, benefitting not just Houston and its ambition to be carbon-neutral by 2050, but the United States as a whole. In addition to having the potential to effectively decarbonize one of the country’s largest sources of industrial emissions, the concept could generate tens of thousands of new jobs and protect thousands of existing jobs. Importantly, CCS also promises the potential of significant impact at lower societal costs compared to other emissions reduction technologies, especially for the manufacturing sector.
Lessons learned from this Houston CCS Innovation Zone could be replicated in other areas of the country where there are similar concentrations of industrial facilities located near suitable CO2 storage sites, such as in the Midwest or elsewhere along the U.S. Gulf Coast.
As the “Energy Capital of the World”, Houston is already the home to all kinds of energy innovation. The Houston area also is home to more than 12,000 ExxonMobil employees, including myself.
ExxonMobil is uniquely positioned to help advance this Houston CCS Innovation Zone concept. We’re the global leader in CCS, having cumulatively captured more anthropogenic CO2 around the world than anyone else. We also have extensive reservoir management expertise and decades of proven performance in safely building and operating large-scale projects.
But a concept as ambitious as a Houston CCS Innovation Zone will require a collective effort.
It will need collaboration among federal, state and local officials – the “whole of government” approach the Biden Administration has championed. It will need business support from across industries and community support. It will need government and private-sector funding, as well as enhanced regulatory and legal frameworks that enable investment and innovation. That’s why we envision a “zone” approach, similar to other public-private initiatives established to facilitate economic growth or tackle other broad societal challenges.
And today, one of the biggest challenges is reducing the risks of climate change while continuing to meet people’s need for affordable energy and the products they rely on every day.
The role of policy
We applaud President Biden’s decision to rejoin the Paris Agreement, a framework ExxonMobil has supported since its inception. We believe CCS should be a key part of the U.S. strategy for meeting its Paris goals and included as part of the administration’s upcoming Nationally Determined Contributions (NDC) submission. After all, the International Energy Agency has said, “reaching net-zero [emissions] will be virtually impossible” without CCS.
New policies are needed, however, to spur the investment required to deploy CCS on a pace and scale to meet Paris Agreement goals. Government should establish a durable regulatory and legal environment, and implement policies to enable CCS to receive direct investment and incentives similar to those available to other efforts to reduce emissions. Establishing a market price on carbon will play an important part by providing the needed clarity and stability required to drive investment.
Looking ahead
Meeting the goals of the Paris Agreement is a big challenge – requiring new technologies, new policies and new ways of thinking. A Houston CCS Innovation Zone could be a giant step in the right direction.
In the weeks, months and years to come, ExxonMobil will continue to engage with the industry, government, academic and community leaders who will be needed to make this concept a reality. I look forward to collaborating with them and helping reduce global CO2 emissions, starting right here in my adopted hometown of Houston.”
*False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet by Bjorn Lomborg