The major oil and gas corporation, ExxonMobil has recently announced plans to invest billions into a new business focusing on low-carbon technologies. As one of the leaders of one of the leading causes of climate change, this has prompted questions.
It’s been reported that the decision was largely a result of pressure from shareholders who saw the company irresponsibly planning for a future of inordinate growth in fossil fuels. Public perception, regulatory requirements and market trends are other likely factors.
For years now there has been a growing belief that ESG and other forms of sustainable investment are likely to be the most reliable and lucrative in the long-term. The ExxonMobil shareholders clearly noticed an ignorance to this among the C-suite.
As fossil fuels are less popular among the public, who want renewable energy which is also more viable now that clean energy technologies have reduced in price, it figures why ExxonMobil have now taken the step towards these sorts of investments. Public image is so important and ExxonMobil is no expectation. It’s likely they’ve made this choice as a response to the growing public scrutiny directed at fossil fuel companies.
ExxonMobil’s chief executive Darren Woods has said, “The world’s climate challenge is immense and the opportunity it creates is equally immense.” He added that the new green energy side of the business could grow “larger than ExxonMobil’s base business is today as the world approaches net zero”.
Despite any company making positive climate action or ESG investments always being good news, some critics doubt the sincerity of ExxonMobil’s announcement. As a central figure in the fossil fuel industry it is certainly hard to believe that their green investments, even if they do make a positive impact, will at all offset their primary oil and gas operations.
The new low-carbon solutions business hopes to overhaul Exxon’s image and secure it a spot in the future energy industry. Critics have pointed out however, that the billions the company promises only account for about 10% of spending over five years and that the company remains committed to a future of fossil fuels.
Some say that the decision has largely been made in order to benefit from the subsidies for green technologies under Biden’s, Inflation Reduction Act. The bill is hugely controversial, what Biden claimed as his landmark climate initiative, has been called “the most protectionist act ever drafted in the world” by Amitabh Kant, the Indian government official, due to its emphasis on domestic industry.
Exxon plans to invest in decarbonising technologies such as biofuels, low-emission hydrogen, carbon capture and storage, rather than working on wind and solar projects like BP, Shell and TotalEnergies. Darren Woods has called his competitors’ attempts a “beauty competition”.
It’s good to see investment going into technologies that have the potential to decarbonise. While some healthy scepticism might be required when considering the fossil fuel industry, we can always hope that Woods is right that the clean energy business will grow “larger than ExxonMobil’s base business is today as the world approaches net zero”.
