Exxon Adopts Roadmap for Net-Zero Ambitions but Faces Long Road Ahead

Joining its supermajor peers in Europe and the US, ExxonMobil announced its aim to achieve net-zero emissions with its operated assets by 2050. However, the pathway to that destination is still unclear. First, the roadmap is just an ambition—not a binding target—and second, ExxonMobil's plan fails to address Scope 3 emissions, which make up most of its emissions.

As part of its path to net-zero emissions by 2050, ExxonMobil—the largest oil & gas company in the US—plans to invest more than $15 billion through 2027 on commercial growth opportunities for carbon capture and storage (CCS), biofuels, and hydrogen. The Texas-based oil major is already well-positioned in these three areas.

A Good First Step but Still a Step Behind

ExxonMobil was a holdout in the energy transition, with European supermajors Shell, bp, and TotalEnergies committing years ago to achieve net-zero emissions by 2050. Occidental Petroleum—one of ExxonMobil's biggest rivals in the Permian Basin—was the first US integrated oil & gas company to commit to net zero, pledging to use carbon capture, utilization, and storage (CCUS), specifically direct air capture, to meet its goal. 

California-based Chevron announced its net-zero aspiration in October 2021. However, as with ExxonMobil, Chevron's pledge is non-binding and fails to account for Scope 3 emissions, which include the emissions that come from the use of Chevron's products such as tailpipe emissions from its gasoline. For supermajors such as ExxonMobil and Chevron, Scope 3 emissions can account for 90% of the company's total carbon footprint.

Ramping Up Investment in Low Carbon Solutions

CCUS, hydrogen, and biofuels are key aspects of most decarbonization pathways. While many integrated oil & gas companies will likely remain well-positioned to meet oil & gas needs through the next decade, most are looking to grow their presence in low carbon energy sources such as electrification and power and steam cogeneration.

ExxonMobil's growing interest in CCUS reflects a bigger industry trend. International Energy Agency data shows just under 30 commercial CCUS facilities in operation in the industry and fuel transformation sectors in 2020, but 120 new industrial CCUS projects have been announced in recent years. In the US alone, close to 50 new carbon capture projects were announced between January 2020 and August 2021.

ExxonMobil also wants to grow hydrogen production from the 1.3 million metric tons that it produces annually. Much of the company's focus is on blue hydrogen, which is made from natural gas reforming coupled with CCS. However, as the world looks to accelerate the pace of decarbonization, most countries are prioritizing green hydrogen development, which is made from renewable electricity and water electrolysis. 

Guidehouse Insights expects hydrogen electrolyzer capacity to surge in the next 10 years, growing at a compound annual growth rate of 78% through 2031 as the industry looks toward an ever-growing list of end uses. For a more in-depth look at electrolyzer capacity and hydrogen applications, see Guidehouse Insights' recent reports Guidehouse Insights Leaderboard: Electrolyzer Vendors and Emerging Hydrogen End Uses. With the transportation sector representing a big source of emissions, biofuels have been—and should remain—another area of focus for integrated energy providers.