As oil majors prioritize their own decarbonization goals, an internal document viewed by Bloomberg reveals Exxon Mobil Corp. is planning to increase annual carbon-dioxide emissions output by as much as a small country like Greece.
Exxon is one of the biggest corporate emitters of greenhouse gasses globally, and the leak comes as the Texas-based company’s rivals, such as BP Plc and Royal Dutch Shell Plc, are planning, or have already begun, to shrink oil and gas operations to become net-zero on carbon by 2050 or before.
The internal document revealed Exxon’s stunning investment strategy of more than $200 billion in energy investments that would increase its emissions by about 17% through 2025. These investments are projected to drive higher cash flows and double earnings. However, much of the strategy was developed in pre-virus pandemic times and has yet to be revised for a post-pandemic world of lower oil demand and collapsing energy prices.
But the planning documents show for the first time that Exxon has carefully assessed the direct emissions it expects from the seven-year investment plan adopted in 2018 by Chief Executive Officer Darren Woods. The additional 21 million metric tons of carbon dioxide per year that would result from ramping up production dwarfs Exxon’s projections for its own efforts to reduce pollution, such as deploying renewable energy and burying some carbon dioxide.
These internal estimates reflect only a small portion of Exxon’s total contribution to climate change. Greenhouse gases from direct operations, such as those measured by Exxon, typically account for a fifth of the total at a large oil company; most emissions come from customers burning fuel in vehicles or other end uses, which the Exxon documents don’t account for.
That means the full climate impact of Exxon’s growth strategy would likely be five times the company’s estimate—or about 100 million tons of additional carbon dioxide—had the company accounted for so-called Scope 3 emissions. If its plans are realized, Exxon would add to the atmosphere the annual emissions of a small, developed nation, or 26 coal-fired power plants. –Bloomberg
Despite Exxon’s massive investment plan, plunging oil demand has resulted in a collapse in energy prices, which has in turn weighed on the company’s shares, as has being kicked out of the Dow. This drop in demand forced Exxon to slash its spending budget by a third in April, and its share price currently hovers around March lows.
The company recently warned of continued quarterly losses while using debt to pay capital expenditures and dividends. Over the summer, the company delayed oil and gas projects to preserve cash.
Exxon clearly lags behind other oil majors in addressing plans to tackle global warming, as the pandemic has forced many oil companies to start the transition toward developing energy with cleaner sources.
“It’s past time for Exxon Mobil to take responsibility for the harmful impacts of its oil and gas products,” said Mulvey of the Union on Concerned Scientists. “The world at large and its own investors would benefit from Exxon redirecting its strategy toward the energy we need in a low-carbon future.”
It’s also possible that Exxon’s strategy of going all-in on investment stems from the same trend that led to Rex Tillerson, the company’s former top executive, serving under the Trump administration as Secretary of State between 2017-18, as Exxon has sought to capitalize on Trump’s push to expand American “energy dominance”.