ExxonMobil says low-carbon business could one day eclipse oil and gas

ExxonMobil’s new low-carbon businesses could one day be more lucrative than its fossil fuel production, a top executive said, as the US oil major laid out ambitious plans to generate tens of billions of dollars from biofuels, hydrogen and carbon capture within a decade.

The Texas-based oil producer on Tuesday gave investors the most comprehensive view yet of its energy transition plans, saying it expects to profit from carbon-cutting technologies even as it expands oil and gas output.

Exxon’s share price hit a record in February after high oil and gas prices drove bumper 2022 profits. But Dan Ammann told investors that the low- carbon business he runs could eventually be worth “hundreds of billions of dollars” and grow to be “larger than ExxonMobil’s base business is today as the world approaches net zero”.

That growth depends on finding ways to bring down the costs of hydrogen fuel and carbon capture and on government incentives, he added. This could take the form of carbon taxes or economic subsidies such as those in the Biden administration’s 2022 Inflation Reduction Act, which included extensive funding for climate projects.

“In order for the energy transition to be successful, it has to be made economically viable, and that’s a big part of our job and building this business,” Ammann told the Financial Times.

Exxon’s critics argue the company’s continued investment in fossil fuels runs counter to international efforts to slash greenhouse gas emissions. They also contend it has not proven that it can build large-scale carbon capture and hydrogen projects.

But Ammann, who moved to Exxon last year after running General Motors’ self-driving car unit, said the low-carbon business was starting to build “momentum”.

In recent months, the company has announced a number of hydrogen and carbon capture projects, mostly along the US Gulf Coast, and it says they could start generating cash by 2025.

“Projects are moving off PowerPoint and into the real world, and that’s really encouraging,” he said.

Exxon said it planned to spend about $17bn on the low-carbon business through to the end of 2027, about 10 per cent of what it aims to spend on fossil fuel projects over the same period. Amman said most of that would be in the US “driven by the Inflation Reduction Act”. He contrasted the American incentives with Europe’s more “prescriptive” approach that mandates shifts away from fossil fuel. He said the latter makes Europe less attractive for investment.

Kathy Mikells, Exxon’s chief financial officer, said on Tuesday that last year’s record profits meant there was “plenty of capital in order to ensure the growth of this business”.

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