ExxonMobil Joins Left’s Climate/Energy Agenda (H.R. 5376)

By Robert Bradley Jr. -- August 10, 2022

“Bad Profits, rent-seeking, resource misallocation–it’s an upside down world, turning Ayn Rand’s dis-utopian world in Atlas Shrugged into reality one step at a time.”

“Manchin-Schumer leaves no special interest unrewarded,” wrote Robert Bryce. “The legislation is so broad and has so many carve outs that it has been lauded by Exxon Mobil and the Natural Resources Defense Council.”

The new law’s “lollipops” (Bryce) go to wind, solar, EVs, ethanol, carbon capture and storage, and hydrogen–all money losers on a real free market. Bad Profits, rent-seeking, resource misallocation–it’s an upside down world, turning Ayn Rand’s dis-utopian world in Atlas Shrugged into reality one step at a time.

It is a sad day when ExxonMobil, once a bastion of climate and energy realism and good business, goes all-in with the Inflation Reduction Act
of 2022. The transformation began when it surrendered the high ground on climate/energy early in Obama’s first term by embracing the CO2-is-bad narrative of the Deep Ecologists. Then came the company’s endorsement of a carbon tax. Strange predictions that all new passenger cars sold would be EVs by 2040.

And now this.

As reported by Kevin Crowley (July 29th) in Bloomberg, “Exxon CEO Loves What Manchin Did for Big Oil in $370 Billion Deal,”

In a recent conference call, ExxonMobil CEO Darren Woods supported H.R. as “a step in the right direction.” He added: “We’re pleased with the broader recognition that a more comprehensive set of solutions” is needed….

In prepared remarks accompanying Friday’s earnings release, Woods said the US needs “clear and consistent” policy that promotes the country’s resource development.

“It is encouraging to see the recognition and the desire to try to catalyze investment in this space because, as we’ve said, we think they’re going to be absolutely critical to society.”

Wrong, wrong, and wrong as far as the general welfare goes.

The descent into the political dungeon was a predictable “slippery slope.” Now the Left criticizes the company for greenwashing as it revvs up its oil and gas businesses, while investing in “green” pork such as carbon capture and storage, and biofuels.

Think of opportunity cost. The company could have stepped up its education about the benefits of global lukewarming and CO2 enrichment–and the importance of energy affordability and reliability for the masses.

Other Companies

ExxonMobil was hardly alone as Crowley’s piece documents. “I believe the permitting reform that’s currently being talked about in D.C. is a very positive development,” stated Cheniere Energy CEO, Jack Fusco.

At least Conoco CEO Ryan Lance threw in a caveat:

I’m not sure if it’s a good time ever to be increasing taxes and increasing government spending just as a general economic policy. At least the agreement recognizes that natural gas and oil are an important part of the energy transition and are going to be here for decades. So that’s a positive.”

Lance reminds me of what Enron’s Ken Lay said a quarter-century ago:

If there is one thing I have been impressed with over the last decades, it is that when the environmental community defines a number one priority, something happens. Not always something good—but something.

Occidental Petroleum CEO Vicki Hollub stated: “This is turning into a net positive bill for us [from tax benefits from carbon capture and storage], should it get passed.” Add to this benefits from oil and gas leasing in the Gulf of Mexico, she added.

Back to ExxonMobil’s Darren Woods, who noted that “clear and consistent” policy is needed to promote U.S. development. “This policy could include regular and predictable lease sales, as well as streamlined regulatory approvals and support for infrastructure such as pipelines.”

Appendix: Rent Seeking Toward Net Zero

As part of its 2Q-2022 earnings press release, ExxonMobil had a section titled, Leading the Drive to Net Zero. The first part is on carbon capture and storage; the second on biofuels and hydrogen. It is reproduced verbatim.

Carbon Capture and Storage

• ExxonMobil signed a memorandum of understanding to explore the development of a carbon capture and storage project at the Dayawan Industrial Park in Guangdong Province, China. The envisioned project has the potential to capture up to 10 million metric tons of CO₂ per year, and could become one of the first large petrochemical complexes to remove CO₂ emissions.
• ExxonMobil, Neptune Energy, Rosewood, and EBN signed an agreement to advance the L10 carbon capture and storage project in the Dutch North Sea. This stage of the project has the potential to store four to five million metric tons of CO₂ annually for industrial customers, and represents the first stage in the potential development of the greater L10 area as a large-volume CO₂ storage reservoir.
• ExxonMobil announced the start of early front-end engineering design studies for a South East Australia carbon capture and storage hub in Gippsland, Victoria. The project would initially use existing infrastructure to store up to two million metric tons of CO₂ per year from multiple local industries in the depleted Bream field off the coast of Gippsland. Operations could begin as early as 2025.
• Earlier in the quarter, ExxonMobil and Pertamina, the state-owned energy company for Indonesia, signed a joint study agreement to assess the potential for large-scale implementation of lower-emissions technologies, including carbon capture and storage and hydrogen production. The agreement builds on efforts to advance carbon capture and storage in Indonesia that began with a memorandum of understanding signed at COP26.

Biofuels and Hydrogen

• In early July, ExxonMobil successfully delivered the first cargo of certified sustainable aviation fuel (SAF) to Singapore Changi Airport as part of a one-year pilot program launched by the Civil Aviation Authority of Singapore, Singapore Airlines, and Temasek. In addition, ExxonMobil delivered the first cargo of SAF via proprietary pipeline to Virgin Atlantic at London Heathrow Airport. These programs represent part of a global plan to provide 200,000 barrels per day of lower-emission fuels by 2030.
• ExxonMobil’s majority-owned affiliate, Imperial Oil Ltd., is progressing plans to produce renewable diesel at a new complex at its Strathcona refinery in Edmonton, Canada. When construction is complete, the refinery is expected to produce approximately 20,000 barrels per day of renewable diesel, which could reduce emissions in the Canadian transportation sector by about three million metric tons per year. The complex will use locally grown plant-based feedstock and hydrogen with carbon capture and storage as part of the manufacturing process.
• ExxonMobil is advancing the previously announced large-scale blue hydrogen plant in Baytown, Texas. The facility will have the capacity to produce up to one billion cubic feet of blue hydrogen per day and store approximately 10 million metric tons of CO₂ per year, more than doubling ExxonMobil’s current capacity.
• In June, ExxonMobil, Grieg Edge, North Ammonia, and GreenH signed a memorandum of understanding to study potential production and distribution of green hydrogen and ammonia for lower-emission marine fuels at ExxonMobil’s Slagen terminal in Norway. The production of up to 20,000 metric tons of green hydrogen and distribution of up to 100,000 metric tons of green ammonia per year would be driven by hydroelectric power.